WILLIAM QUAY HAYS & Ors v BLOOMFIELD INVESTMENTS LLC

Extensions of time to challenge an arbitral award are exceptional because the Arbitration Act 1996 promotes speedy finality. The court must assess all relevant circumstances, including the delay, the applicant’s conduct, prejudice, the effect on the arbitration, the apparent strength of the challenge and overall fairness. No factor is automatically primary.

A brief merits assessment may be undertaken. A challenge based on serious procedural irregularity may justify an extension where the irregularity has strong prospects of success and substantial injustice is inherently likely. An arbitral tribunal must give parties a reasonable opportunity to address a significant point on which its decision may depend. An interest award should ordinarily be compensatory, and an extraordinary rate adopted without warning may justify intervention under section 68.

The claimants sought 35-day extensions under sections 67, 68, 72 and 80(5) of the Arbitration Act 1996, and under CPR 62.9, to challenge two LCIA awards made in favour of Bloomfield Investments LLC.

The proposed challenges concerned, first, the tribunal’s jurisdiction over non-signatories to the funding agreements and, secondly, an award of interest at 65% per annum compounded quarterly. The interest rate had not been claimed or addressed in submissions and was first disclosed in the awards.

The court considered whether the delay was justified, whether Bloomfield suffered irremediable prejudice, the apparent merits of the challenges and the policy of speedy finality. The central issue was whether the interests of justice required departure from the statutory timetable.

1. Extensions of time. The 35-day delay was significant against the 28-day statutory period. The claimants had not acted reasonably, since they failed to obtain timely English legal advice, but the evidence did not establish a deliberate tactical decision to avoid the English court. Bloomfield had not shown irremediable prejudice beyond delay, and there was no impact on a continuing arbitration.
2. Relevant factors. The factors identified in AOOT Kalmneft v Glencore International AG [2002] 1 Lloyd’s Rep 128 are all relevant. Their relative weight depends on the facts. The first three factors are not automatically more significant than the others. The policy of speedy finality remains an important consideration.
3. Interest challenge. The tribunal had discretion under section 49 of the Arbitration Act 1996 and article 26.4 of the LCIA Rules 2014 to award interest. However, the use of a contractual rate of return, applicable only to specified litigation proceeds, as interest on damages was surprising and probably incorrect. It produced an extreme and potentially punitive result which the parties could not reasonably be taken to have contracted for.
4. The tribunal adopted the interest approach without giving the parties an opportunity to address it. The claimants therefore had a strong provisional case under section 68(2)(a), and it was well arguable that the tribunal had exceeded its powers under section 68(2)(b). The resulting substantial injustice was probably inherently likely, since a party would probably have responded had it been warned of an interest award approaching US$60 million.
5. The jurisdiction challenge required a complete rehearing of the relevant facts and New York law. The court could not form a clear provisional view that it would succeed. The claimants therefore failed to show that the interests of justice required an extension for that challenge.
6. The extensions were granted for the section 68 and section 72(2)(b) challenges concerning interest, but refused for the section 67 and section 72(2)(a) jurisdiction challenges.