Global Aerospares Limited v Airest AS

Under the Arbitration Act 1996, section 18 relief requires a failure of the appointment procedure. The procedure must first have been validly invoked. Contractual notice provisions incorporated into an arbitration agreement may survive termination. A mandatory requirement for personal service is not satisfied by receipt through other means. If the required request is invalidly served, the appointment process has not begun and cannot have failed. Whether that statutory pre-condition is met concerns the merits of the section 18 claim, rather than the court’s jurisdiction under CPR Part 11.

The claimant sought directions under section 18 of the Arbitration Act 1996 after serving a request for arbitration concerning an aircraft-parts supply agreement. The agreement provided for London arbitration but contained no appointment procedure. The defendant applied under CPR Part 11 to dispute the court’s jurisdiction and to set aside the claim and service order.

The defendant argued that the request was unclear and had not been served in accordance with the agreement. The central issues were whether the Part 11 procedure was available, whether the request validly commenced the appointment process, and whether the court could act under section 18.

1. Part 11 issue. The defendant’s application under CPR Part 11 was procedurally available, but it failed on the jurisdiction point. The claim form had been validly served. Whether the statutory pre-condition for exercising a section 18 power had been met went to the merits of the claim, not the court’s jurisdiction to try it or exercise jurisdiction.
2. Commencement and appointment procedure. Sections 14, 15 and 16 of the Arbitration Act 1996 interlock. In the absence of agreement, section 14(4) applied, arbitral proceedings commenced when written notice was served requiring the parties to appoint or agree an arbitrator, and section 15(3) provided for a sole arbitrator. Section 16(3) required joint appointment within 28 days of a written request.
3. Content of the request. A request must be objectively clear, but is assessed flexibly by substance and context rather than technical form. The request and covering letter, read together, clearly asked the defendant to agree to appoint an arbitrator. It therefore satisfied the content requirement.
4. Service. Clause 9 required notices to be served personally and also sent by email or suitable post. The use of “must” made personal service mandatory. The clause formed part of the arbitration agreement and survived termination under section 7. The claimant had not attempted personal service, so the request was invalidly served.
5. Section 18. Because the request had not been served in accordance with the agreement, the appointment process had not validly begun. There could therefore be no failure of that process and the section 18 powers did not arise. Even if a freestanding section 18 application were possible, failure to invoke the contractual machinery properly would weigh against exercising the discretion. Section 77 could have been relevant if personal service had been attempted but thwarted.
6. Disposition. The application was dismissed, but the claim was dismissed on the substantive issue. The claimant was ordered to pay an agreed proportion of the defendant’s costs, with costs assessment adjourned.