Ases Havacilik Servis Ve Destek Hizmetleri A.S. v Delkor Uk Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 11 December 2012 |
| Neutral Citation | [2012] EWHC 3518 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 December 2012 |
| Docket Number | Case No: 2012 FOLIO 1120 |
[2012] EWHC 3518 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
IN THE MATTER OF THE ARBITRATION ACT 1996
Royal Courts of Justice
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: 2012 FOLIO 1120
Mr Shantanu Majumdar (instructed by Gardner Leader solicitors) for the Claimant
Mr Robin Neill (instructed by Mogers solicitors) for the Defendant
Hearing dates: 12, 13, 14 and 15 November 2012
Introduction
This is an application by the Claimant ("ASES") under s.67 of the Arbitration Act 1996 ("the 1996 Act") for an order setting aside the Partial Final Award dated 24 July 2012 ("the Award") made by John Jarvis QC ("the arbitrator") whereby the arbitrator decided he had jurisdiction to determine the dispute between the parties.
ASES is, inter alia, a marketing and industrial consultant. The Defendant ("Delkor") is a company specialising in the design, manufacture and supply of mineral processing and solid liquid/separation equipment.
The substantive dispute between the parties, which was purportedly referred to arbitration by Delkor on 31 May 2012, arises out of the supply by Delkor to ASES of a belt-assisted boric acid filter, which was to be delivered to the end user client ETI-Maden ("ETI"), an entity controlled by the Turkish government, at ETI's Bandirma site in Turkey.
ASES took no part in the appointment of the arbitrator or in any part of the arbitration up to and including the issue of the Award because it was challenging the arbitrator's jurisdiction under s.72 of the 1996 Act and was therefore required to maintain its non-participatory status. This was made clear in letters to the arbitrator.
On 22 June 2012 the arbitrator was appointed following an application by Delkor to the court under s.18 of the 1996 Act. On 3 July 2012 the arbitrator held a directions hearing. On 16 July 2012 ASES issued its application under s.72 of the 1996 Act. On 20 July 2012 the arbitrator held a hearing to determine jurisdiction. On 24 July 2012 he issued the Award. On 26 July 2012 the arbitrator decided to proceed to a final hearing of the arbitration with a hearing set for 10–12 September 2012.
Given that ASES's s.72 application had been listed to be heard on 18 October 2012 this timetable put ASES in a difficult position. It decided that in the light of the arbitrator's decision to continue the arbitration in the meantime and the fixing of a final hearing of the arbitration on 10–12 September 2012 it had no real choice but to participate in the arbitration and to challenge the Award under s.67.
Accordingly on 21 August 2012 it issued a s.67 application and on the same day filed a Defence in the arbitration under protest as to jurisdiction.
There was then a directions hearing on 28 August 2012 and, in the light of ASES's participation and difficulties with witnesses and counsel in respect of a hearing on 10–12 September 2012, the hearing of the arbitration was moved to 21–28 November 2012 in Istanbul.
At a further arbitration directions hearing on 25 September 2012, the issues in the arbitration were separated and a hearing scheduled for November confined to issues of contract formation and applicable terms, with a further hearing to be scheduled to decide issues of breach and quantum.
The arbitrator held that he had jurisdiction on the basis that there is a valid arbitration agreement governed by English Law by virtue of clause 15 of Delkor's Standard Conditions. This provides that:
"The terms and conditions of this proposal shall in all respects be construed and operated as a British contract and in accordance with English Law. If at any time any question, dispute, or difference whatsoever shall arise between the Seller and the Buyer in relation to, or in connection with the Goods, then every such case, dispute or difference whatsoever shall be submitted to arbitration in terms of the Arbitration Acts 1950–1979."
ASES's basis for this application is essentially that this arbitration clause was not incorporated into the contract between the parties, or was inapplicable, as the governing agreement was in fact a Limited Manufacturing Licence ("LML") which was subject to Swiss Law and which provides for arbitration in Switzerland. ASES contends that the arbitrator wrongly concluded that the LML was irrelevant and/or inapplicable and that he further wrongly concluded that an Agency Agreement was relevant and gave effect to other documentation – specifically the document "471 ASES-Bandirma contract (draft).docx" — which had not been seen still less accepted by ASES at the material time.
In the light of ASES' non-participation in the arbitration the arbitrator only had a limited amount of documentary and witness evidence before him. For the purpose of the s.67 application, I have been provided with extensive documentation, witness statements, witness evidence and expert evidence. The hearing of the application took four days.
The Issues
The principal issues which arise are:
(1) Whether ASES is entitled to bring the s 67 application or may only do so on limited grounds.
(2) Whether the governing arbitration clause is the Swiss arbitration clause in the LML or the English arbitration clause in Delkor's Standard Conditions.
(1) Whether ASES is entitled to bring the s 67 application or may only do so on limited grounds.
Delkor contends that ASES is not entitled to bring its s.67 application because:
(1) It has not exhausted any available arbitral process of appeal or review or recourse under s.57 of the 1996 Act; and/or
(2) It has brought a counterclaim in the arbitration and thereby accepted jurisdiction.
S.70(2) of the 1996 Act provides that:
"an application or appeal may not be brought if the applicant or appellant has not first exhausted:
(a) Any available arbitral process of appeal or review, and
(b) Any available recourse under section 57 (correction of award or additional award)"
S. 82(1) of the 1996 Act defines "available arbitral process" as including:
"any process of appeal to or review by an arbitral or other institution or person vested by the parties with powers in relation to that matter".
S.57(3) of the 1996 Act provides that:
"(3) The tribunal may on its own initiative or on the application of a party—
(a) correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission [emphasis added] or clarify or remove any ambiguity in the award"
Delkor submits that s.57 provided an available process of review to ASES, whereby the arbitrator could address ASES's case that Delkor's Standard Conditions had not been incorporated or were otherwise inapplicable. It stressed that under the 1996 Act the arbitral process should wherever possible correct itself and that ASES should first have made use of that available process.
I agree, however, with ASES that there were no arbitral processes of review or appeal agreed between the parties which were available to ASES following the arbitrator's Award. There is no provision for any such process in any of the contractual documents on either party's case, and none has been agreed at any point following the conclusion of the contract or the arising of the substantive dispute. S.70 (2) (a) of the 1996 Act does not therefore prevent ASES from bringing this application under s.67 of the 1996 Act. If, as ASES submits, no such process is available, then ex hypothesi there is nothing to exhaust.
As to s.70 (2) (b), s.57 (3) (a) gives a tribunal the power, on its own initiative or on the application of a party, to correct an award "so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award". The mistake must have arisen as a result of an accidental slip or omission; the slip rule cannot be used by the tribunal to reconsider the award – Sutherland & Co v Hannevig Brothers Ltd [1921] 1 KB 336, CA. As stated by HHJ Havelock-Allan QC in Al Hadha Trading Co v Tradigrain SA [2002] 2 Lloyd's Rep 512:
"By no stretch of the imagination does the power in s 57(3) (a) to "correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission to clarify or remove an ambiguity in the award" entitle a tribunal to reconsider its conclusion about the submissions of a party, especially where those submissions have been safely received and accurately recorded in the award. I would endorse the commentary on s 57(3) (a) and (b) in Mustill & Boyd on Commercial Arbitration (2nd Ed, Companion Volume 2001 at p 341) where it says: "Neither of these powers is intended to enable the arbitrator to change his mind on any matter which has been decided by the award, and attempts to use the section for this purpose should be firmly resisted."
Whilst the decision" in Craske v Norfolk CC [1991] JPL 760 indicates that the power of the arbitrator under the slip rule contained in what is now s.57 of the 1996 Act (formerly s.17 of the Arbitration Act 1950) to correct errors in the award applies to errors which were attributable to the parties, as well as errors attributable to the tribunal, it also makes it clear that it does not extend to oversights or errors in production of evidence or argument before the Arbitrator – see White Book 2012, Vol. 2, Note 2E-226 at page 648. S.57 does not apply to second thoughts, still less to second thoughts based on fresh evidence.
It is ASES's case that the arbitrator...
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