National Ability SA v Tinna Oils & Chemicals
| Jurisdiction | England & Wales |
| Judge | Lord Justice Thomas,Mr Justice Coleridge,Lady Justice Hallett |
| Judgment Date | 11 December 2009 |
| Neutral Citation | [2009] EWCA Civ 1330 |
| Docket Number | Case No: A3/2008/2980 |
| Court | Court of Appeal (Civil Division) |
| Date | 11 December 2009 |
[2009] EWCA Civ 1330
[2008] EWHC 2826 (Comm)
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE BURTON
Before: Lord Justice Thomas
Lady Justice Hallett
and
Mr Justice Coleridge
Case No: A3/2008/2980
Peter Irvin (instructed by Stephenson Harwood) for the Appellant
Steven Gee QC (instructed by Hill Dickinson) for the Respondent
Hearing date: 6 October 2009
Lord Justice Thomas :
There are two methods of enforcing an arbitration award made in England and Wales – (1) an ordinary action on the award and (2) an application to enforce an arbitration award in the same manner as a judgment under the procedure set out in s.26(1) of the Arbitration Act 1950 and s.66 of the Arbitration Act 1996. The first method is subject to a limitation period of 6 years, unless the contract containing the arbitration agreement is made under seal. The appellants contend that the second method is not subject to that limitation period and that they can enforce an award that would otherwise be time barred if enforcement is attempted by action; the respondents contend that the period is the same. The issue arises under s.26(1) of the Arbitration Act because the original contract is of some age but the provisions of s.26(1) are in all material respects identical to the provisions of s.66 of the Arbitration Act 1996. It is because the issue is of some continuing importance that permission to appeal was granted by Moore-Bick LJ.
The factual background
As the issue is one of statutory construction, the facts can be summarised very briefly.
i) The appellants, a Panamanian company, were the owners of the Amazon Reefer. They chartered her to the respondents, an Indian Company, under a charterparty on the Gencon form dated 29 April 1995 for a voyage from Kandla to Novorossiysk. The charterparty provided for the resolution of disputes by arbitration in London under English law.
ii) Disputes arose between the appellant owners and the respondent charterers which were referred to arbitration in London. By awards dated 19 November 1998 and 12 October 1999, the arbitrators awarded the appellant owners approximately US$ 820,000, interest until the date of the award, the costs of the arbitration, and interest on the costs.
iii) In the course of the arbitration proceedings, the respondent charterers entered into a scheme of arrangement in India with Tinna Finex Ltd (TFL) under the Indian Companies Act. There were proceedings in India between the appellant owners, the respondent charterers and TFL in which the High Court in Delhi held on 4 June 2008 that the proper party with the obligation to make payment under the awards was TFL and it dismissed the claim to enforce against the respondent charterers. That judgment is being appealed in India.
Nonetheless on 14 July 2008, the appellants sought and obtained an ex parte order from Aikens J giving them permission under s.26 of the Arbitration Act 1950 to enforce the awards as judgments against the respondent charterers and to enter judgment in terms of the awards. The respondents successfully applied to Burton J to set the order aside: [2008] EWHC 2826 (Comm)). He first decided that the order was obtained by serious material non-disclosure and discharged the order of Aikens J on that ground alone. Permission to appeal from that part of the decision was refused. He also decided that, as the application under s.26 could be made inter partes, he would treat it as if it had been made and heard at the hearing before him, so that the procedure was unaffected by the failure to make material disclosure. Nonetheless, that application in any event failed because the limitation period under s.7 of the Limitation Act 1980 had expired and s.7 of the Limitation Act applied to the application under s.26.
The limitation period for an action on the award, as it is founded on the implied promise to pay, runs from the time the award should have been paid. Clearly more than six years had elapsed and so if the limitation provision of s.6 applied, then the claim was plainly time barred. However, as I have stated, permission was granted on the issue as to whether the limitation period of six years under s.7 of the Limitation Act 1980 was applicable to the application under s.26.
The methods of enforcing an arbitration award
It is necessary to say a little more about the two methods of enforcing awards obtained under the Arbitration Act 1950 (which continue to apply under the Arbitration Act 1996).
i) Enforcement of an award by action is by an ordinary action brought in the High Court. The procedure is not subject to any statutory provision, but it has long been established at common law as an action founded upon the implied promise to pay the award. It is given statutory recognition in s.66(4) of the 1996 Act.
ii) Enforcement of the award in the same manner as a judgment is a statutory process.
s.26 ( 1) 1950 Act provides:
“An award on an arbitration agreement may, by leave of the High Court or a judge thereof, be enforced in the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in terms of the award.”
S.66 of the Arbitration Act 1996 provides:
“(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.”
The procedure for enforcement by action is little used in practice. For many years it has been the practice of parties who seek to use the enforcement mechanism of the court in England and Wales to use the procedure under s.26 of the 1950 Act and s.66 of the 1996 Act to enforce an award. The procedure is straightforward. The parties make an application to the court on an ex parte (or without notice) basis and any challenge to the enforcement is heard by the judge.
The procedure under s.26 and s.66 had its origins in earlier legislation and was a summary form of proceeding intended to dispense with the full formalities of the action to enforce an award. The summary procedure was originally intended only to be invoked in reasonably clear cases – see Boks & Co. v Peter Rushton [1919] KB 491 at 497 where Scrutton LJ made clear it only be invoked in “reasonably clear cases”. However, procedures were developed so that the court could decide summarily questions of law which did not involve issues of fact. By the 1980s courts were prepared to deal with all applications under the summary procedure provided objections could be disposed of without a trial: see, for example, Middlemiss & Gould v Hartley Corporation [1972] 1 WLR 1643 and Hall and Woodhouse Ltd v Panorama Hotel Properties Ltd [1974] 2 Lloyd's Rep 413. The summary procedure both under s.26 of the 1950 Act and s.66 of the 1996 Act is so convenient that it is by far the most common way of enforcing an award.
The construction of the Limitation Act 1980
The statutory provision in s.7 of the Limitation Act 1980 in relation to the enforcement of an award is clearly expressed:
“An action to enforce an award, where the submission is not by instrument under seal, shall not be brought after the expiration of 6 years from the date on which the cause of action accrued.”
The word “action” is given a broad definition in s.38(1):
““Action” includes any proceeding in a court of law, including an ecclesiastical court.”
As an application under s.26 of the 1950 Act is clearly a proceeding in a court of law, it would at first sight appear to follow, as a matter of ordinary English, that an application under s.26 is an “action to enforce an award” within the meaning of s.7 of the Limitation Act. Certainly that has always been assumed to be the case. For example in Good Challenger Navegante S.A. v Metalexportimport S.A. [2003] EWCA Civ 1668, Clarke LJ (as he then was) recorded that it was common ground that when an ex parte...
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