Sumukan Ltd v Commonwealth Secretariat (No. 2)
| Jurisdiction | England & Wales |
| Judge | The Hon Mr Justice Colman,Lord Justice Toulson,MR JUSTICE COLMAN |
| Judgment Date | 14 February 2007 |
| Neutral Citation | [2006] EWHC 304 (Comm),[2007] EWHC 188 (Comm) |
| Docket Number | Case No: 2005 FOLIO 420,Case No: 2006 FOLIO NO. 420 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 14 February 2007 |
[2006] EWHC 304 (Comm)
Mr Justice Colman
Case No: 2006 FOLIO NO. 420
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr R Thompson QC and Mr K Qureshi (instructed by Turbevilles) for the Applicant
Mr C Nicholls QC and Mr T Poole (instructed by Speechly Bircham) for the Respondent
Hearing dates: 20 February 2006
REASONS FOR JUDGMENT
If this Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This application for permission to appeal against an arbitration award by the Commonwealth Secretariat Arbitration Tribunal ("CSAT") raises an issue of importance as to the meaning and application of section 69 of the Arbitration Act 1996.
The Commonwealth Secretariat ("ComSec") is an international organisation. It is entitled as such to diplomatic immunity to the effect that it cannot be impleaded in the courts of this country by reason of the terms of the International Organisations Act 2005. One of its functions is to enter into contracts for the provision of aid by way of services to the governments of states that are Commonwealth members. For this purpose, it enters into contracts with outside providers of goods and services. Such contracts sometimes, if not invariably, include an arbitration clause. That clause refers disputes which cannot be settled by negotiation to the CSAT for settlement by arbitration in accordance with its statute, that is the Statute of the Arbitral Tribunal of the Commonwealth Secretariat. It provides that the seat of the Arbitral Tribunal is to be the principal office of ComSec which is in London.
On 6 July 2001 the Claimants' predecessors in title, Asset Management Shop Ltd ("AMS"), entered into a contract with ComSec under which AMS was to create a prototype website for the Government of Namibia by which to display the market in the products of certain industries in Namibia. The Government was to be given the opportunity of considering whether the prototype justified the creation of a fully functional website covering a full range of industries in addition to those (two) represented in the prototype.
The contract by clause 9 included the following term:
"The Secretariat and the consultant shall endeavour to settle by negotiation and agreement any dispute which arises in connection with this contract. Failing such agreement the dispute shall be referred to the Commonwealth Secretariat Arbitral Tribunal for settlement by arbitration in accordance with its statute which forms part of this contract and is available on request."
The Statute there referred to included at Article IX 2 the following provision:
"The judgment of the Tribunal shall be final and binding on the parties and shall not be subject to appeal. This provision shall constitute an "exclusion agreement" within the meaning of the laws of any country requiring arbitration or as those provisions may be amended or replaced."
Following completion by AMS of the prototype website a dispute arose as to the effect of one of the provisions of ComSec's Standard Terms and Conditions for Short-Term Consultancies which were incorporated by reference into the Contract. That was clause 3 which provided that title to and rights in any material produced under the contract which did not vest in the Commonwealth government to which it had been applied passed to ComSec. Thus, whereas Comsec claimed title to the website, AMS relied on various provisions in the Terms of Reference and its earlier proposal in respect of the works, both of which were expressly incorporated into the contract, to the effect that title to the prototype was to remain in AMS.
The dispute was referred to arbitration by CSAT and a three-person panel consisting of Prof Duncan Chappell, President, Dame Joan Sawyer and Miss Anesta Weekes QC. By an award dated 25 April 2005 the Tribunal held that the website was owned by ComSec and not by AMS.
AMS has applied under Section 69 of the Arbitration Act 1996 for permission to appeal against that award on the grounds of error of law. ComSec submits that this court has no jurisdiction to give permission to appeal because the incorporation by clause 9 of the ComSec Statute of the Arbitral Tribunal, Article IX.2, had the effect of an exclusion agreement disentitling either party from the right to appeal under section 69 of the 1996 Act.
Section 69(1) provides:
"Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings. An agreement to dispense with reasons for the tribunal's award shall be considered an agreement to exclude the court's jurisdiction under this section."
It is submitted by Mr Colin Nicols QC, on behalf of ComSec, that in this case there was a sufficient exclusion agreement by reason of the incorporation by reference of the ComSec Statute, Article IX.2, and that it was not necessary to spell out in the body of the agreement to arbitrate contained in clause 9 that the right of appeal was excluded.
On behalf of the Claimant Mr Rhodri Thompson QC submits that the exclusion of the right of appeal is such a draconian measure when, as here, imposed by the standard arbitration system relied on by a public authority, such as ComSec, that before there can be reasonable notice by ComSec to an opposite contracting party such as AMS there must be an express reference to that exclusion on the face of the agreement to arbitrate. Alternatively, if that would not be necessary at Common Law, it must be necessary in order to comply with the requirements of Article 6 of the European Convention on Human Rights.
Discussion
Counsel were unable to refer me to, and I have been unable to find, any direct authority on whether it is sufficient for the purposes of the opening words of Section 69 that a contract arbitration clause incorporates an agreement to exclude a right of appeal by reference rather than by expressly stating the exclusion agreement on its face. However, there is clear authority that under the much more elaborate provisions of section 3(1) of the Arbitration Act 1979, by which the right to appeal on questions of law was first introduced into English arbitration law, a mere reference in an arbitration clause to a body of arbitration rules (in that case those of the International Chamber of Commerce) was sufficient to incorporate an exclusion agreement. That is the decision of Leggatt J. in Arab African Energy Corporation v. Oliproduckten Nederland [1983] 2 Lloyd's 419. It is to be observed that in the course of his judgment Leggatt J. referred at page 423 to that approach to construction being conditioned by the change in English public policy towards the desirability of finality in arbitration as against the demands of supervisory control by the courts. He said this:
"Section 3 (1) of the 1979 Act does not require the overt demonstration of an intention to exclude the right of appeal. True it is, that formerly the Court was careful to maintain its supervisory jurisdiction over arbitrators and their awards. But that aspect of public policy has now given way to the need for finality. In this respect the striving for legal accuracy may be said to have been overtaken by commercial expediency. Since public policy has now changed its stance, I see no reason to continue to adopt an approach to the construction of exclusion agreements which might well have been appropriate before it had done so. In my judgment, the phrase "an agreement in writing … which excludes the right of appeal" is apt to apply to an exclusion agreement incorporated by reference. I reach this conclusion unpersuaded to the contrary by the decisions of the European Court which I consider might be misleading in this essentially domestic context. Whatever considerations of good sense may support those decisions and however much one, might be impressed by them if approaching the matter a priori, the pursuit of homogeneity should not deter me from the broader approach hitherto adopted by the common law. It is more important that commercial men should know that the English Courts are consistent than that the Courts should turn towards Luxembourg when Parliament has not directed them to do so."
Section 3(1) provided as follows:
"(1) Subject to the following provisions of this section and section 4 below —(a) the High Court shall not, under section 1 (3) (b) above, grant leave to appeal with respect to a question of law arising out of an award … if the parties to the reference in question have entered into an agreement in writing (in this section referred to as an "exclusion agreement") which excludes the right of appeal under section 1 above in relation to that award …
(2) An exclusion agreement may be expressed so as so relate to a particular award, to awards under a particular reference or to any other description of awards, whether arising out of the same reference or not; and an agreement may be an exclusion agreement for the purposes of this section whether it is entered into before or after the passing of this Act and whether or not it forms part of an arbitration agreement.
(4) Except as provided by sub-section (1) above, sections 1 and 2 above shall have effect notwithstanding anything in any agreement purporting —(a) to prohibit or restrict access to the High Court; or (b) to restrict the jurisdiction of that court; or (c) to prohibit or restrict the making of a reasoned award."
In Marine Contractors...
To continue reading
Request your trial
-
Sumukan Ltd v Commonwealth Secretariat
...aside permission to appeal granted by Lord Justice Rix to the claimant, Sumukan Ltd, against the decision of Mr Justice ColmanUNK ((2006) EWHC 304 (Comm)) that the parties had agreed on the exclusion of a right of appeal to the courts from an arbitration award. Mr Anthony Speaight, QC and M......
-
Broda Agro Trade (Cyprus) Ltd v Alfred C Topefer International GmbH
...be waived. Thus the right to a public hearing can be waived by a party who agrees to submit a dispute to arbitration; see Sumukan Ltd. v The Commonwealth Secretariat [2007] EWCA Civ.243, Stretford v Football Association [2007] EWCA Civ 238 and [2007] 2 Lloyd's Rep.31 and Fiona Trust Holdin......
-
Stretford v Football Association Ltd
...should not have ordered a stay under section 9(4) of the Act. 2 This appeal was heard at the same time as the appeal in Sumukan Ltd v The Commonwealth Secretariat and the application in Shuttari v The Solicitors Indemnity Fund, in both of which cases judgment is being handed down today. The......
-
Nestor Maritime SA v Sea Anchor Shipping Company Ltd
... ... Mr Justice Eder ... Case No: 2012 FOLIO 144 IN THE HIGH COURT OF JUSTICE QUEEN'S BENCH ... First, he referred to Sumakan Ltd v Commonwealth Secretariat [2007] EWCA Civ 1148 (where a challenge was brought under ... ...