The case of Agile Holdings Corp v Essar Shipping Ltd clarifies the circumstances in which the court can revisit the decision to grant leave to appeal an award on a point of law under section 69 of the UK Arbitration Act 1996 (“AA“) at the merits stage.
Section 69 of the UK provides narrow grounds on which a party can appeal an award on a point of law. Before an appeal can be brought, the court must grant leave to appeal (s.69(2)). Under section 69(3), the court may only grant such leave if it is satisfied:
a) that the determination of the question of law will substantially affect the rights of one or more parties,
b) that the question of law is one which the tribunal was asked to determine,
c) that, on the basis of the findings of fact in the award:
i. the decision of the tribunal on the question of law is obviously wrong, or
ii. question is one of general public importance and the decision of the tribunal is at least open to serious doubt, and
d) that, despite the arbitration agreement, it is just and proper in all circumstances for the court to determine the question.
The case at hand focused on section 69(b): whether the question of law is one that the tribunal had previously been asked to determine.
The court had considered this provision previously. In The Ocean Crown one party sought to argue that because leave to appeal had been given, the court hearing the appeal was bound to accept that the tribunal had been asked to determine a particular question of law. The court disagreed. The task of the judge considering the grant of leave is different from the task of the judge hearing the appeal, and it is open to the latter to differ from the former on this point.
The case related to a charterparty involving a trip from Tunisia to India via Trinidad for the delivery of a consignment of direct reduced iron (a highly reactive and combustible material). The Claimant owner of the vessel, and the Appellant in the court proceedings was Agile Holdings Corporation. Essar Shipping Ltd was the Defendant Charterer and Respondent. The parties contracted on the NYPE 46 form.
In the course of loading the consignment by means of a conveyor belt, the belt caught fire. Notwithstanding this, the supercargo inspected the holds and advised that loading could continue. The cargo remained on fire throughout the journey. The Claimant commenced arbitration seeking a declaration that the Respondent was obliged as charterer to indemnify the Claimant against any liability it might be found to have to the cargo interests.
The dispute related to whether the liability of a claim arising out of the handling of cargo lay 100 percent with the charterer of the vessel (the Respondent) or should be split equally with the owner (the Claimant). The answer depended on whether wording had been added to clause 8 of the standard form Inter-Club New York Produce Exchange Agreement having the effect that the Master (and therefore the owner) was responsible for cargo handling. The tribunal found the words had not been added, but that the clause amounted to a “similar amendment” and that accordingly liability should be split equally between the parties.
The Claimant sought permission to appeal.
The Defendant argued that leave to appeal should not be granted because the scope of the phrase “similar amendment making the master responsible for cargo handling” was not something which the tribunal had been asked to determine. On this basis, the appeal did not involve a question of law arising out of the award or one which the tribunal was asked to determine, and therefore the conditions in section 69 were not met.
The Claimant disputed this. The judge at the permission stage, Popplewell J, agreed with the Claimant and granted leave to appeal, holding that the point had been considered by the tribunal.
At the substantive stage, the defendant sought to re-open the issue and re-argue its original submission that the arbitration had not been asked to consider similar amendments.
His Honour Judge Waksman QC was the appeal judge. He considered the reasons Popplewell J had given for granting leave to appeal. He categorised the threshold questions in section 69 into questions that are determined finally at the permission stage (namely whether the determination would substantially affect the rights of one or more parties, whether the question is one of general public importance and whether it is just and proper for the court to determine the question), and those that obviously may be revisited when dealing with the merits of the underlying question for appeal as they relate to the merits of the underlying question for appeal (namely whether the decision of the tribunal was “obviously wrong” or “at least open to serious doubt”).
He explained that the issue of whether there is a question of law and whether it is one that the tribunal has been asked to determine is more nuanced. However, he concluded that while the court can revisit these issues at the merits stage, it should “at the very least give considerable weight to the decision by the Judge granting permission on those points“. He continued that the weight increases where: “(a) the decision was made not merely on paper but after an oral hearing and/or (b) the materials before the Judge granting permission were the same or substantially the same as those before the appeal court so that the appeal court is in effect being asked simply to second-guess the original decision.” Pointing to the fact that Popplewell J had reviewed four separate sets of written submissions on the issue of whether the question had arisen for determination by the tribunal, that Popplewell J had made reference to the oral closing submissions of the parties in the arbitration hearing, and the materials before the two judges were not significantly different, HHJ Waksman QC found he should be slow to reach a different conclusion, and could see no basis for doing so.
HHJ Waksman QC did not suggest there should be an absolute bar against the appeal court determining whether the question of law had been considered by the tribunal. Therefore, in case his approach was wrong, he ruled on whether the question of law had been considered by the tribunal in this case. He concluded that the question of law on appeal had arisen before the tribunal by reference to the transcript of the closing submissions in the arbitration.
The decision in Agile Holdings v Essar provides useful guidance on how the court may revisit certain elements of the gateway to appeal in section 69(3) at the substantive stage. It makes clear that certain issues (namely those in sections 69(3)(a), (c)(ii) and (d)) cannot be re-examined by the court when considering the substantive issue. While the court can re-consider whether the tribunal was asked to determine the question of law on which the appeal is based, considerable weight will be given to the findings of the judge who granted leave, particularly where the parties had a significant opportunity (whether in writing or orally) to argue the point in question, and where the two judges have access to similar materials.
Accordingly, while a party may wish to re-open the question of whether the tribunal has been asked to determine the particular issue of law on which the appeal centres at the substantive stage, this is unlikely to prove a particularly useful tool in resisting such an appeal.
  EWHC 1055 (Comm)
  1 Lloyd’s Rep 468