No permission to appeal despite parties’ agreement
St Shipping & Transport Pte Ltd v. Space Shipping Ltd (CV Stealth)  EWHC 880 (Comm)
This shipping dispute dealt with whether and when it is necessary to obtain the Court’s permission to appeal against an arbitration award on a point of law in circumstances where the parties have already agreed between themselves to allow an appeal.
The Court dismissed the Charterers’ application for permission to appeal against a decision of the arbitral tribunal regarding the consequences of the detention of the vessel – a decision that was the subject of an appeal agreement between them. The Court ruled that permission to appeal was required (despite the parties’ agreement). The Court refused that permission because the statutory criteria set out in the Arbitration Act 1996 (the “Act”) had not been met.
The background dispute
The Owners let the vessel to Charterers on an amended Shelltime 4 form for a period of about eight months. The charterparty included an arbitration clause in which the parties agreed that either of them could “appeal to the High Court on any question of law arising out of an award”.
The Charterers sub-chartered the vessel to a company that intended to unlawfully export a cargo of crude oil from Venezuela. The Owners were unaware of the Charterers’ intentions and ordered the vessel to proceed to Venezuela to load the sub-charterers’ cargo. It turned out that the loading documents were not genuine and, as a result, the vessel was detained in Venezuela in September 2014 by the local authorities.
The Charterers paid hire up to and including January 2015, but contended that the charterparty was frustrated on/about 29 January. Their contention was rejected by the Tribunal. On 1 April 2015, the Charterers purported to redeliver the vessel back to the Owners. The dispute was referred to arbitration and a partial award in the Owners’ favour was issued.
S.69 of the Act allows a party to arbitration proceedings to appeal an arbitration award to the Court on a point of law. Under s.69 (2), however, that party will require either the agreement of the other party to an appeal or the permission of the Court. In this case, the Charterers appealed to the Court under s.69, relying upon a number of issues of law. They argued that they did not need the Court’s permission to appeal because the arbitration clause amounted to the Owners’ agreement to an appeal.
The Commercial Court decision
The Court dismissed the application on the basis that one of the issues involved was a question of fact, rather than law, as required under S.69(1) of the Act and, therefore, it did not fall within the parties’ agreement.
The Charterers’ orders were to proceed to the terminal for the purpose of loading the sub-charterers’ cargo. The Court concluded that those orders led to the detention of the vessel at Venezuela. In reality, the appeal was based on a finding of fact. Dressing up a finding of fact as a point of law in order to appeal it was illegitimate and went against the policy of the Act.
The Court also held that the arbitration clause was drafted with the terms of s.69 in mind and that, therefore, any agreement to appeal must be limited to questions of law whose determination by the Court is not academic and will substantially affect the rights of the parties (S.69(3)(a)). The burden lies with the party asserting that it does not need the Court’s permission to back this up with the necessary evidence.
In the Court’s view, the Charterers had not provided the necessary evidence and so the Court’s permission to appeal was required. The Court refused to grant it because it was not persuaded that the determination of any question of law in the appeal would substantially affect the parties’ rights.
Although it is open to the parties to agree to appeal an award without permission of the Court, this is subject to the appeal (a) arising on a point of law and (b) the determination of that point of law substantially affecting the rights of the parties. An attempt to dress up a finding of fact as an appeal on a point of law is illegitimate and does not fall within the parties’ agreement to appeal.
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