UK: Tick Tock Watch The Clock

Last Updated: 25 January 2018
Article by Peter Hirst

The time to challenge and appeal an arbitral award starts to run from the date the award is made. The 28 days provided by the Arbitration Act 1996 can be a tight deadline to take all the steps needed to bring a challenge or appeal and extensions of time are not granted lightly.

On receipt of an arbitral award parties are quick to turn to the end of the award to see whether they have won. In many cases the concepts of 'winning' or 'losing' are not straightforward and both sides will review the award in great detail in order to ensure that the tribunal have fully understood and considered the case and to see whether there are any grounds for challenge or appeal by either side. This review must be undertaken quickly as an award seated in England & Wales, thereby subject to the Arbitration Act 1996 (AA 1996), must be challenged (under s67 or s68) or appealed (s69) within 28 days of the date of the award or the date on which the parties are notified of the result of any arbitral process of appeal or review.

In practice, 28 days is not a long time, considering any decision to challenge or appeal will most likely require consultation with numerous stakeholders. Discussions over costs and/or funding may require Board approval or senior figures at a client company or state body. It is also not a long time when decisions over whether to challenge or appeal are never simple as awards are rarely 'blatantly' wrong. Applications under AA 1996, s68 in particular will require thorough analysis of the case put to the tribunal and the decisions the tribunal did or did not make as well as the impact of those decisions or omissions. The bar for a successful challenge or appeal is high and the success rate commensurately low.

Test for extension of time

The 28 day time limit is subject to extension by the court under AA 1996, s 80. The courts (see in particular Kalmneft v Glencore and Terna Bahrain v Al Shamsi) have provided a list of considerations for the court when considering an application for an extension, namely:

  • length of the delay by the applicant.
  • the reasonableness of the party in all the circumstances in having let the time expire
  • any contribution by the respondent or the tribunal to the delay in making the application
  • whether the respondent would suffer irremediable prejudice other than loss of time if the extension was granted
  • whether, during the delay, the arbitration has been able to continue and, if so, what impact the court's determination of the challenge or appeal would have on that progress and the costs of the arbitration
  • the strength of the application
  • whether it is unfair to deprive a party of a right to make a challenge or an appeal

In Oldham v QBE (judgment 1 December 2017) Popplewell J considered the principles he had set down in Terna v Bahrain adding four more observations, namely:

  • the length of the delay is measured by the yardstick of the 28 days provided in which to make the application – a delay measured in days is significant, a delay measured in weeks or months is substantial.
  • an investigation into the reasons for the delay
  • whether the party who has allowed the time to expire has acted reasonably
  • the court's approach to the strength of the challenge application will depend on the procedural circumstances in which the issue arises.

In this case, there were two delays, one of 18 days and one of 6 weeks. The applicant gave an explanation for his delay including that he had believed that time only started to run when he received a signed copy of the award, the initial copy sent to him by the arbitrator had gone astray in the post, he had been abroad for a period and that his financial position restricted his ability to obtain legal advice. The application for extension of time was also listed to be heard at the same time as the challenge application itself and Popplewell J was therefore able to decide whether the application would succeed should the extension be granted – much more than simply deciding whether the case was 'weak or strong' as the test prescribes. On the facts, the extension of time was granted with Popplewell J finding that denying Mr Oldham the opportunity to advance meritorious challenges with a realistic prospect of success would be out of proportion in fairness and justice to any culpability for the delay or its seriousness. In essence, the strength of Mr Oldham's case negated the delay. Would this have been clear to Popplewell J had the merits of the case not been listed for the same time as the extension? Or the extension application dealt with on paper? This is impossible to know.

Start the clock

Well-informed and represented parties should not miss the 28-day deadline. Often advance notice is given of when the award will be made such that resources can be put in place to thoroughly consider the award and obtain any necessary instructions or authorities. This said, it is easy to get swept up in the award and to lose track of time so, simple as it may be, those involved should always diarise the date of the award and put in a maker for the 28th day (see AA 1996, s 78 for reckoning periods of time under the act).

On receipt of the award parties need to consider both any application they may wish to make as well as any application they may have to defend (particularly where the award is not an outright win for either party). From Oldham v QBE it is particularly noteworthy that where the opposing party is not familiar with the arbitral process or is self-represented the court may offer more leniency on the applicable deadlines that they otherwise would.

Parties should always have plans for enforcement and while a winning party may theoretically commence enforcement proceedings despite the existence of a challenge or appeal, the court will most likely stay that process until any challenge or appeal is determined (AA 1996, s 103(5)) so it is a tactical decision whether to commence enforcement proceedings or to wait until any challenge or appeal process is resolved.

Even where a winning party sees no grounds for the awards to be challenged or appealed successfully it is comforting when 'day 29' ticks around but, as Oldham v QBE shows, the 28-day deadline is not absolute.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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