Out-Law / Your Daily Need-To-Know

English court allows retroactive extension of time to allow corrections in arbitral process

Out-Law News | 12 Aug 2016 | 3:39 pm | 2 min. read

The High Court in England has allowed claimants more time to apply for changes to an arbitral award.

Under London Court of International Arbitration (LCIA) rules, parties have 30 days from the receipt of an award to ask to correct any "computation, clerical or typographical" or similar errors.

In the case between Xstrata Coal Queensland and Benxi Iron and Steel, four coal companies won an LCIA arbitration award against Benxi Iron and Steel. There was, however, confusion over the companies involved in the contract, with a fifth company called ICRA OC named in the award although it was not a party. ICRA OC does work as part of a joint venture with some of the other coal companies, but was not involved in this contract.

The tribunal did not explain this discrepancy in its award. When the coal companies tried to enforce the award in China, the Chinese court refused to recognise and enforce it on the basis that ICRA OC was not a party to the contract or arbitration agreement.

The coal companies attempted to gain a new award or to have the original award changed, but had missed the 30-day deadline. The LCIA, while "sympathetic to the claimants' position", said it was unable to hear the application.

The High Court, however, said that in practice the rules would "almost always expire before the outcome was known of a contested attempt under the New York Convention to obtain recognition and enforcement of an award in another country", and granted the application for an extension.

Arbitration expert Nicola King of Pinsent Masons, the law firm behind Out-Law.com, said: "This is another pragmatic and pro-arbitration decision by the English Court, which upholds the principle that the arbitral process ought to be allowed to correct itself where possible."

"The court focused on the absence of an explanation from the arbitral tribunal in respect of the correct parties to the award. This left uncertainty about the award, which can impede the arbitral process. Mr Justice Knowles took a just and reasonable approach to the case which allowed the claimants to have the opportunity to seek clarification from the arbitral tribunal in respect of the explanation that is presently missing," King said.

"The court swiftly dismissed the argument that application for clarification of the award should have been made prior to awaiting the outcome of the enforcement proceedings. In the circumstances of this case, the claimants would not have had an incentive to seek the clarification before the argument about the proper parties was raised successfully by the respondent in the recognition and enforcement proceedings in China. However, parties should be mindful to make any application to court as swiftly as possible to avoid arguments of undue delay," she said.

Alistair Calvert, also of Pinsent Masons, said: "Companies should be mindful in transactions with related contracts and multiple parties to ensure that the parties are clearly and correctly defined in the contract and the parties bringing claims are those entitled to do so, either by virtue of being signatory to the arbitration agreement or by otherwise being able to benefit from it."

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