The claimant argued that it was open to the parties to an arbitration agreement to agree that questions of fact and questions of law arising out of an arbitration award can be the subject of an appeal to the English court, and that they had agreed so in the present case. This was said to follow on from the principle of party autonomy in the Arbitration Act 1996. The defendant argued that an appeal to the court on factual issues was misconceived because the court had no jurisdiction to hear an appeal against an arbitrator's findings of fact, and not only could the parties not agree to confer such jurisdiction on the courts, they had not done so in the present case.
The dispute concerned a contract for the conversion of a Very Large Crude Carrier into a Very Large Ore Carrier, and why the work could not be performed. The parties' contract was governed by English law and the parties had agreed to arbitrate in London under the LMAA rules. Clause 22.3 of the contract provided:
"22.3 All other disputes or differences arising out of or in connection with this Contract or otherwise shall be referred to arbitration in London, England before a tribunal of three (3) arbitrators. One (1) arbitrator shall be appointed by each Party to this Contract and the third by the two (2) so chosen. All arbitrators shall be full members of the London Maritime Arbitrators Association ("LMAA") and all arbitrations shall be conducted in accordance with the then current Rules of the LMAA and the Arbitration Act 1996. The Parties agree that either Party may appeal to the English High Court on any issue arising out of any award. The Parties agree that any final unappealable judgment of the English High Court (or higher court on appeal therefrom) shall be referred back to the arbitrators and the arbitrators shall issue a final unappealable award in the form of the said judgment."
The claimant argued that this was not an appeal on questions of law under s. 69, nor a procedural challenge under s. 68, but was a novel appeal not previously heard by the English courts. The claimant based its case on party autonomy. The claimant argued that the single most important feature of arbitration is that the parties are given the opportunity to choose the particular manner in which their disputes are to be resolved. Accordingly they are able to determine for themselves which potential attributes of the arbitral process are important to them, and how to maximise the aspects that they perceive as advantageous, while minimising the perceived disadvantages. Therefore, if they do not like any of the characteristics conventionally associated with arbitration, such as finality, they can agree to opt out, by using a suitably worded arbitration clause. The claimant maintained that everything was allowed unless expressly prohibited by statute.
The claimant supported this argument by pointing out that section 4 of the Act, which contains the mandatory provisions, were limited to those listed in Schedule 1 to the Act, and that that list did not include section 69 dealing with appeals. The claimant submitted that the phrase "unless otherwise agreed by the parties..." showed that the section expressly contemplated that the parties could agree something different.
The defendant countered that that there is a general principle that parties cannot agree to confer jurisdiction on a court which the court does not otherwise possess.
It was argued that Article 22.3 was "startlingly different" because, the qualification "of law" has been omitted, the choice of noun was "issue" rather than "question", and, instead of "of law", the modifier attached to "issue" was the word "any", a word, it was argued which was only used with the intention of expanding the potential application of the noun to which it related. It was argued that Article 22 created a coherent scheme, agreed between the parties, with class related matters to be determined in a single stage process, and for other matters the court to have a function as the upper tier of a two-tier system of dispute resolution, but with the ultimate result being embodied in an award (for enforcement purposes).
It is a long-standing rule that findings of fact are the exclusive province of arbitrators. It would, therefore, require clear words to give the courts the power to review decisions made by a tribunal on issues of fact. It had to be assumed that the parties had intended to slot into the existing regime for appealing awards, rather than creating a new and free-standing right of appeal. There were no clear words to this effect in clause 22. At the time the contract was concluded, it could not be sensibly suggested that the parties had intended to agree that an appeal on any issue arising from the award could be referred to the courts.
Guangzhou Dockyards Co. Ltd. (formerly known as Guangzhou CSSC Oceanline GSW Marine Engineering Co. Ltd.) v E.N.E. Aegali I, [2010] EWHC 2826 (Comm
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