REUTERS | Darren Whiteside

The dangers of not paying the arbitral tribunal’s fees

It’s been a while since I’ve blogged about arbitration, but that’s certainly not because there are a shortage of arbitrations, either domestically or internationally. Indeed, on a couple of occasions this year I’ve had more active appointments as arbitrator than adjudicator.

It was therefore with interest that I read O’Farrell J’s judgment in Ian Rollitt (t/a CD Consult) v Christopher Ballard, which concerned an application to extend time to appeal against an arbitration award dated 12 May 2016, and to appeal against that award on a point of law. It also concerned permission to amend a claim form concerning a challenge to the arbitrator’s later costs award on the grounds of a serious irregularity. However, I want to concentrate on the appeal against the first award.

Rollitt v Ballard

It appears that Mr Ballard employed Mr Rollitt to provide project management services in relation to a property known as High Cane, Sandy Lane, Barbados. If you Google the property, you’ll see that it’s yours to rent for a hefty US$ 2,750 per night, or an eye-watering US$ 5,500 per night over Christmas. However, I have to admit that it looks fantastic.

A dispute arose between the parties concerning payment of Mr Rollitt’s fees, and the well-known arbitrator, Mr David Cartwright, was appointed by the Chartered Institute of Arbitrators (CIArb).

Mr Ballard made an application to the arbitrator for a ruling on his substantial jurisdiction. The arbitrator concluded that, while the RICS Project Management agreement was incorporated by reference, this was not sufficient to incorporate the arbitration agreement. The arbitrator also concluded that the parties had failed to comply with the tiered dispute resolution provisions but that, in any event, Mr Ballard was operating as a consumer and therefore the arbitration agreement would, even if incorporated, be invalid under UTCCR.

Therefore, the arbitrator found that he did not have jurisdiction. Such a finding is binding on the parties under section 30 of the Arbitration Act 1996 (which is unlike adjudication, where any such finding will not be binding).

The arbitrator’s award on jurisdiction was dated 12 May 2016, but it was not issued that day. This was because, unlike adjudication where liens are not permitted, section 56 of the Arbitration Act 1996 expressly permits arbitrators to:

“… refuse to deliver an award to the parties except upon full payment of the fees and expenses of the arbitrators.”

The arbitrator exercised his right under section 56. Cleared funds were not received until 8 August 2016 and, as such, the arbitrator issued his award some three months after it had been completed.

Out of time

Realising the arbitrator’s award was not in his favour, Mr Rollitt evidently wished to challenge it under section 69 of the Arbitration Act 1996 (appeal on a point of law), but he had a significant problem. Section 70 of the Arbitration Act 1996 provides that any appeals under sections 67, 68 or 69 must be brought “within 28 days of the date of the award”. The period for appealing against the arbitrator’s award therefore expired on 9 June 2016 (28 days after 12 May 2016). As O’Farrell J stated, such a strict time limit reflects the:

“… stated purpose of the Act to obtain a fair resolution of disputes by a tribunal without unnecessary delay or expense and to promote the finality of arbitration awards.”

However, all was not lost because section 79 of the AA 1996 expressly allows a court to extend time limits. Therefore, on 5 September 2016 Mr Rollitt made an application to the court to extend time under section 79, and to appeal the arbitrator’s award on a point of law under section 69.

The principles of an extension

O’Farrell J referred to the principles applicable to the court’s discretion to extend time under section 79, as set out by Popplewell J in Terna Bahrain Holding Co WWL v Al Shamsi, the three most important being:

  • The length of the delay.
  • Whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so.
  • Whether the respondent to the application or the arbitrator caused or contributed to the delay.

O’Farrell J’s findings

O’Farrell J said that the 88-day period of delay between 9 June 2016 and 5 September 2016 was substantial “compared with the yardstick of 28 days provided for in the Act”, and that while this delay may not have been deliberate, Mr Rollitt had no reasonable explanation for it. O’Farrell J also said that neither the arbitrator nor Mr Ballard had contributed to the delay.

O’Farrell J then turned her attention to the strength of the claim. Although the judge did not agree with the arbitrator’s conclusions concerning the incorporation of the arbitration agreement and the parties alleged failure to comply with the tiered dispute resolution provisions, she said that nothing turned on this. This was because the arbitrator’s conclusion that the agreement would be invalid under UTCCR was a mixed finding of fact and law which could not be challenged under section 69. As such, O’Farrell J found that:

“… even if the application for leave to appeal had been made in time, it would be refused on its merits.”

Therefore, O’Farrell J refused Mr Rollitt’s applications to extend time and to appeal on a point of law.

Lessons learned

It is clear that, even if Mr Rollitt had paid the arbitrator’s fees in the days after 12 May 2016, his application to the court to appeal against the arbitrator’s award on jurisdiction on a point of law would have failed in any event by virtue of the UCTTR point. However, the case is nevertheless an important reminder that:

  • Arbitrators are entitled to exercise liens over their awards.
  • If your arbitrator exercises a lien, they will need to be paid promptly in order that the opportunity to appeal under section 70 is maintained, and a costly application to extend time is unnecessary under section 79. The parties’ rights to apply for the correction of slips also expires after 28 days under section 57.

I appreciate that many of you reading this will be fully aware of the provisions of the Arbitration Act 1996 that I’ve mentioned above, but those practitioners not used to conducting arbitrations may not be, and there is obviously an even greater risk that unrepresented parties will be oblivious to the time limits.

I think that arbitrators can and should do their bit by reminding parties of the time limits. Indeed, I exercised a lien over the last arbitration award that I wrote, but in the letter enclosing my invoices I stated:

“I ask the parties to note that under s.57(4) of the Arbitration Act 1996 any application by the parties to correct my Award must be made within 28 days of the date of my Award, i.e. by 29th June 2017. Similarly, any appeal the parties may wish to make to a Court in respect of my Award must also be made within 28 days of the date of my Award. These 28-day time periods do not run from the delivery of my Award to the parties.”

You have been warned!

MCMS Ltd Jonathan Cope

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