Who would be a drafter of contracts? Not me.
I only have to read cases like Shell Egypt West Manzala GmbH and Another v Dana Gas Egypt Limited [2009] EWHC 2097 (Comm) to persuade myself that drafting is not for me.
The contract in Shell Egypt included an arbitration agreement. The arbitration agreement stated that the arbitration tribunal’s award would be “final, conclusive and binding on the parties”. The question was, did this wording mean that the unsuccessful party to an arbitration could appeal to the court pursuant to section 69(1) of the Arbitration Act 1996 on a point of law?
Section 69(1) of the Arbitration Act 1996 states that:
“Unless otherwise agreed by the parties, a party to arbitral proceedings may… appeal to the court on a question of law arising out of an award made in the proceedings.”
So, one may have thought (and I certainly did) that the parties in Shell Egypt had “otherwise agreed” and that as a result, the arbitration tribunal’s award was indeed “final, conclusive and binding” and that there was no right of appeal on a point of law against any such award.
However, if you did think this, you, like me, would have been wrong.
The words “final… and binding” do not add anything. Section 58(1) of the Arbitration Act 1996 already says that (unless otherwise agreed), awards are “final and binding” and we have already seen that, notwithstanding that awards are final and binding, there is (unless otherwise agreed) a right to appeal (Essex County Council v Premier Recycling Limited [2006] EWHC 3594).
But surely by including the word “conclusive”, the parties added something more to the mix, so that they had “otherwise agreed”?
The Oxford English Dictionary defines “conclusive” as:
“Of an argument, statement etc: That closes or decides the question; decisive, convincing.
Law: That concludes or debars, binding.”
For good measure, the shorter Oxford English Dictionary defines “conclusive” as:
“Concluding; occurring at or forming the end; final.
Ending all argument; decisive, convincing.”
Irrelevant thought Mrs Justice Gloster, DBE. You need to decide what the phrase means in its context. She thought that the three words overlapped:
- “Binding” meant that “each party promises to abide by the award and to perform it”.
- “An award is ‘final’ in the sense that the successful claimant is precluded by the award from bringing the same claim again in a fresh arbitration or action”.
- An award is “conclusive” of issues of fact and law. A conclusive award “prevents a party in a subsequent arbitration or claim from disputing for a second time an issue of fact or law on which he has failed… it precludes a party from reopening in a later dispute individual issues of law or fact which had been necessarily decided by the award.”
As a result, I now know that the words “final, conclusive and binding” are themselves insufficient to exclude the right of appeal. All that they do is create a res judicata and issue estoppel. Consequently, if you want to exclude the right of appeal, you must go further. It appears that the only way to be sure is to spell it out expressly and in full, as the ICC and the LCIA arbitration rules do:
- “Every Award shall be binding on the parties. By submitting the dispute to arbitration under these Rules, the parties undertake to carry out any Award without delay and shall be deemed to have waived their right to any form of recourse insofar as such waiver can validly be made.” (ICC Rules, Article 28.6.)
- “All awards shall be final and binding on the parties. By agreeing to arbitration under these Rules, the parties undertake to carry out any award immediately and without any delay…; and the parties also waive irrevocably their right to any form of appeal, review or recourse to any state court or other judicial authority, insofar as such waiver may be validly made.” (LCIA Rule 26.9.)
So, there is another case which, as I read the last paragraph of the judgment, I heard myself saying “There but for the grace of God, go I”. No… drafting is not for me.
