In a recent decision of Daewoo Shipbuilding & Marine Engineering Company Limited v. Songa Offshore Equinox Limited, the English Commercial Court analyzed the issue of whether or not an application for correction of award (to correct clerical errors under Section 57(3) of the English Arbitration Act 1996 (the Act), extends time beyond the stipulated time frame of 28 days as prescribed in Section 70(3) for challenging or appealing the impugned award in the court. The Court inter alia held that the 28 day period runs from the date of the original award and not from any correction to the award which is consistent both with the express language of Section 70 of the Act, and the ethos of the Act.
Daewoo filed an application under Section 69 of the Act seeking permission to appeal against two arbitration awards and to extend time for the making of such application. Against this Songa filed an application to strike out/summarily dismiss Daewoo’s application on the ground that the section 69 application was brought outside the 28-day time limit for such applications as set forth in section 70(3) of the Act.
After the award was passed against Daewoo, they applied to the Tribunal under section 57(3)(a) of the Act to correct what they described as four “clerical errors in the Awards arising from accidental slips”. Thereafter, the Tribunal corrected these errors and issued two memoranda of correction which was 27 days after the Awards had been issued.
Daewoo applied for an extension of time for appealing the Awards and for permission to amend the arbitration Claim Form. As a result, Songa applied for an order that Daewoo section 69 application be struck out or summarily dismissed on the grounds that it not been brought within the 28-day time limit and that the interests of justice did not require an extension of time for appealing the Awards.
- Whether Daewoo’s application for permission to appeal the Awards was brought within the 28-day time limit set out in section 70(3) of the Act – this being a question of whether time ran from the date of the Awards or from the Memoranda of Correction; and
- If Daewoo’s application for permission to appeal the Awards was not brought in time, whether Daewoo should be granted a retrospective extension of time for issuing this appeal under section 80(5) of the Act.
Law on the time limit in the Act
The time limit applicable to section 69 appeals (and indeed to in relation to applications pursuant to section 67 and section 68 of the Act) is set out in section 70. So far as is relevant to this application, section 70 provides as follows:
70 Challenge or appeal: supplementary provisions.
- The following provisions apply to an application or appeal under section 67, 68 or 69.
- An application or appeal may not be brought if the applicant or appellant has not first exhausted—
- any available arbitral process of appeal or review, and
- any available recourse under section 57 (correction of award or additional award).
- Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process.
Section 54 of the Act provides:
54 Date of award.
- Unless otherwise agreed by the parties, the tribunal may decide what is to be taken to be the date on which the award was made.
- In the absence of any such decision, the date of the award shall be taken to be the date on which it is signed by the arbitrator or, where more than one arbitrator signs the award, by the last of them.
Section 57 of the Act provides:
57 Correction of award or additional award.
- The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.
- If or to the extent there is no such agreement, the following provisions apply.
- The tribunal may on its own initiative or on the application of a party—
- correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or
- make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in the award.
These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.
- Any application for the exercise of those powers must be made within 28 days of the date of the award or such longer period as the parties may agree.
- Any correction of an award shall be made within 28 days of the date the application was received by the tribunal or, where the correction is made by the tribunal on its own initiative, within 28 days of the date of the award or, in either case, such longer period as the parties may agree.
- Any additional award shall be made within 56 days of the date of the original award or such longer period as the parties may agree.
- Any correction of an award shall form part of the award.
Contention of Daewoo
- It emphasised that there is no reference in section 70(3) to any concept of “materiality” or to the possibility that a single award could have the effect of giving rise to several different 28-day time periods, if the award gives rise to different potential grounds of appeal, some of which are potentially susceptible to recourse under section 57 and others of which are not.
- Daewoo submitted that the better interpretation is to treat the words “any arbitral process of appeal or review” as extending to an application for corrections under section 57(3). Further there is nothing in those words which implies such a limitation, and referring to the definition in section 82(1) of the Act whereby an “available arbitral process” “includes any process of appeal to or review by an arbitral or other institution or person vested by the parties with powers in relation to that matter” as being an expansive and not a limiting definition.
- Daewoo also submitted as to what the date of the award, as defined in section 54 of the Act, is in circumstances where an application is made to the tribunal for correction. Daewoo submitted that in such circumstances the date of the award is the date of the corrected award, even in circumstances where the correction was wholly immaterial to the challenge to the original award. As per Daewoo, even spurious applications stop time from running from the date of the original award. It is said that, subject to severance of dispositive parts of an award, it is conceptually impossible for an award to have multiple dates and to hold that an award can have different dates for different applications would engender confusion and future disputes. It was further submitted that any delay associated with his interpretation of the Act cannot be considered unnecessary or illegitimate in circumstances where it is, on his case, mandated by the terms of the Act.
Contention of Songa
- Songa relied upon the distinction between “any available arbitral process of appeal or review” (section 70(2)(a)) and “any available recourse under section 57” (section 70(2)(b)). No mention of the latter is made in section 70(3).
- Songa drew a distinction between
- those cases where an application under section 57 (or the regime agreed by the parties) is made in order to fulfil section 70(2) and so to bring an application or appeal before the Court, and
- those instances where it merely fulfils a facultative role in correcting minor typographical errors and the like.
As per Songa, it is only in the former category of cases that the date of the award is of significance.
- There is a clear, and indisputable, distinction drawn between “any available arbitral process of appeal or review” (section 70(2)(a)) and “any available recourse under section 57” (section 70(2)(b)). Section 70(3) expressly refers to “any arbitral process of appeal or review” but not to recourse under section 57.
- As to the meaning of “any [available] arbitral process of appeal or review” in section 70(2)(a) and section 70(3), this is a reference to a process by which an award is subject to an appeal or review by another arbitral tribunal. An application to the same tribunal for a correction of the award does not fall within the ordinary and natural meaning of such language. On the contrary the drawing ordinary and natural meaning of such language, in the context of a statutory provision that draws a delineation between an appeal or review and a correction, is that it is a reference to a process by which an award is subject to an appeal or review by another arbitral body. This is supported by the fact that, under section 57, and absent any contractual provision permitting it to do so, a tribunal cannot reconsider whether it reached the correct decision, or indeed change its decision, given that it has already delivered its award (rather any recourse is by an appeal or review by another arbitral body or, absent that, under section 69 of the Act if the requirements for permission to appeal are met). This is consistent with the definition of “available arbitral process” found in section 82 (albeit that the definition is not exhaustive).
- As is recognised in section 1(a) of the Act “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”. The principles of speed and finality of arbitration are of great importance. These would be undermined if the effect of making any application for a correction is that time for appealing runs from the date the appellant is notified of the outcome of that request. This is not simply a “concern” (nor is it one that has been over-stated as alleged by DSME) rather it is contrary to the whole ethos of the Act. It would be open to parties who have freely agreed to arbitrate their disputes to frustrate and delay that agreed mechanism of dispute resolution by relying upon completely irrelevant minor clerical errors. This cannot have been the intention of Parliament, which imposed a short time limit of 28 days in order to serve the principles of speed and finality.
- Challenges to arbitration awards are strictly limited by the Arbitration Act. Where they are permitted they must be promptly made, which furthers the finality of arbitration awards.
An application for correction of an award is material and will properly serve to postpone the running of the 28-day period until the date of the corrected award where the correction is necessary to enable the party to know whether he has grounds to challenge the award. In such a case it makes good sense. However, where the grounds for challenge are known and are not dependent upon the outcome of the application for clarification then there is no good reason to postpone the running of the 28-day period until the date of the corrected award. To do so would unnecessarily delay the making of a challenge to an award. That would be contrary to the aim and object of the Act to promote the finality of arbitration awards.
A test of materiality is supported by the language of section 70 in the context of its statutory object and purpose. Section 70(2) requires prospective applicants to the court to first exhaust available avenues within the arbitral process (those avenues being any available arbitral process of appeal or review and any available recourse under section 57 (correction of award or additional award)). This, therefore, is a requirement that is a distinct requirement that must first be fulfilled. The purpose is to ensure that before there is any challenge, any arbitral procedure that is relevant to that challenge has first been exhausted. Thus if there is a material ambiguity that is relevant to the application or appeal you have first to go back to the arbitrators. However, if what you are doing is seeking correction to typos then that is not a bar to you pursuing your application. Materiality is inherent within section 70(2). It is only where a matter is material that you first have to exhaust the available remedies specified in section 70(2), so that it is only in those circumstances that it is necessary for time only to run after those available remedies have been exhausted. There is no reason or necessity for time not to run, or be extended, in the context of immaterial corrections – these are not matters that have to be corrected before an appeal can be brought. This illustrates that the test of materiality is inherent in the structure of section 70(2) and 70(3). Additionally, if there was not an inherent requirement of materiality this would undermine the entire ethos of the Act of speedy finality and also serve no useful purpose.