English Court confirms the default position of right of appeal on question of law with respect to arbitral awards

The English High Court has again addressed the question of how parties can exclude the right of appeal on a question of law in respect of awards issued in arbitrations seated in England and Wales.

In short, the answer is: the default position is that there is a right of appeal on a question of law under section 69 of the Arbitration Act 1996 (“section 69”) unless otherwise agreed by the parties. Importantly:

• the parties do not have to expressly reserve the right of appeal under section 69; and
• an agreement to exclude the section 69 right of appeal must be sufficiently clear but does not require express reference to section 69 itself.

“The default position, in other words, is that there is a right of appeal, not the other way round; as such, it is wholly unnecessary and unrealistic to expect that the parties should have explicitly to reserve the right.”

To expand, the issue had arisen because of the interplay between section 69 and Article 28.6 of the 1998 International Commercial Court rules (the “ICC Rules”) (which the parties had incorporated into the arbitration agreement).

• Section 69 provides: “Unless otherwise agreed by the parties, a party to arbitral proceedings may (upon notice to the other parties and to the tribunal) appeal to the court on a question of law arising out of an award made in the proceedings.”
• Article 28.6 of the ICC Rules provides: “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.”

The Court was referred to the case of Lesotho Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 in which the House of Lords (since replaced by the UK Supreme Court) decided that the wording of Article 28.6 of the ICC Rules is sufficient to exclude the section 69 right of appeal.

However, in this case the High Court held that there had been no such exclusion. The Court followed established case law in starting with the premise that whether or not there is an agreement within the meaning of section 69 is a question of construction of the arbitration agreement. In doing so, the Court looked carefully at the wording of the arbitration agreement and found that the ICC Rules were only incorporated in certain circumstances which were not engaged here.

In light of the judgment, best practice remains that contractual parties should ensure that an express waiver of section 69 is included in their arbitration agreements if that is their intention; anything less than express language will leave the matter open to debate.

Any party considering an existing arbitration agreement where the position as to exclusion of section 69 is unclear should be prepared for the English Court to employ its standard approach to contractual construction and a relatively involved process as a result.