This was an appeal by a farmer (Bratt Brothers) to the Court of Appeal against an order by the Commercial Court that an arbitration award be enforced against him. The award was in favour of a company (Frontier Agriculture) which, it alleged, entered into two contracts for the sale of wheat. However, Bratt Brothers denied entering into the second contract and did not participate in the arbitration proceedings. Bratt Brothers was appealing to contest the arbitrator’s jurisdiction on the basis that Frontier Agriculture had not provided the relevant documents in respect of the arbitration within the applicable time limits.
The two contracts were considered by the Court of Appeal. In respect of the first contract, it was accepted that Bratt Brothers had in correspondence engaged in appointing the arbitrator (and said “in principle [the Arbitrator] is acceptable to me”). Participating in the appointment of an arbitrator, without qualification, was considered to be taking part in the arbitration for the purposes of section 73 of the Arbitration Act 1996 (the Act) (which governs the loss of a party’s right to object to the arbitrator’s jurisdiction).
The decision of the second contract was less clear to the Court of Appeal. However, viewing the correspondence objectively, the court held (and Bratt Brothers agreed), that by disputing the existence of the second contract, Bratt Brothers was not accepting the jurisdiction of an arbitration in respect of that contract. The acceptance of the arbitrator addressed the first contract, not the second and did not abandon Bratt Brothers’ objection under the second contract. The right to challenge the arbitrator’s jurisdiction had not been lost. However, it is not sufficient alone to deny existence of an agreement to arbitrate since it must also be shown that there is a “real prospect of success, a triable issue”. On the facts, there was no witness statement nor oral evidence to show an oral contract confirmed in writing and as such, a real prospect of success had been demonstrated by Bratt Brothers.
Accordingly, the appeal was allowed, setting aside the order and the matter was remitted to the Commercial Court for directions and determination of the issue as to the validity of the second contract.
This judgment demonstrates that clear acceptance of an arbitrator’s appointment amounts to taking part in the proceedings within the meaning of section 73 of the Act. However, if a party raises (at the earliest opportunity) an objection to jurisdiction and maintains that objection throughout, that party may still have input into the arbitrator’s appointment without losing its right to object to jurisdiction. It is therefore possible, in the situation where one arbitration concerns two contracts with identical arbitration clauses, that a party may be deemed to participate in relation to one contract whilst remaining a non-participant in respect of the other contract, provided that there is a reasonable prospect of showing that other contract was not agreed. As such, an arbitration award relating to both contracts may be vulnerable to challenge. However, if parties are in doubt, greater certainty may be achieved by commencing separate arbitrations in respect of each contract.
To view the judgment, click here: http://www.bailii.org/ew/cases/EWCA/Civ/2015/611.html.