The Court of Session has refused permission for a legal error appeal from an Arbitrator’s award in a judgment which reflects its support for the arbitration process.

The court’s role in the arbitration process

The Scottish courts have a supervisory jurisdiction regarding arbitration. An application can be made to the courts in respect of various matters under the Arbitration (Scotland) Act 2010. One of these is that a party may appeal against an Arbitrator’s award on the ground that the Arbitrator erred on a point of Scots law. This is called a legal error appeal under Rule 69 of the Act.

However, the court’s powers in this area are restrained by Rule 70. This only permits an appeal with parties’ agreement, or with the leave of the court.

A dispute had arisen between two parties to a construction contract. The dispute had been referred to arbitration and an award issued in four parts. The fourth part award was challenged on the ground of legal error. There was no agreement that a legal error appeal should be made and so the application required the leave of the court.

The grounds of challenge

The challenge was in relation to the fourth part of an arbitration award, and on the grounds of three legal errors having been made by the Arbitrator. The court can only grant leave to appeal if satisfied that a three part test has been met:

  • that deciding the point will substantially affect a party’s rights;
  • that the Arbitrator was asked to decide the point; and
  • that, based on the findings of fact in the award, that the Arbitrator’s decision on the point was either obviously wrong, or where the court considers the point to be of general importance, the arbitrator’s decision is open to serious doubt.

For each of the three contended legal errors, the three part test was applied by the court and was failed. In relation to the first two legal errors, the second and third parts of the test were both failed. In relation to the third legal error, the challenge was essentially one on the findings of fact as to how to treat expert evidence, rather than a true legal error appeal and so did not constitute a legal error and ,in any event, the point was never put to the arbitrator so it failed part 2 of the test.

What do we take from this decision?

In considering such an arbitration decision I often ask myself is the arbitration judge acting as a friend or policeman to Scottish arbitration. Here we see the court continuing to act as arbitration’s friend, in providing a speedy decision, under the court rules for arbitration (Rule of Court 100), which is supportive of the arbitration process. The first part award in this long running dispute had been issued in 2011 and the fourth part award in 2016. While the arbitration itself may have taken some time, a clear objective of arbitration is finality, and that is what has been delivered up by the court’s decision.

The clear message is that the court will have no truck with bad losers!

The Court of Session has refused permission for a legal error appeal from an Arbitrator’s award in a judgment which reflects its support for the arbitration process.

The court’s role in the arbitration process

The Scottish courts have a supervisory jurisdiction regarding arbitration. An application can be made to the courts in respect of various matters under the Arbitration (Scotland) Act 2010. One of these is that a party may appeal against an Arbitrator’s award on the ground that the Arbitrator erred on a point of Scots law. This is called a legal error appeal under Rule 69 of the Act.

However, the court’s powers in this area are restrained by Rule 70. This only permits an appeal with parties’ agreement, or with the leave of the court.

A dispute had arisen between two parties to a construction contract. The dispute had been referred to arbitration and an award issued in four parts. The fourth part award was challenged on the ground of legal error. There was no agreement that a legal error appeal should be made and so the application required the leave of the court.

The grounds of challenge

The challenge was in relation to the fourth part of an arbitration award, and on the grounds of three legal errors having been made by the Arbitrator. The court can only grant leave to appeal if satisfied that a three part test has been met:

  • that deciding the point will substantially affect a party’s rights;
  • that the Arbitrator was asked to decide the point; and
  • that, based on the findings of fact in the award, that the Arbitrator’s decision on the point was either obviously wrong, or where the court considers the point to be of general importance, the arbitrator’s decision is open to serious doubt.

For each of the three contended legal errors, the three part test was applied by the court and was failed. In relation to the first two legal errors, the second and third parts of the test were both failed. In relation to the third legal error, the challenge was essentially one on the findings of fact as to how to treat expert evidence, rather than a true legal error appeal and so did not constitute a legal error and ,in any event, the point was never put to the arbitrator so it failed part 2 of the test.

What do we take from this decision?

In considering such an arbitration decision I often ask myself is the arbitration judge acting as a friend or policeman to Scottish arbitration. Here we see the court continuing to act as arbitration’s friend, in providing a speedy decision, under the court rules for arbitration (Rule of Court 100), which is supportive of the arbitration process. The first part award in this long running dispute had been issued in 2011 and the fourth part award in 2016. While the arbitration itself may have taken some time, a clear objective of arbitration is finality, and that is what has been delivered up by the court’s decision.

The clear message is that the court will have no truck with bad losers!

Read the judgment in Arbitration Application No 2 of 2016