Court finds tribunal did not err in dismissing claim because of inordinate and inexcusable delay

The claimant commenced an arbitration against the defendant. Six years later, after the limitation period had expired, the defendant applied under section 41(3) of the Arbitration Act 1996 for an order from the arbitrators that the claim should be dismissed because there has been " inordinate and inexcusable delay" by the claimant. An order can only be made under section 41(3) if the tribunal is satisfied that delay gives rise to a substantial risk that it is not possible to have a fair resolution of the issues in that claim (section 41(3)(a)), or has caused, or is likely to cause, serious prejudice to the defendant (section 41(3)(b)).

Although the tribunal found that a fair resolution was still possible (because it was not anticipated that the merits of the case would turn on the factual witness evidence), it dismissed the claim on the basis that there could be "serious prejudice" to the defendant: namely, because the defendant had had to put up security for costs, and the case ought properly to have been decided 3 or 4 years earlier. The claimant challenged that finding on the basis that the point had not been raised by the defendant, but the judge was satisfied that the prejudice resulting from the security had been an issue raised by the defendant and so the claimant had had sufficient opportunity to meet the case because the "essential building blocks" of the tribunal's reasoning had been "in play" or "in the arena" in relation to the issue, even if the argument was not articulated in the way adopted by the tribunal. Accordingly, the challenge was dismissed.

The claimant had sought to argue that the arbitrators ought to have instead ordered it to pay the costs of putting up the security in any event, but the "experienced LMAA arbitrators" proceeded on the basis that those costs would not be recoverable as costs of the arbitration. Blair J commented on this issue as follows: "it was a matter for the tribunal what weight it gave to the costs issue in deciding on the appropriate remedy. It would in my view be a retrograde step in international arbitration for the court effectively to rule out the cost of delay as a ground for striking out a claim on the basis that it could always be compensated for in an order for costs at the end of the day".