Egmatra v. Marco Trading Corporation
(England and Wales) High Court of Justice (Commercial Court), Tuckey J., July 28, 1998.
Arbitration award - application for leave to appeal - principles to apply under s. 69 of the Arbitration Act 1996 - whether question of law includes a question of foreign law - application under s. 68 of the Arbitration Act 1996 - whether refusal by tribunal to allow expert evidence to be adduced a serious irregularity.
Facts:
The applicant ("Egmatra"), as seller, and the respondent ("Marco"), as buyer, entered into two contracts for the sale of aluminium blocks. The contracts were governed by Swiss law and provided for arbitration under London Metal Exchange Rules. Disputes arose over Marco's allegation that the contracts required Egmatra to deliver blocks that had at least 97% aluminium content and it had failed to do so. Two LME arbitrators were appointed, one by each party. With the parties' consent, they determined the matter on documents only. They upheld Marco's claim.
Egmatra applied for leave to appeal under s. 69 of the Arbitration Act 1996 ("the 1996 Act") on the basis that the arbitrators' construction of the contract, as one that required blocks with a 97% content, was obviously wrong and because the arbitrators had failed to apply Articles 38 and 39 of the Vienna Convention, applicable under Swiss Law, in deciding whether the goods were rejected in time. Alternatively, Egmatra applied under s. 68 of the 1996 Act on the grounds that there was a serious irregularity in the conduct of the arbitration because the arbitrators refused to allow it to submit expert evidence and because they had failed to deal properly with issues that arose under the Vienna Convention.
Held:
The applications were dismissed.
On the s. 69 application, the court must be satisfied that the arbitrators were obviously wrong on a question of law. It was not enough to say that maybe they were wrong or even that there was only a possibility they were right. In this case there was obviously material from which the arbitrators could reach the conclusion they did on the meaning of the contract. Their decision was not obviously wrong. On the rejection point, while the arbitrators did not specifically answer the questions posed by the articles 38 and 39 of the Vienna Convention, they did not obviously misapply those provisions so as to justify leave to appeal being given. Furthermore, the contract was subject to Swiss law and its construction and interpretation were, therefore, matters of Swiss law for the arbitrators to determine. Swiss law was foreign law and, in applying foreign law, the arbitrators were not dealing with a question of the laws of England and Wales. This was a complete answer to the application for leave for, by s. 69(2)(1) of the 1996 Act, appeals on questions of law were only permitted in respect of questions of the law of England and Wales.
On the s. 68 application, it must be shown that one of the defined categories of serious irregularity had occurred and that it had caused or would cause substantial injustice to the applicant. Section 68 was not a soft option as an alternative to a failed application for leave to appeal. The LME rules gave the tribunal wide powers to determine the procedure to adopt and to refuse or limit the appearance of factual or expert witnesses and, in the case, the parties had agreed a documents only procedure.
The arbitrators had, following submissions by both parties, rejected Egmatra's application to submit expert evidence to assist the tribunal on the grounds that they had sufficient expertise to deal with the matters in dispute. There was nothing to suggest that they did not have the requisite expertise or that they would not have allowed Egmatra's expert evidence if they had felt unqualified to deal with the matter. There was nothing that could possibly be characterised as a substantial injustice by their refusal to allow this evidence to be put before them. Neither could they be criticised for not dealing with the Vienna convention points in the way that Egmatra would have liked. If there was anything in this point it would justify giving leave to appeal. As there was not, it did not get Egmatra anywhere under s. 68 of the 1996 Act either.
For the applicant : Ms E Birch (instructed by Messrs Pennningtons).
For the respondent: Mr T Landau (instructed by Messrs Dibb Lupton Alsop).
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