ASM Shipping v. TTMI (S.68 Appn.) CofA

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ASM Shipping Ltd of India v. TTMI Ltd of England
English Court of Appeal: Sir Anthony Clarke MR, Rix and Longmore LJJ.: [2006] EWCA Civ 1341: 16 October 2006
Geraldine Andrews QC, instructed by Zaiwalla & Co, for the appellant, ASM Shipping
Simon Croall, instructed by Waterson Hicks, for the Respondent TTMI
Where a judge had dismissed a challenge to an arbitration award on the grounds of serious irregularity – in this case, the alleged apparent bias of the third arbitrator - and had then refused permission to appeal under the Arbitration Act 1996 s.68(4), the Court of Appeal lacked jurisdiction to grant permission to appeal in the absence of any realistic argument that the judge's decision itself contravened the European Convention on Human Rights 1950 Art.6 (which guarantees a fair hearing before an impartial tribunal)

DMC Category Rating: Confirmed

This case note is based on a text originally written by Hew Dundas, Chartered Arbitrator, CEDR-Accredited Mediator and Expert Determiner, who is a Contributor to this website.

ASM (Owners) and TTMI (Charterers) had been engaged in a London arbitration arising out of a charterparty where Mr Duncan Matthews QC had been appointed as third arbitrator by the party-appointed arbitrators. ASM was represented by Zaiwalla & Co (Solicitors), TTMI by Waterson Hicks & Co (Solicitors) ("WH"); ASM's principal witness was Mr Moustakas ("M"), a shipbroker.  In a wholly separate (but relatively recent) arbitration (the "Other Arbitration") between entirely unrelated parties, M had been a key witness for one of the parties and WH had represented the other side and, for a short time and in respect of one preliminary issue only (which was settled), Mr Matthews had been instructed by WH as Counsel.  In these other proceedings, so M alleged, he had been the target of an attack by WH, who had alleged impropriety in M's giving discovery and had personally accused M of producing fraudulent and fabricated documents.  M alleged further that all these allegations had come to naught and that he had been completely exonerated.

On the first day of the Hearing in the present arbitration, just before he commenced giving evidence, M claimed to recognise Mr Matthews. Owners requested Mr Matthews to recuse himself (stand down) on grounds of his prior involvement with WH and M, and the consequent risk of bias. Having considered his position overnight, Mr Matthews issued a statement to the parties at the beginning of the second day of the arbitration, in which he set out the reasons why he did think it either appropriate or necessary for him to stand down. ASM protested but allowed the hearing to continue before all three arbitrators. Eventually the tribunal issued its award, which ASM took up. It was substantially in favour of TTMI.

ASM then applied to the court under s.68 of the Arbitration Act 1996, to have the award set aside on the ground of apparent bias. The judge agreed with ASM on the issue of ‘bias’, holding that Mr Matthews should have recused himself, but held that ASM’s challenge failed by virtue of s.73 of the Act, by reason of their failure to raise the objection without delay They had, in effect, waived or lost their right to object by continuing to take part in the arbitration (albeit under notice of objection) and taking up the Award. The judge stated (at §49): "Owners were faced with a straight choice: come to the court and complain and seek Mr Matthews’ removal as a decision maker or let the matter drop. They could not get themselves into a position whereby if the award was in their favour, they would drop their objection but make it in the event that the award went against them. A 'heads we win and tails you lose' position is not permissible in law as [s.73] makes clear." The judge dismissed ASM’s s.68 application accordingly and refused permission to appeal, in reliance on s.68(4) of the Act. This provides:

"The leave of the [High Court judge] is required for any appeal from a
decision of the court under this section." 

ASM then applied to the Court of Appeal for permission to appeal from the dismissal of its High Court application.  The question before the Court was whether, given the provisions of s.68(4), it had jurisdiction to entertain an application for permission to appeal from the substantive decision of the judge.  ASM contended that the judge's waiver holding was so clearly and obviously wrong that one of two consequences must follow: first, there had been no s.68 decision at all either for that reason or because, while waiver might operate as a defence to the claim of a serious irregularity, a decision on waiver was a decision on a defence to the assertion of serious irregularity not a decision on the assertion itself and, secondly, the judge's decision had been an unlawful contravention of Art.6 European Convention on Human Rights ("EHCR"), which guarantees a fair hearing before an impartial tribunal.  If the tribunal had apparently been partial as the judge had found, he had – so ASM argued - no option in law other than to set aside the award and a refusal to do so made his decision unlawful.

Distinguishing Cetelem SA v Roust Holdings Ltd [2005] EWCA Civ 618, the Court of Appeal held that there was no doubt that the judge had had jurisdiction either to grant ASM's application or to refuse it.  Whichever way the decision went, it was still a decision under s.68 and a refusal of permission to appeal was likewise a decision under that section.  It could not, therefore, be challenged by way of appeal even if the decision was wrong or, even, obviously wrong.  The fact that waiver (or indeed estoppel)
could be said to operate as a defence to a prima facie entitlement was irrelevant.

The allegation of bias had been dealt with by the judge at first instance in a public and impartial hearing and there was no apparent contravention of Art.6 in respect of either the s.68 application or in respect of the further determination whether there should be permission to appeal.  The present case was therefore entirely outside the residual jurisdiction of the Court of Appeal identified in North Range Shipping Ltd v Seatrans Shipping Corpn [2002] EWCA Civ 405.  

ASM's contention that, if a judge fails to remedy the breach of an ECHR obligation he is himself in breach of the ECHR because he has not upheld the right which the ECHR has itself guaranteed, was misguided for a number of reasons.  First, the European Court is not concerned with the merits of the decision which is under attack, but only to see that the procedure has been fair, see English v Emery Reimbold & Strick Ltd [2002] EWCA Civ 605. Secondly there is no overarching principle laid down by the ECHR that
an award tainted by apparent bias must be set aside, instead national courts are allowed to decide whether or not it should be set aside (reference was made to (i) Bulut v Austria, (1996) 24 EHRR 84 (ii) Nordström-Janzon v Netherlands (28101/95 of 27 November 1996) (iii) Suovaniemi v Finland (31737/96 of 23February 1999)).

Given the absence of any realistic argument that the judge's decision had contravened ASM's EHCR rights, the Court of Appeal concluded that, as a matter of English law, it had no jurisdiction to grant permission to appeal and the present application had necessarily to be dismissed.  Further, while there had been some argument on whether the judge's decision had been based on s.73 of the Act or on waiver at common law, nothing could turn on that distinction; permission to appeal without the judge's leave was prohibited by s.68(4) in either case. 

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