UK: Clarification On The Time Limit For Bringing A Jurisdiction Appeal In Respect Of A GAFTA Award

The Commercial Court has confirmed, in the case of PEC Limited v Asia Golden Rice Co Ltd [2012] that the 28 day time limit for bringing a jurisdiction challenge under section 67 of the Arbitration Act 1996 (the "Act") runs from the date of the first tier GAFTA award.

Background

A GAFTA award was issued on 2 July 2012 in respect of a disputed sales contract (the "Award"). The Award held that the tribunal had jurisdiction to hear the dispute and found in favour of Asia Golden Rice Co Ltd ("AGR"). PEC Limited ("PEC") appealed to the GAFTA Appeal Board. The appeal is due be heard in January 2013 and does not raise the question of jurisdiction as both parties have accepted that the GAFTA Rules do not permit appeals on jurisdiction.

The current case results from PEC's application for an extension of time for making a section 67 jurisdiction challenge up until 28 days after the publication of the GAFTA Appeal Award ("Appeal"). Despite the parties having reached an agreement that the Court had jurisdiction to, and should, grant an extension of time, Mr. Justice Hamblen produced a reasoned judgment due to "uncertainty as to the legal position".

The parties' positions

PEC's primary case was that there was no need for any extension, as time only ran from the date of the Appeal (section 70(2) of the Act). It submitted that the provisions requiring that any arbitral process of appeal, or review, should be exhausted before the 28 day time limit began to run, applied despite the fact that the GAFTA Rules did not allow for appeals on jurisdiction. In the alternative, PEC requested an extension pursuant to section 80(5) of the Act.

AGR's position was that the time for making an application under section 67 ran from the date of the Award. As this had expired, it was up to the Court to exercise its discretion to grant the extension based on PEC's evidence.

Findings

The matter turned on the interpretation of sections 70(2) and (3) which provide, in so far as is relevant:

"(2) An application or appeal may not be brought if the applicant or appellant has not first exhausted –

(a) any available arbitral process of appeal or review...

(3) Any application or appeal must be brought within 28 days of the date of the award or, if there has been any arbitral process of appeal or review, of the date when the application or appellant was notified of the result of that process. ..."

Mr. Justice Hamblen held that because the GAFTA Rules do not permit appeals on jurisdiction, the only way the jurisdiction of the tribunal can be challenged is by virtue of a section 67 application. Consequently, there is no available arbitral process of appeal or review. It follows that the time limit for bringing a section 67 application runs from the date of the first tier award, regardless of whether an appeal is submitted to the GAFTA Board of Appeal. In the circumstances, however, the Court held that it was appropriate to grant an extension of time.

Comment

This case provides welcome clarification on the time limit for bringing a jurisdiction challenge, under section 67, in respect of a GAFTA award. Parties who seek to make a jurisdiction challenge should do so within 28 days of the date of the award, regardless of whether any appeals are to be made to the GAFTA Board of Appeal. The influence of this case is likely to extend beyond GAFTA proceedings to other arbitral proceedings, including FOSFA, given the similarities in the arbitral rules regarding jurisdiction challenges. Parties should be aware of the need to make any jurisdiction challenge promptly following the publication of the first tier award to avoid the expense and uncertainty of having to make an application to Court for an extension of time.

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