Court of Appeal
National Iranian Oil Co v v Crescent Petroleum Co International Ltd and another
[2023] EWCA Civ 826
2023 July 3, 4, 5; 13
Males, Nugee, Falk LJJ
Arbitration AppealPermission to appeal On preliminary issue judge finding claimant not losing right to challenge tribunal’s substantive jurisdiction to make arbitral award before court but challenge having no realistic prospect of success Judge granting claimant permission to appeal against summary judgmentDefendants not requesting permission to appeal of judge on the right to challenge issue but seeking permission from Court of Appeal Whether Court of Appeal having jurisdiction to grant permission Arbitration Act 1996 (c 23), ss 67, 73

The claimant and the first defendant entered into a gas sale and purchase contract, which was governed by Iranian law and contained an arbitration clause. The contract was assigned to the second defendant, who entered into a gas supply agreement with a subsidiary, who in turn entered into contracts to supply gas to various third-party end users. The claimant did not perform its obligations under the contract and the defendants commenced arbitration proceedings. The tribunal, having found the claimant to be in breach of the contract, issued a remedies award, which included an amount in respect of the second defendant’s liability to the subsidiary for its lost profits on sales of gas. The claimant challenged that part of the remedies award under section 67 of the Arbitration Act 1996 on the ground that as a matter of Iranian law, the existence and/or extent of the second defendant’s liability to the subsidiary were not matters within the scope of the arbitration clause. The defendants contended that although the claimant had raised a jurisdictional objection to the tribunal’s determination of the second defendant’s liability to the subsidiary, it was different from the one it sought to raise under section 67. The defendants applied for (1) the determination as a preliminary issue that the claimant, having participated in the arbitration without raising the new objection in circumstances where it could have done so, was precluded by section 73 from raising it before the court on a section 67 claim, and (2) the summary dismissal of the claim. The judge refused the defendants’ first application, but granted the second. The claimant appealed against summary dismissal of its section 67 claim with permission of the judge. The defendants sought permission to cross-appeal.

On the appeal and the application for permission to cross-appeal—

Held, (1) permission to cross-appeal refused. In circumstances where no permission had been sought from or granted by the judge, the first question was whether the Court of Appeal had jurisdiction to grant that permission, which depended on whether the judge’s decision that the right to challenge the arbitrators’ jurisdiction under section 67 of the Arbitration Act 1996 was not lost pursuant to section 73 was “a decision of the court under this section” (ie under section 67) within the meaning of section 67(4). It was established that only the first instance court could grant permission to appeal from a decision under section 67 and that the Court of Appeal had no jurisdiction to do so. Whether a decision that a party had not lost the right to challenge an award under section 73 was a decision under section 67 or section 68 for the purpose of section 67(4) and section 68(4) was a question of statutory interpretation. It had therefore to be approached having regard to the object of the 1996 Act and the principles by which the Act had to be interpreted set out in section 1, which included the avoidance of unnecessary delay and expense and the limitation of court intervention in the arbitral process, except where expressly provided. It was clear that section 73 was entirely ancillary to sections 67 and 68. It had no relevance or application independent of a challenge to an award under one or both of those sections. A decision whether a party had lost the right to challenge an award was undoubtedly “part of the process” for determining a challenge under section 67 or section 68 and was “within the compass” of those sections. It was a preliminary question, but not a question going to the court’s jurisdiction, the answer to which determined whether the court needed to consider the merits of the section 67 or section 68 challenge. “Decision” was a broad term and the determination of a section 73 issue was naturally to be regarded as a decision under section 67 or section 68 as a matter of language, whichever way it went. There was no justification for saying that it was a decision under section 67 or section 68 if the section 73 issue was decided in favour of the award creditor , but not if it went against the award creditor. Moreover, it was in accordance with the policy of the Act, as consistently described in the case law, to interpret section 67(4) and section 68(4) as encompassing such a decision. It would be paradoxical to interpret those provisions to mean that only the first instance court could grant permission on the final decision to uphold or dismiss the challenge to an award, but that the Court of Appeal could give permission on preliminary or case management decisions when the first instance court had refused such permission. Although it might be said that the Court of Appeal could be trusted not to give permission in unmeritorious cases, and would be unlikely to do so on case management decisions, even the process of applying for such permission would cause delay and expense, while leaving the status of the award in limbo until the application had been determined. The fact that there were other provisions of the Act, such as section 9 and sections 66 and 103, which might raise broadly similar issues as to the scope of an arbitration clause as arose under section 67, but which contained no equivalent restriction on the grant of permission to appeal, was nothing to the point. There could be no justification for straining to avoid the operation of the restriction on appeals contained in section 67(4). On the contrary, that restriction was in accordance with the statutory policy of non-intervention by the court except as expressly provided. Accordingly the Court of Appeal had no jurisdiction to grant permission on the cross-appeal (paras 37, 64–69).

Athletic Union of Constantinople v National Basketball Association (No 2) [2002] 1 WLR 2863, CA applied.

ASM Shipping Ltd of India v TTMI Ltd of England [2007] 1 Lloyd’s Rep 136, CA, Sumukan Ltd v Commonwealth Secretariat [2007] Bus LR 1075, CA, Johann MK Blumenthal GmbH & Co KG v Itochu Corpn [2013] 1 All ER (Comm) 504, CA and Manchester City Football Club Ltd v Football Association Premier League Ltd [2021] 1 WLR 5513, CA considered.

(2) Appeal dismissed. The judge had not taken the wrong approach to a summary judgment application and was right to conclude that the claimant’s section 67 case had no realistic prospect of success ( paras 92, 97, 100–101, 102, 103).

Decision of Butcher J [2022] EWHC 2641 (Comm); [2023] Bus LR 235 affirmed.

David Bailey KC, Jessica Sutherland and Frederick Alliott (instructed by Eversheds Sutherland (International) LLP) for the claimant.

Ricky Diwan KC, Tariq Baloch and Moeiz Farhan (instructed by McDermott Will & Emery UK LLP) for the defendants.

Alison Sylvester, Barrister.

We use cookies on this website, you can read our Privacy and Cookies Policy. To use website as intended please Accept Cookies