ReSolution Issue 17, May 2018 | Page 7

Can defective arbitration clauses be cured?
In SEA2011 Inc v ICT Ltd [2018] EWHC 520 (Comm) the TCC was asked to consider a challenge to two partial final awards under section 67 of the Arbitration Act 1996 based on evidence that neither the claimant nor the defendant were in fact the same entities that had entered into the arbitration agreement, which was, of course, the foundation of the arbitrator’s jurisdiction.
The claimant submitted that the defendant was not a party to that agreement, because, at the relevant date, its registered name had been different and had only changed to its current name 12 months after the agreement had been entered, such that the arbitrator’s jurisdiction, as defined by the notice of arbitration, had not extended to determining the disputes that the defendant had raised.
A Sales Agency Agreement dated 28 January 2011 was entered into by SEA Inc as the principal and ICT Ltd as agent. The agreement contained an arbitration clause. At that date there was no company registered in England as ICT Ltd, but in January 2012 IN Ltd, which was in existence at the time, changed its name to ICT Ltd. In December 2011 SEA2011 was incorporated, and took over the business of SEA Inc. In 2014 disputes arose between the parties in relation to commission levels. ICT Ltd served notice of arbitration on SEA2011 Inc on 20 April 2016. The notice provided that in or around March 2012 the business of SEA Inc had been transferred to SEA2011 Inc, and that the dispute was between ICT Ltd and SEA2011 Inc. In the arbitration, ICT Ltd abandoned the argument that there had been an assignment to SEA2011 and instead argued that there was an implied contract between ICT and SEA2011 Inc. SEA2011 Inc contested the jurisdiction of the arbitrator. Its challenges were dismissed in partial awards and SEA2011 Inc appealed against the awards.
The court accepted the evidence that the corporate entities involved in the arbitration were not the same entities that had entered into the arbitration agreement, however, the court overcame this defect finding that there had been a clear mistake in the description of parties in the contract which could be readily corrected as a matter of construction. Applying the principles set out by Lord Hoffmann in Chartbrook v Persimmon Homes [2009] UKHL 38, the Judge held that there was an implied arbitration agreement between the correct entities based on the meaning which the Sales Agency Agreement would convey to a reasonable person having all the background knowledge as to the formation of the contract and how the mistake had arisen to include the incorrect corporate entities in the agreement.
Time for appeal under s69 of the UK Arbitration Act runs from the date of the award or the date of a material correction only
In Daewoo Shipbuilding & Marine Engineering Company Ltd v Songa Offshore Endurance Ltd [2018] EWHC 538 (Comm) dated 16 March 2018, Bryan J dismissed the application for permission to appeal under s69 of the English Arbitration Act 1996 by Daewoo Shipbuilding & Marine Engineering Company Limited (DSME) on the ground that the application was not made within the statutory time period provided by s70(3) of the Act and there was no reason to grant an extension to that period.
The key issue was whether the 28 day statutory period for appeal commenced on the date of the original award or the date of the correction of the award (to remedy clerical errors pursuant to s57(3) of the Act). The Court held the 28 day period commences on the date of the original award unless the correction was material to the challenge to the Award. This exception did not apply here so DSME’s application was out of time.