No relief for late commencement of arbitration

Once upon a time, if one was unfortunate enough to miss a contractual, as opposed to statutory, time limit for commencing arbitration, relief could be sought and often obtained from the High Court under Section 27 of the Arbitration Act 1950.

Following review by the Law Commission, it was concluded that the test which then applied – whether under hardship would otherwise be caused (if time was not extended) – was too "soft".  It consequently proposed change.

The Court may still grant relief (under what is now Section 12 of the Arbitration Act 1996) but only if:

1. The circumstances are such as were outside the reasonable contemplation of the parties when they agree the provision in question, and that it would be just to extend the time, or
2. The conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question.

The introduction of this test has had exactly the effect that was intended.  There are now significantly fewer applications for enlargement of time.  One could say that such applications are now few and far between.

However, a recent attempt to invoke the Court's power under this Section was made in the case of Expofrut SA and Others v. Melville Services Inc and Another.  The matter came on for hearing before Mr Justice Burton on 22 June who, by his judgment of 8 July 2015 (commendably quick) refused to grant the necessary extension.

In that case, cargo claimants had initiated proceedings in Belgium on 17 February 2010 against the carrier in respect of damage to a consignment of fresh fruit shipped from Argentina to Antwerp.

The claim was brought in Belgium well within time but the Belgian Court ultimately determined that the claim had to be pursued by arbitration by reason of the incorporation of the arbitration clause from the relevant charterparty into the bills of lading.  

Having reviewed the authorities on Section 12, the Judge then turned to consider the facts to see whether the conduct of the carrier made it unjust to hold the cargo interests to the strict terms of the provision in question, it being common ground that this was the only basis on which the application could succeed.

After reviewing the evidence of the two Belgian lawyers representing the parties, the Judge concluded that:

1. there was no admissible evidence of any reservations by the cargo interests of their right to refer the matter to arbitration if the Belgian Court were to decide that the arbitration clause had been properly incorporated; and

1. there was no conduct by the carrier or their representatives which made it unjust to hold the cargo interests to the strict terms of their contract. 

Separately, he concluded that there has been delay in making the application which was a further factor militating against any extension of time. 

In summary, the Judge had little difficulty in concluding that on the facts of the case before him the application did not merit the grant of an extension.  It is equally clear from the authorities so far that it will probably be a fairly unusual or exceptional case in which the Court is likely to exercise its power to extend time under this section.

[2015] EWHC 1950 (Comm)