Royal Courts of Justice
Strand, London, WC2A 2LL
Before :
THE HONOURABLE MR JUSTICE EDER
Between :
NIKOLA ROTENBERG | Claimant |
- and - | |
SUCAFINA S.A. | Defendant |
Alexander Gunning (instructed by Gordons Solicitors) for the Claimant
Thomas Raphael (instructed by Hill Dickinson LLP) for the Defendant
Hearing dates: 25 February 2011
Judgment
Mr Justice Eder:
Introduction
This matter arises out of certain arbitration proceedings conducted under the Arbitration Rules (the “Rules”) of the Coffee Trade Federation Limited (the “CTF”) and concerns, in particular, the status of what are described as Interim Appeal Awards of the Appeal Board made pursuant to Rule 48 and an application under s.79 of the Arbitration Act 1996 (the “1996 Act”) for an extension of time for compliance with the requirements of Rule 52. (I should mention that I was told that the CTF has joined forces with the British Coffee Association (“BCA”), that the two organisations are now operating under the name of the BCA and that the intention is that the CTF will in due course be wound up. However, it was common ground that this does not affect the questions which I have to determine.)
I attach as an Appendix to this Judgment, extracts from the Rules including the relevant Rules to which I make reference below. In this Judgment, reference to a numbered Rule is to those Rules.
The claimant (“Mr Rotenberg”) is a Belgian citizen but was at all material times a resident of the Democratic Republic of the Congo (“the DRC”). He was a co-managing director and shareholder in a Congolese company known as ILFEC which was a general trading company and had expanded its operations into the coffee market.
In 1999, when civil war broke out in the DRC, ILFEC expanded its activities in the north of the DRC and into the Central African Republic (the “CAR”), where it set up a local company known as CAFECA to export coffee from the CAR itself and also to supervise the export of coffee coming from ILFEC’s operations in the north of the DRC, routing it through the CAR for final shipment from Cameroon.
The Defendant (“Sucafina”) is and was at all material times a Swiss company which specialises in coffee trading.
The original arbitration
On or about 12 September 2002, Sucafina appointed Mr A Kerr of Coffee AG to act as the arbitrator in a dispute which had arisen in relation to 64 contracts for the supply of coffee dating from between about June 1998 and March 2001.
The contracts incorporated the terms and conditions of the European Contract for Coffee 1996 Edition and provided for arbitration in London. The arbitration was subject to the Rules and, in particular, what is described as the “two-stage procedure” under the Rules. This involved a “first stage” where disputes are decided by two arbitrators or, should they be unable to agree, an umpire. Thereafter, under the Rules, there was the possibility of a “second stage” whereby the parties were entitled to appeal against a first stage award to a board of appeal (the “Appeal Board”).
The arbitration was initially commenced by Sucafina against Mr Rotenberg, ILFEC and CAFECA. However, in its Statement of Case served in accordance with the Rules, Sucafina presented its claim only against Mr Rotenberg and claimed the sum of US$880,424.84 under the contracts together with interest and costs.
In default of appointment of an arbitrator by Mr Rotenberg, Mr John Brown was appointed as second arbitrator on 23 December 2002. The arbitrators appointed Mr Paul Wilkes to act as umpire.
Sucafina and Mr Rotenberg exchanged submissions in relation to the arbitration. From those submissions, it was clear that the principal issue between the parties was whether the contracts had been made by Sucafina with Mr Rotenberg personally or with ILFEC or CAFECA.
The arbitrators sat in London on about 3 May 2004 and on subsequent dates to evaluate the submissions and supporting evidence but were unable to reach a decision. Accordingly and pursuant to Rule 15, the arbitrators handed the matter over to the appointed umpire, Mr Wilkes, on 20 July 2004.
By an award dated 22 August 2005 and published on 25 August 2005 (“the original award”), Mr Wilkes adjudged and awarded that the losses arising under the disputed contracts were recoverable from Mr Rotenberg and held that Mr Rotenberg was liable to pay US$880,456.85 to Sucafina, together with interest and costs. Mr Rotenberg was also required to pay the arbitration fees totalling £4,500.
The appeal
Pursuant to Rule 32, a party to an arbitration is permitted to appeal to a board of appeal, consisting of 5 members of the CTF panel, appointed by the CTF. Pursuant to Rule 42, an appeal constitutes a new hearing and fresh evidence will be admitted.
Mr Rotenberg exercised that right of appeal on or about 22 September 2005 and submitted his Statement of Case on 22 December 2005. The gist of that case was that the umpire had erred in finding the contracts to have been made with Mr Rotenberg.
A Statement of Defence was served by Sucafina on 27 February 2006 and a Reply was served by Mr Rotenberg on 17 March 2006. Sucafina served Rejoinder Submissions on 24 April 2006.
On 8 June 2006 the CTF notified the parties that a hearing was to be held on 30 June 2006. Following an application by Sucafina that Mr Rotenberg should provide security for costs, on 6 July 2006 the CTF ordered Mr Rotenberg to pay the sum of £25,000 to the CTF by way of security for its fees of the arbitration. That payment was made by Mr Rotenberg on 10 July 2006.
The First Interim Appeal Award of the Appeal Board
By a fax letter dated 4September 2007, the CTF wrote to Mr Rotenberg’s solicitors (Gordons) and Sucafina informing them that the Appeal Board had made an Interim Award and that such award would be published following receipt of a further deposit of £10,600 to be made by Mr Rotenberg. That deposit was duly paid and acknowledged by the CTF in its fax letter dated 28 September 2007.
On 1 October 2007, the CTF wrote to both parties enclosing what it described as “Interim Appeal Award 1003T” (“the First Interim Appeal Award”). That interim appeal award was expressed to be made pursuant to Rule 48 of the Rules which provided: “The board of appeal shall have the power to make an interim award or awards”.
By the First Interim Appeal Award, the Appeal Board found that all bar 9 of the relevant contracts were made with ILFEC and CAFECA. The operative part of the First Interim Award was contained in paragraphs 111-115 which stated as follows:
“Under the powers given to it by rule 48 of the CTF Arbitration Rules the board of appeal hereby makes the following INTERIM AWARD:
111. That for the Contracts where it found that ILFEC or CAFECA were the sellers Sucafina’s claim against Mr Rotenberg is dismissed and the board of appeal’s jurisdiction ceases;
112. That for the Contracts where it found that Mr Rotenberg was the seller Sucafina’s claim against Mr Rotenberg stands;
113. That therefore, but for the Contracts mentioned in 112, the decision of the umpire is overturned and the appeal is upheld;
114. That after hearing submissions as to quantum it will make an award as to the amount of Sucafina’s claim under these Contracts; and
115. After publishing the award under 114 it will direct the parties to make submissions on costs.”
At the very end of the First Interim Appeal Award, the Appeal Board also gave directions with regard to the timetable for the service of the parties’ submissions on quantum and stated: “The board stresses that it will only look at submissions on quantum and that it will ignore any submissions relating to any other matter.”
The First Interim Appeal Award was an unqualified success for Mr Rotenberg. Whereas the umpire had originally found that he had been a party to 64 contracts and liable to pay US$880,424.84 to Sucafina in respect thereof, the Appeal Board had found that Mr Rotenberg was only a party to 9 contracts. Further, in respect of those 9 contracts, Mr Rotenberg’s position was that no monies were in fact due from Mr Rotenberg to Sucafina and that, on the contrary, Sucafina owed Mr Rotenberg US$161,421.42.
On 26 October 2007, Sucafina made an application to the Appeal Board, purportedly pursuant to s.57 of the Arbitration Act 1996 (the “1996 Act”). On 19 November 2007, the CTF wrote to the parties informing them that the Appeal Board had considered Sucafina’s application, that it did not fall within s.57 of the 1996 Act and that it was, in effect, a request to reconsider its decision which the Appeal Board was not empowered to do. The body of the letter stated: “In its Interim Award the board of appeal made it clear that it would only look at submissions on quantum or costs. Therefore its jurisdiction to look at any other matters has ceased.”
The Second Interim Appeal Award of the Appeal Board
Mr Rotenberg served his short quantum submissions in October 2007, claiming the US$161,421.42 payable under the 9 contracts made with him. Sucafina contested that claim on 8 November 2007, contending that it was not open to Mr Rotenberg to advance a counterclaim. Further short submissions were exchanged in November 2007.
On 21 November 2008, the CTF wrote to the parties enclosing what was described as “Interim Appeal Award 1003T relating to quantum” (“the Second Interim Appeal Award”). The operative part of the Second Interim Appeal Award stated as follows:
“Under the powers given to it by rule 48 of the CTF Arbitration Rules of the board of appeal hereby makes the following INTERIM AWARD:
42. That Sucafina pay Mr Rotenberg the sum of US$161,421.42 but only after it has received payment for the outstanding balance from ILFEC/CAFECA.
43. That Sucafina pay Mr Rotenberg interest on the above amount from the date the amounts became due after the date when payment is made but only after it has received interest payment on the amount due to it from ILFEC/CAFECA and at the same rate.”
Preparations for the Final Award of the Appeal Board
In the Second Interim Appeal Award, the Appeal Board gave directions for the exchange of written submissions by the parties on costs and stated: “The board stresses that it will only look at submissions on costs and that it will ignore any submissions relating to any other matter.”
Pursuant to those directions, costs submissions were exchanged between the parties. The gist of Mr Rotenberg’s case was that costs should follow the event, that he had been successful in his appeal and that accordingly he should be paid his costs of the arbitration, including the costs relating to the original award. The gist of Sucafina’s case was that it had succeeded on the contracts that were found to have been made with Mr Rotenberg (even though it had been found liable to Mr Rotenberg in respect of those contracts) and that the Appeal Board had no jurisdiction to order costs in favour of Mr Rotenberg in respect of contracts that were not found to be made with him.
On 9 November 2009, the CTF notified the parties that the appeal was completed and that the Final Award would be published and made available upon payment of the fees and expenses of £38,850 less the amount of the deposit held by the CTF, in the sum of £36,600, making a net amount payable of £2,250.
By 14 December 2009, neither Mr Rotenberg nor Sucafina had paid the sum of £2250 referred to in that letter and, on that date, the CTF wrote to both parties confirming that payment had not been received.
On 16 December 2009, the CTF again wrote to the parties referring to and enclosing a copy of Rule 52 and, in accordance with Rule 52(c)(i), called upon the parties to pay the outstanding balance of £2,250.00.
On the same day i.e. 16 December 2009, Sucafina gave instructions for payment of that sum and wrote to the CTF (with copy to Gordons) in the following terms:
“We thank you for your facsimile today.
We enclose a copy of our payment instruction for the amount of GBP 2250.
We wish to make it clear that this payment should be considered as out compliance with Rule 52c(ii) and not be considered as a wish ourselves to take up the The Appeal Award.
We understand that as per Rule 52 c, the original Award CTF 1003T is now to be considered as final and binding.
We would welcome your confirmation that our understanding is correct by return.”
On 21 December 2009, instructions were given by or on behalf of Mr Rotenberg for payment of the sum of £2,250. On the following day, Gordons wrote to the CTF confirming that such payment instruction had been given.
By letter dated 22 December 2009 the Secretary to the CTF wrote to the parties stating that after due consideration, he did not believe that he was permitted to publish the Final Award. As stated in that letter, this was because on 9 November 2009, the parties had been notified that the Final Award would be published on payment of the sum of £2,250 and the payment of that sum had not been received within the 30 day period referred to in Rule 52 c) i.e. by 9 December 2009. The letter ended with the statement: “In respect of the original Award of the Umpire being final and binding, this is referred to in Rule 52 c) para 1”
On 3 February 2010, Sucafina wrote to Gordons attaching 3 debit notes and requested payment within 7 days, stating that in the event of non-payment they would take all necessary steps “to enforce The Award”. The debit notes in question were as follows:
Debit Note FS31307 refers to the “Awarded Principal Sum plus interest to date of publication” and is in the sum of US$1,001,725.19;
Debit Note FS31308 relates to the “Awarded Costs of reference plus interest to date of publication” and is in the sum of US$28,560.63; and
Debit Note FS31309 relates to “Arbitration Fees plus Legal Fees to February 2009”.
On 15 February 2010, the CTF wrote to the parties confirming that the CTF had been credited with the sum of £2,250 made on behalf of Mr Rotenberg on 23 December 2009 i.e. after the same amount had been received from Sucafina on 22 December 2009. The letter stated that £2,250 was therefore superfluous and had to be returned to one of the parties: “I have decided that the funds be returned to the sender or alternatively payment be made to Gordons should I be so requested.” On 17 February 2010, Gordons wrote to the CTF asking for the payment to be sent to them. On 22 February 2010, the CTF replied by fax confirming that a cheque in the sum of £2250 had been sent to Gordons.
On 23 February 2010, Sucafina wrote to the CTF as follows:
“Further to your facsimile of the 22nd December 2009, and for the purposes of enforcement, we would be very grateful if you would kindly issue us with a letter confirming:
Quote
1. Award No. 1003T of The Coffee Trade Federation Ltd published on the 25th August 2005 (“The Award”) in the dispute referred to it by Nikola Rotenberg and Sucafina S.A. became final and binding on the parties on the 9th December 1999 pursuant to Rule 52 c) of The Coffee Trade Federation Ltd Arbitration Rules (1999 edition) (“The Rules”).
2. Under The Award referred to in paragraph 1 above, it was awarded that Mr Rotenberg shall pay Sucafina S.A. US$ 880,456.85 together with a) interest thereon at LIBOR plus 2% from 21st March 2002 to be capitalised annually b) costs of US$ 25,000.00 and also that Mr Rotenberg shall pay arbitration fees and the fees of The Coffee Trade Federation Ltd in the amount of GBP 4,500.00
3. The parties failed to take up an unpublished final appeal award which was advised to the parties on the 9th November 2009 under Rule 52 b).
4. As a result of the operation of Rule 52 c) of The Rules, which made The Award referred to in paragraph 1 final and binding on the parties, the final appeal award referred to paragraph 3 above and interim appeal awards dated 1st October 2007 and 21st November 2008 are not binding on the parties, and we do hereby so confirm.
5. Under Rule 52 c) ii) of The Rules, it is a pre-condition of enforcement of the original award that all outstanding fees, costs and expenses so due to The Coffee Trade Federation Ltd shall have been paid. On the 22nd December 2009, The Coffee Trade Federation received GBP 2,250.00 from Sucafina S.A. in full settlement of the amount which The Coffee Trade Federation Ltd had on the 16th December 2009 called upon the parties to pay it and we do hereby so certify. In addition, Sucafina S.A. had paid the amount of GBP 4,500.00 to The Coffee Trade Federation Ltd which Mr Rotenberg was required to pay under The Award (referred to in paragraph 1 above) and we do hereby so certify.
6. We further confirm that there are no further fees, costs and expenses due to The Coffee Trade Federation Ltd from the parties in relation to this dispute or any one of them.
7. Accordingly, The Award (referred to in paragraph 1 above) therefore became enforceable on the 22nd December 2009, and we hereby do so confirm.
8. In addition, under Rule 52 c) ii) Sucafina S.A., having made the payments of GBP 4,500.00 and also GBP 2,250.00 to The Coffee Trade Federation Ltd as mentioned in paragraph 3 above, are entitled to recover these amounts from Nikola Rotenberg. For this purpose, The Award (referred to in paragraph 1 above) shall be deemed to include an additional provision that Nikola Rotenberg is liable to pay these amounts to Sucafina S.A. in addition to the amounts set out in The Award (referred to in paragraph 1 above) and we hereby do so confirm.
Unquote”
Mr Rotenberg’s applications
In light of the above and following further correspondence, Mr Rotenberg issued a Claim Form in this Court dated 23 February 2010 seeking the following relief:
An Order pursuant to section 79 of the Arbitration Act 1996 for an extension of the time limit under Rule 52 of the Coffee Trade Federation’s Arbitration Rules by which the final appeal award of the Board of Appeal of the Coffee Trade Federation in Appeal 1003T should be taken up until 21 days after the hearing of this application; alternatively
A declaration that in the event that the final appeal award is not taken up, the interim awards published by the Board of Appeal of the Coffee Trade Federation on 1 October 2007 and 21 November 2008 remain final and binding between the parties.
There was some debate between the parties as to the order in which these two applications should be considered. In the event, it was agreed that I should consider, first, the application for a declaration; and, second, the application under s.79 of the 1996 Act.
Mr Rotenberg’s claim for a Declaration
There was also initially a debate before me as to whether I had jurisdiction to make the declaration and whether, even if I had jurisdiction to do so, I should do so or should decline to exercise it on the basis that any issue as to the status of the First and Second Interim Appeal Awards was itself a dispute which fell within the original arbitration agreement and accordingly had to be referred to arbitration in accordance with the Rules. However, in the event it was agreed by the parties that I had the necessary jurisdiction and both could and should determine the issue raised by the claim for a declaration.
The starting point is Rule 2 which expressly provides in effect that the provisions of the 1996 Act shall apply to every arbitration and/or appeal under the Rules “….save insofar as such provisions [are] expressly modified by, or are inconsistent with, these rules.” Accordingly, before considering the status of the First and Second Interim Appeal Awards and the scope and effect of the relevant Rules, it is convenient to start with a brief consideration of the relevant provisions of the 1996 Act.
For present purposes, the following points are, in my judgment, important.
First, sections 46 to 58 of the 1996 Act deal with the “award”. In particular, s.58(1) provides: “Unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding both on the parties and on any persons claiming through or under them.” S.47 is headed “Awards on different issues, &c.” and provides: “Unless otherwise agreed by the parties, the tribunal may make more than one award at different times on different aspects of the matters to be determined.” As appears from paragraph 226 of the Report of the Departmental Advisory Committee on Arbitration Law (the “DAC”) dated February 1996, this was considered to be a very important provision i.e. to enable the arbitral tribunal to select particular issues for early determination, not necessarily on the basis that they will be legally determinative of the entire litigation, but where they may well be commercially determinative, in the sense that a decision is likely to help the parties to resolve their other differences themselves without the need to spend time and money on using lawyers to fight them out (see para 227 of the DAC Report).
The wording of s.47 of the 1996 Act is to be contrasted with the former s.12 of the Arbitration Act 1950 which was concerned with the power to make an “interim award”. Importantly, paragraph 233 of the DAC Report stated in relation to what became s.47 of the 1996 Act as follows: "It might also be noted that we have been careful to avoid the use of the term "interim award”, which has become a confusing term, and in its most common use, arguably a misnomer.” Although not explicitly stated, the reason why, in my judgment, the use of the term “interim award" is described as a confusing term and arguably a misnomer is because the word “interim” is potentially ambiguous and suggests (or at least arguably suggests) something other than a permanent binding decision. An award made pursuant to s.47 of the 1996 Act is not “interim” in that sense. Such an award may not be "final" in the sense that it deals with only some but not all of the issues in the arbitration; but (unless otherwise agreed by the parties) such an award will be final and binding i.e. it will (subject to any appeal or other proper challenge) constitute a permanent final decision as to the matters dealt with and determined in it. That is the result of a combination of s.47 and s.58 of the 1996 Act. Bearing in mind what is said in the DAC Report and in order to avoid any possible confusion, it is, in my judgment, important to avoid describing an award made pursuant to s.47 of the 1996 Act as “Interim Award”. A much better term (and one which is, I understand, commonly used) is “Partial Award pursuant to s.47 of the 1996 Act”.
Second, s.39 of the 1996 Act is, as its heading indicates, concerned with the power of an arbitral tribunal to make what is referred to as “provisional awards”. It is perhaps a curious feature of the section that, apart from the heading, there is no reference in the body of the section itself to the making of any “award” as such; rather, the section refers to the power “to order” (s.39(1)) and the making of a “provisional order” (s.39(2(a)) or an “order to make an interim payment” (s.39(2)(b)). In any event, it is important to recognise that there is (as stated in paragraph 202 of the DAC Report) a “sharp distinction” between an award under s.39 of the 1996 Act and one made pursuant to s.47 of the 1996 Act. In particular, unlike an award made pursuant to s.47 of the 1996 Act, s.39 of the 1996 Act is concerned (as stated in subsection (1)) with the power of the arbitral tribunal “..to order on a provisional basis any relief which it would have power to grant in a final award.” As there stated, any relief granted pursuant to such a power is “provisional” only i.e. it is not final and binding.
This is further confirmed by s.39(3) of the 1996 Act which expressly provides as follows: “Any such order shall be subject to the tribunal’s final adjudication; and the tribunal’s final award, on the merits or as to costs, shall take account of any such order.” Another striking difference between ss.39 and 47 of the 1996 Act is that whereas the power under s.47 applies “unless otherwise agreed by the parties”, the reverse is the case with regard to s.39 i.e. the tribunal has no power to make a provisional award under s.39 unless the parties agree to confer such power on the tribunal – see s.39(4) of the 1996 Act. The sharp distinction between s.39 and s.47 is further emphasised by the last part of s.39 which provides: “This does not affect its powers under section 47 (awards on different issues, &c.)”.
Third, quite apart from the power to make a partial award under s.47 of the 1996 Act and a provisional award under s.39 of the Act, it is important to note the other general powers of the arbitral tribunal under s.38 of the 1996 Act, in particular under s.38(4) to give “directions” in relation to any property which is the subject of any proceedings or as to which any question arises in the proceedings and which is owned by or is in the possession of a party to the proceedings for the purposes stipulated in sub-sections (a) and (b).
Against that background, it is convenient to make certain observations about the Rules.
First, I have already referred to Rule 2 which makes plain that the provisions of the 1996 Act apply “save insofar as such provisions [are] expressly modified by, or inconsistent with, the rules”. It follows that pursuant to s.58 of the 1996 and “unless otherwise agreed”, an award by the tribunal will be “final and binding”. It also follows that, again “unless otherwise agreed”, the tribunal will have a power to make a partial award pursuant to s.47 of the 1996 Act and that, for the reasons stated above, such an award will be final and binding with regard to the matters dealt with and determined in it. As I have already noted, the DAC considered that the provision granting such power (which subsequently became s.47 of the 1996 Act) was very important. In my judgment, there is nothing in the Rules which might constitute some other agreement so as to exclude or to displace that general power to make such a partial award.
Second, I note in passing both Rule 26 and Rule 47 which are concerned with the making of interim orders. Such provisions sit side-by-side with Rule 27 and Rule 48 which are headed “Interim Award”. The use of the term “interim award” in the Rules both in Rule 27 (relating to the first stage procedure) and, in particular, Rule 48 (relating to the appeal procedure) is confusing for the reasons stated above. In particular, when read in isolation, it is unclear whether it is referring to a power to make (a) a partial award which is final and binding (i.e. such as envisaged by s.47 of the 1996 Act), (b) a provisional award (i.e. such as envisaged by s.39 of the 1996 Act) or (c) both.
In its opening written submissions, it was in effect Sucafina’s submission that Rule 48 did not refer to or otherwise include a power to make a partial award which is final and binding under s.47 of the 1996 Act. In particular, Sucafina submitted that consistent with the intended operation of the Rules considered as whole:
It appears from Rules 48 and 49 that interim appeal awards are not intended to be final and binding independent of the final Appeal Award at all. Only the final Appeal Award (which has to be collected in time under 52(c)) is “final and binding”, and only it “shall constitute the arbitration award”: see Rule 49. Any interim award will derive any final force from ratification by the Appeal Award, but not otherwise.
It is the systematic approach of the CTF rules that withdrawal, invalidity, or other infraction by the appellant in relation to the appeal, leads to the whole appeal process falling away, and the original award becoming “final and binding”: see Rule 33 (last para); 34 (second para); 41 (first para); 42(g); 52(c). The provisions of Rule 52(c) are merely one example of this.
The draftsman of the CTF rules is most unlikely to have intended that interim appeal awards would override the original award so far as the interim appeal awards extended, with the Original Award having a final and binding residual effect to the extent not dealt with by the interim appeal awards. This would produce in many cases very difficult, and often irresoluble, problems of reconciliation of the terms of the Original Award and the interim appeal awards – for example where an interim appeal award partly reversed liability but did not address quantum. The better construction is that when the Original Award becomes final and binding under Rule 52, the appeal process is unwound, and any interim appeal awards on the merits cease to have effect, at least to the extent inconsistent with the Original Award.
It will be necessary to consider the particular awards made in the present case by the Appeal Board. But, in general terms, I am unable to agree with this analysis of the Rules for a number of reasons.
First, it begs the important question as to what is meant by an “interim award”. At the very least, it is ambiguous as to whether that term as it appears in Rule 48 is used to cover both partial and provisional awards. Given that the power to make a partial award under s.47 of the 1996 Act exists “unless otherwise agreed”, I accept that Rule 48 might arguably be said to be superfluous to the extent that it covers the former (i.e. a power to make such a partial award) and that for that reason Rule 48 should be read as not including the power to make a partial award. But it does not seem to me that such potential superfluity should necessarily lead to a conclusion that Rule 48 is to be read narrowly as, in effect, being limited only to the power to make a provisional award i.e. one which is not final and binding.
Second, it seems to me that the much better construction of Rule 48 is one which gives effect to (or at least is consistent with) the general desirability of an arbitral tribunal having a power to make a partial award which is final and binding; and that, on this basis, Rule 48 should be read as including a power to make such a partial award. I suppose that an alternative approach might be to say that even if Rule 48 is restricted to the power to make a provisional award, it does not affect the general power to make a partial award under s.47 of the 1996 Act which (although not specifically referred to in the Rules) exists simply by virtue of s.47 of the Act itself and is not otherwise excluded by agreement. However, that latter approach smacks of being somewhat over-complicated.
Third, I do not accept that there is anything in Rule 52(c) which is inconsistent with the above or necessarily leads to a different conclusion. In my judgment, Rule 52 (c) is generally concerned with the ordinary situation in which a dispute is resolved by the Appeal Board in a single award and where (i) the Secretary notifies that the appeal award is ready and can be taken up and will be published upon payment of the fees, costs and expenses and (ii) that appeal award is not taken up within 30 days of the date of the said notification. To my mind, it has no retrospective unwinding effect in circumstances where, for example, the Appeal Board issues and publishes one or more partial awards intended to be final and binding in respect of matters determined therein without giving any notice under Rule 52(b) prior to publication of such partial award(s). In those circumstances, such partial award(s) will be final and binding in accordance with the terms of such award(s). Rule 52(c) will have no retrospective application simply because there has been no “said notification” in advance of publication i.e. no notification within Rule 52(b) in advance of publication of such partial award(s).
On behalf of Sucafina, it was argued that this construction of Rule 52(c) gave rise to various problems. In particular:
Alleged problem 1
The first problem alleged by Sucafina is that “a party in the position of Mr Rotenberg that feared an unfavourable result under a later interim appeal award which threatened to swallow up earlier gains (for example by an order as to costs) could deliberately choose not to comply with Rule 52(c) in order to ensure that an earlier interim appeal award was intact”. On behalf of Mr Rotenberg, it was submitted that this problem does not arise in this case because (it is said) there is no question of Mr Rotenberg fearing an unfavourable result under the third award. On the contrary, it is said, he expects to be paid his costs. However, it seems to me highly unlikely that this problem will arise generally. If an appellant suspects that a later interim appeal award will swallow up earlier gains, then if he does not want to take up the award, no doubt the respondent will.
Alleged problem 2
The second problem alleged by Sucafina is that “from the CTF’s perspective, the dependence of interim awards on final Appeal Awards would be important because it is the withholding of the final Appeal Award which is the CTF’s leverage to obtain its costs”. On behalf of Mr Rotenberg, it is again said that such alleged problem is not one which arises in this case. The CTF has been paid all of its costs. Indeed it was paid the final sum twice. In any event, it seems to me highly unlikely that this is a problem which will arise generally. A tribunal can gain leverage over the parties in relation to its costs by seeking deposits (under, for example, Rule 34) or through making publication of the award dependent upon payment of its costs. However, that is a leverage which exists and is exercised or at least can be exercised in relation to each stage of the proceedings and, in particular, each award as it is published. The CTF does not require the leverage of cancellation of the entire appeal process as leverage for the award on costs at the end of the day.
Alleged problem 3
The third problem alleged by Sucafina is that “If interim awards could remain binding without proper payment against Appeal Awards, this could enable parties to evade paying the CTF”. This seems to be a repetition of the previous alleged problem.
Alleged problem 4
The final problem alleged by Sucafina is said to arise from a supposed “potential incoherence produced by having to relate the remnants of the original award to the interim awards”. That is not a problem which arises in at least this case. If Rule 52(c) is read naturally, it simply does not apply where there are multiple appeal awards. Once an “original award” is superseded in whole or in part by a final and binding appeal award, it is the appeal process that finally determines the rights and interests of the parties.
The effect of the First and Second Interim Awards
So far, I have considered the Rules in the abstract. It remains necessary to consider the specific circumstances that arise in the present case.
As already stated, the First and Second Interim Appeal Awards were both expressly stated to be made under the powers given to the Appeal Board by Rule 48. For the reasons set out above, I do not read Rule 48 as being limited to the power to make awards which are provisional only and which are not final and binding in relevant sense. It is plain from both those awards, in particular those parts of the awards which I have quoted above, that they were made and published in terms which were and were objectively intended to be final and binding with respect to the matters set out therein. Moreover, there is nothing in those awards to suggest that the validity, efficacy or finality of such awards as to the matters determined therein were in any way subject to or conditional upon any future payment of any fees, costs or expenses. In my judgment, in accordance with ss. 47 and 58 of the Act, those awards stand as final and binding between the parties with regard to the matters determined therein. Furthermore, in my judgment, this is so regardless of any subsequent events and, in particular, regardless of events concerning the making of the intended Final Award with regard to costs.
So far as Mr Rotenberg is concerned, it is accepted that the CTF notified the parties on 9 November 2009 that the Final Award would be published and made available upon payment of the net amount of £2250; that that sum was not paid and such Final Award was not taken up within the 30 day time limit stipulated in Rule 52(c); and that Mr Rotenberg missed the “deadline” by some 14 days. However, in my judgment, the failure to pay such sum or to take up the Final Award within that period do not have any retrospective unwinding effect on the previous First and Second Interim Appeal Awards which were, as I have already concluded, final and binding on the parties with respect to the matters determined therein. This is so for two main reasons. First, if (as I have concluded) the First and Second Interim Appeal Awards were final and binding in respect of the matters determined therein at the time they were made and published, it would be odd if not bizarre if such conclusion were somehow reversed by these subsequent events. Although I am willing to suppose that such a result might be achievable by agreement of the parties, it seems to me that very clear words indeed would be needed to have such a result. Second, there are no such clear words in the present case. In particular, Rule 52(c) has no application to the circumstances of the present case for the reasons stated above.
This leaves for consideration what I consider to be the most difficult point. Absent an extension of time under s.79 of the 1996 Act, it seems to be common ground between the parties that the deadline for the payment of the sum of £2250 and the taking up of the intended Final Award has passed and that, in effect, such Final Award can never be made or published. That being so, what is the position with regard to the outstanding issue which the Appeal Board was intending to deal with in that Final Award i.e. costs including the arbitration fees? Ex hypothesi, there can be no award by the Appeal Board dealing with the costs of the appeal process. As to these, it was accepted on behalf of Mr Rotenberg that (absent an extension under s.79) this is indeed the position with the result that Mr Rotenberg will be unable to recover and will have wasted all of the costs which he has incurred in pursuing his appeal. As I understood, that position was also accepted on behalf of Sucafina (albeit for slightly different reasons).
But what of the costs at the first tier stage? These were, of course, dealt with in the original award. However, in my judgment, the effect of the First Interim Appeal Award was and is to set aside and to supersede the original award in toto including the order in respect of costs (including arbitration fees) contained in the original award and that this remained the position notwithstanding Rule 52(c). Although there is no express statement in the First (or Second) Interim Appeal Award(s) specifically reversing or setting aside the order as to costs made in the original award, it seems to me that that was and is the effect of the First Interim Appeal Award having regard , in particular, to paragraphs 111-115 of the First Interim Appeal Award. In my judgment, the result is that the costs (including arbitration fees) at the first tier stage have not been determined and (absent an extension under s.79 of the 1996 Act) stand in a position similar to the costs of the appeal process i.e. cannot now be determined by the Appeal Board.
The intended Final Award
Given my conclusions as set out above, the financial consequences relating to the position of the intended Final Award are of much lesser significance i.e. those consequences relate only to the incidence of costs (including arbitration fees) in the arbitral process. Nevertheless, such financial consequences are not insignificant. As already stated, under the original award, in addition to the principal amounts held recoverable by Sucafina, Mr Rotenberg was held liable to pay Sucafina’s costs (US$25,000) and the arbitration fees (£4500). In the course of the appeal process, Mr Rotenberg has also been required to and has paid deposits in respect of further arbitration fees. In addition, both Sucafina and Mr Rotenberg have of course continued to incur their own legal costs in the course of that appeal process.
At the hearing before me, it was submitted on behalf of Mr Rotenberg that in light of his substantial success in the arbitration it was to be expected that Sucafina would be ordered to pay the whole or a substantial proportion of Mr Rotenberg’s costs including the costs relating to both the first stage and the appeal. This is not for me to determine. I proceed on the basis that Mr Rotenberg has at least an arguable claim for such an order in his favour.
It is in those circumstances that Mr Rotenberg seeks to extend the 30 day time limit under s.79 of the Arbitration Act 1996.
Mr Rotenberg’s application pursuant to s.79 of the Arbitration Act 1979
Section 79 of the 1996 Act provides in material part as follows:
“(1) Unless the parties otherwise agree, the court may by order extend any time limit agreed by them in relation to any matter relating to the arbitral proceedings or specified in any provision of this Part having effect in default of such agreement.
This section does not apply to a time limit to which section 12 applies (power of court to extend time for beginning arbitral proceedings, &c.).
(2) An application for an order may be made—
(a) by any party to the arbitral proceedings (upon notice to the other parties and to the tribunal), or
(b) by the arbitral tribunal (upon notice to the parties).
(3) The court shall not exercise its power to extend a time limit unless it is satisfied—
(a) that any available recourse to the tribunal, or to any arbitral or other institution or person vested by the parties with power in that regard, has first been exhausted, and
(b) that a substantial injustice would otherwise be done.
(4) The court’s power under this section may be exercised whether or not the time has already expired.
(5) An order under this section may be made on such terms as the court thinks fit.”
In essence, Mr Rotenberg says that the Court has jurisdiction under s.79 to extend the time limit stipulated in Rule 52; that the requirements in s.79(3) are satisfied (i.e. any available recourse to the CTF has been exhausted and “substantial injustice” would be done if the time limit were not otherwise extended); and that, in all the circumstances, the Court should exercise its discretion to extend the time limit. In particular, in support of his submission that “substantial injustice” would otherwise be done if the time limit were not extended and that the Court should exercise its discretion by extending the time limit, reliance is placed on the following matters as summarised in paragraph 33 of the Particulars of Claim:
Assuming, as is (it is said) reasonably to be presumed, that the final award makes an order for costs in favour of Mr Rotenberg, Mr Rotenberg will be deprived of the benefit of recovery from Sucafina of the (substantial) cost and expense which he has incurred in pursuing his successful appeal of the original award.
Further, if (which Mr Rotenberg denies and which is contrary to the alternative claim for declaratory relief), the effect of non-payment of the sum of £2,250 requested in respect of the final award on costs, is to reinstate the original award, Mr Rotenberg will be deprived of the benefit of the First Interim Appeal Award and the Second Interim Appeal Award – and will be found personally liable for a sum in excess of US$1 million in respect of contracts which the Appeal Board has concluded were not made with him.
Those sanctions will follow as a result of Mr Rotenberg’s failure to pay the sum of £2,250 within 30 days even though:
that is a trifling sum of money in the context of the dispute;
the sum was in fact paid by Mr Rotenberg within 44 days of notification of the availability of the award;
the probability that the Appeal Board will have ordered Sucafina to reimburse Mr Rotenberg in respect of the costs of the appeal; and
it can reasonably be inferred from:
the fact that the Appeal Board released the First Interim Appeal Award and the Second Interim Appeal Award without requiring any payment of costs; and
Rule 52.e) of the Rules
that the sum of £2,250 relates only to the fees of the CTF in relation to the award on costs.
Those sanctions also take no account of the personal difficulties which affected Mr Rotenberg’s payment of the said sum within the period of 30 days required by the Rules, namely:
logistical difficulties arising from Mr Rotenberg's place of residence;
difficulties arising from the fact that English is not Mr Rotenberg's first language; and
being the subject of a fraud perpetrated against Mr Rotenberg's business interests.
At the outset, I should mention that the point raised in sub-paragraph b) of the previous paragraph is no longer relevant given my conclusions earlier in this judgment as to the effect of the First and Second Interim Appeal Awards.
Sucafina has put forward six reasons for the Court to refuse the application to extend time viz.
the operation of s.79 is excluded by Rule 52(d);
s.79 does not apply because there is available recourse to the CTF which has not been exhausted;
it is impossible now for any order under section 79 to be complied with;
Mr Rotenberg waived any right on his part to make an application under section 79;
no substantial injustice will be caused if the Court refuses to exercise its discretion;
the Court should not in any event exercise its discretion.
Accordingly, these submissions take each of those points in turn.
I deal with each of these points in turn.
Is s.79 excluded by operation of Rule 52(d)?
Sucafina submits that s.79 is, in effect, excluded (or precluded from having material effect) by Rule 52(d). The thrust of the argument is that because Rule 52(d) provides that payment made after 30 days does not constitute taking up the award, if a payment is now made by Mr Rotenberg that will not constitute taking up the award under Rule 52(c).
In response, on behalf of Mr Rotenberg it is submitted that the argument proceeds from the mistaken premise that if Mr Rotenberg is to take up the award he will need to make a further payment. However, no such further payment is, it is said, required. The fees, costs and expenses of the CTF have been paid. Mr Rotenberg can simply request that the third appeal award be published. But even if it were the case that some further payment were required, it is submitted in behalf of Mr Rotenberg that Rule 52(d) would not have the effect of precluding a s.79 application. Rule 52(d) is merely part of the overall scheme in Rule 52 providing that an appeal award cannot be taken up unless monies are paid first and within the 30 day period for taking up the award. If the time limit in Rule 52(d) (to the extent that there is one) is relevant, it can itself be extended.
In the event, it does not seem necessary to decide this point. I will proceed on the assumption in favour of Mr Rotenberg that s.79 is not excluded by Rule 52(d).
Is alternative recourse available to the CTF?
Rule 52 contains no provision allowing for an application to the CTF (or anyone else) for an extension (retrospective or otherwise) to the date for taking up an appeal award. By contrast, provision is made for the extension of time limits relating to other Rules – see e.g. Rules 13, 42.f-g and 54. Nevertheless, Sucafina argues that there is available recourse to the CTF which has not been exhausted viz a reference to the CTF to determine the effect of the breach of Rule 52 on the arbitration awards. In response, it is submitted on behalf of Mr Rotenberg that a possible reference to the CTF to determine the effect of a breach of Rule 52 is irrelevant. In particular, it is said that the application under s.79 is for an extension of the time limit in Rule 52 and that, in contrast, a reference to the CTF to determine the effect of the breach of Rule 52 would not have had the effect of extending the time under Rule 52 or permitting Mr Rotenberg to take up the Final Award.
Is it impossible now for an order under s.79 to be complied with?
Sucafina argues that even if the Court extends the time for compliance with Rule 52, it will be impossible for Mr Rotenberg to take up the Final Award because:
Sucafina has paid the relevant sums in respect of the CTF’s costs;
there is nothing more to pay;
consequently the CTF could not accept additional payment.
In response, it is submitted on behalf of Mr Rotenberg that this argument is mistaken for two reasons viz
the argument is premised (wrongly) upon the assumption that it is necessary for Mr Rotenberg to make a payment in order to take up the third appeal award. No further payment is necessary as the CTF has been paid. If the time for taking up the third appeal award is extended, the CTF can issue the Final Award straightaway;
if the Court (pursuant to section 79(5)) wants to make it a precondition of the award being taken up that Mr Rotenberg pay the sum of £2,250, it can either direct that sum be paid by Mr Rotenberg to Sucafina or to the CTF. The CTF can still accept payment from Mr Rotenberg and refund Sucafina. But that is unlikely to be necessary.
Again, it does not seem necessary to decide this point. I will proceed on the assumption in favour of Mr Rotenberg that it is not impossible for an order under s.79 to be complied with.
Has Mr Rotenberg waived any right to make an application under section 79?
On behalf of Sucafina, it is submitted that even if Mr Rotenberg had a right to make an application under s.79, he waived that right because Gordons requested and accepted repayment of the £2,250 which had been paid by Mr Rotenberg. To recapitulate, the relevant facts are as follows. On 15 February 2010, the CTF wrote stating that it had to return the payment of £2,250 and that it had decided that “the funds be returned to sender [which meant Mr Rotenberg] or alternatively payment be made to Gordons should I be so requested”. On 17 February 2009 Gordons wrote a 2-line message stating that they would prefer if the payment could be sent to them.
In response, it is submitted on behalf of Mr Rotenberg that these facts do not give rise to any waiver by Gordons of Mr Rotenberg’s rights under s.79. In particular, it is said that if the payment had not been made to Gordons it would have been made to Mr Rotenberg; that neither Gordons nor Mr Rotenberg made any representation that they were abandoning any rights to make an application under s.79; that Sucafina did not take any steps consequential on any such representation; and that the current application was issued on 23 February 2010, less than a week after Gordons’ letter.
Again, it does not seem necessary to decide this point. I will proceed on the assumption in favour of Mr Rotenberg that there was no waiver of his rights under s.79.
Would substantial injustice be caused if the time under Rule 52 is not extended?
On the assumptions which I have made in favour of Mr Rotenberg, it is necessary to consider whether “substantial injustice” would be caused to Mr Rotenberg were an extension not to be granted under s.79.
In that context, the submissions advanced on behalf of Mr Rotenberg were in summary as follows:
The term “substantial injustice” is not defined in the 1996 Act and is used in a number of quite separate contexts. For example, the context in which it is used in s.24 (power of court to remove arbitrator) and s.68 (challenges to an award for serious irregularity) seems quite different to the context of its use in s.50 (extensions of time to issue the award) and s.79.
It is possible to derive two points of guidance in relation to the test of “substantial injustice” from the DAC Report viz.
the test is designed to prevent applications that are disruptive of the arbitral process and ensure that the Court acts in a manner which is supportive of the process: see paragraphs 239, 280 and 309 of the DAC Report;
the DAC clearly felt that where an application had been made to the Tribunal for an extension of time and had been refused, it would be a rare case where the Court would extend time: see paragraphs 239 and 309 of the DAC Report.
Further guidance is to be derived from Equatorial Traders Ltd v Louis Dreyfus Trading Ltd [2002] 2 Lloyd’s Rep. 638 and Gold Coast Ltd v Naval Gijon SA [2006] EWHC 1044 (Comm), [2006] 2 Lloyd’s Rep 400.
Based on the foregoing, the following were relevant factors.
Is the application supportive or disruptive of the arbitral process?
As to this, it was submitted that the current application will not interrupt or disrupt an existing arbitration. It is made at the very conclusion of the arbitration. It is supportive of the arbitration in the sense that it permits the publication of an award by the Appeal Board.
Has the application been considered and refused by the Tribunal?
As to this, it was submitted that this is not an application which has been considered and refused by the CTF. It is a case in which the CTF has no power to extend the relevant time limit and has so advised the parties.
What will be the consequences of refusing/permitting the application?
As to this, it was submitted that (unlike the Equatorial or Gold Coast cases) the present case is not one in which the extension of time is sought to enable a claim to be pursued and then fought or lost in the future. Accordingly, it is not a case in which the Court needs to enquire as to the underlying merits of some future case. Rather it is an application that is made to preserve an outcome that is known. On the basis of the conclusions which I have already reached, the First and Second Interim Appeal Awards are and will remain effective as final and binding as to the matters determined therein regardless of the outcome of the application under s.79: the only effect of refusing the application to extend time will be on the incidence of costs. As to such costs, it was submitted on behalf of Mr Rotenberg that the consequences of refusing the application will be that Mr Rotenberg will be unable to recover the costs (including arbitration fees) of the original award as well as the costs (including arbitration fees) he has incurred in the appeal process. On this basis and for present purposes, I proceed on the assumption in favour of Mr Rotenberg that the consequences of refusing the application under s.79 will be potentially to cause some loss to Mr Rotenberg of up to about US$100,000. Those consequences are (it is said on behalf of Mr Rotenberg) inordinate because, it is said on behalf of Mr Rotenberg, they will flow from a delay of only about two weeks in paying what is said by Mr Rotenberg to be the relatively small sum of £2,250. By contrast, by permitting the application, the Court will give effect to the unanimous decision of the Appeal Board on liability and quantum – and enable the outcome on costs to be known and implemented.
Is there a reasonable explanation for the failure to comply with the time limit?
The reason for Mr Rotenberg’s failure to make payment to the CTF in time for him to take up the award within 30 days is set out at paragraphs 6 to 32 of Mr Rotenberg’s statement. In essence, as there set out, Mr Rotenberg was, throughout the relevant period from 9 November 2009 when the CTF notified the parties that the Final Award was available to be taken up, overwhelmed by the consequences of the failure of his principal business, a company called Mister Cash Transfert, an international money transfer business. According to Mr Rotenberg, that business hit serious financial problems in October 2009 and, as a result, he found himself urgently engaged in resolving the practical difficulties presented by winding up that company with branches throughout the DRC. This, it is said, diverted Mr Rotenberg from the need to pay the sum of £2,250 to the CTF within the stipulated period. In further support of this, it is said that for a substantial period (from 9 November 2009 to 25 November 2009), Mr Rotenberg was travelling in the DRC and was unaware of the correspondence from the CTF. Even thereafter, there was some delay (to 30 November 2009) before he was able to speak to his solicitors; and even after then he had to devote his time and resources to the following:
seeking re-funding of the business;
analysing customer claims and making refunds where appropriate. This was particularly onerous in the absence of all the relevant information from those agencies which were already closed and great care was needed to avoid double payment to customers;
seeking to claim funds to which Mister Cash Transfert was entitled to payment from regular account customers; and
attending meetings at the Ministry of Labour in order to explain the situation with a view to addressing the redundancy of over 300 of the company's staff.
In addition, it is said that Mr Rotenberg was unaware that should he fail to pay the sum of £2,250 by 9 December 2009, there might be a risk that the two interim appeal awards of the Appeal Board would be reversed.
In the circumstances, it was submitted on behalf of Mr Rotenberg that there is a reasonable explanation for his failure to make the payment demanded. In that context, reliance was placed on the observations of Colman J in AOOT v Kalmneft International AG [2002] 1 Lloyd’s Rep 128, 137[58] where he stated: “… it has to be recognised that because of the extremely wide international nature of the market for English arbitration many of the parties may be located in remote jurisdictions and may have little or no previous experience of international or English arbitration. When these relatively unsophisticated parties find themselves involved in such an arbitration, it is only to be expected that they move somewhat more tentatively than would an international trading house well experienced in this field. It would therefore be wrong to fail to make at least some allowance for this factor in evaluating the element of fault in failing to comply with time limits”.
Will any prejudice be caused to Sucafina ?
As to this, it was submitted on behalf of Mr Rotenberg that this is not a case in which Sucafina asserts that it has suffered or will suffer any particular prejudice. Rather it is a case in which Sucafina seek to obtain a windfall advantage from Mr Rotenberg’s error.
In summary, it was Mr Rotenberg’s case that he made an admitted error in failing to pay the CTF in time to take up the Final Award. However, the gravity of that error must be weighed against the gravity of the circumstances which were confronting Mr Rotenberg personally at the time and the gravity of the consequences for Mr Rotenberg if the error is left uncorrected. By that measure, this is (it was submitted) clearly a case where substantial injustice would follow should the application be refused.
I am unable to accept the thrust of these submissions broadly for the reasons advanced on behalf of Sucafina as summarised below.
First, the test of “substantial injustice” is a “stringent hurdle to overcome”: Minermet v Luckyfield Shipping [2004] 2 Lloyds Rep 348, [9] (Cooke J).
Second, as to the facts, the evidence advanced on behalf of Mr Rotenberg with regard to his alleged business problems and his reasons for not paying the sum of £2250 and taking up the Final Award within the 30 day period are, at best, sketchy and unpersuasive. Contrary to the initial assertion, the alleged problems with Mister Cash Transfert were the result not of a single large fraud but, even on Mr Rotenberg’s own evidence, numerous small scale frauds. However, there is no documentary evidence to support the contentions that either (i) there were such frauds or (ii) as to the level of distraction resulting. The only relevant document is the letter to the Central Bank of the Congo, stating that “we have been forced to close various branches due to lack of profitability”. This document is inconsistent with the previous evidence submitted on behalf of Mr Rotenberg that there was a single large scale fraud. It does not refer to any numerous small scale frauds and neither it, nor any of the other documents, indicates any urgency about the winding up. If such frauds had occurred and had been significant, they should have been evident, and capable of proof, from the “audit” of the company required by the Central Bank. The documents relating to the winding up itself record merely a decision to wind up on 11 November 2009. Nor is it known which other employees or directors of Mister Cash Transfert were available to do the relevant work.
On the other hand, it is clear that Mr Rotenberg has throughout been represented by London solicitors (and Counsel). In particular, Mr Rotenberg had access to and was given legal advice as to the CTF’s processes. Mr Rotenberg was informed by his lawyers of the deadline for payment of 9 December 2009 by 25 November 2009 at the latest. Communication difficulties did not prevent Mr Rotenberg from making payment to the CTF between 25 November 2009 and 9 December 2009. Nor did language difficulties prevent payment being made on time. Nor does Mr Rotenberg suggest that language difficulties meant that he misunderstood anything his solicitors said to him. Specifically, on the evidence before me, it is clear that Mr Rotenberg was aware and understood that there was a 30 day time limit and received legal advice orally on 30 November 2009. Privilege has not been waived over that advice. As to this, Mr Rotenberg has stated: “I do not waive privilege over that advice. Suffice it to say, I did not understand that failure to comply with that limit might give rise to a risk, not simply that the award on costs would not be published, but also that the 2 interim awards on liability and quantum for which I had paid would be reversed.” It remains unclear, even on Mr Rotenberg’s account, whether he was or was not advised by his solicitors (Gordons) as to the full consequences of non-compliance with the time limit in Rule 52. Nevertheless, it appears to be tacitly admitted that Mr Rotenberg had at least been told and was aware that if payment was not made on time, “the award on costs would not be published.” That would seem to be an oblique reference to the operation of Rule 52(c).
It therefore remains unclear exactly what occurred and what advice Mr Rotenberg received. But whether it was unclear advice or a failure to take that advice seriously, Mr Rotenberg clearly was aware that a serious consequence would occur under the Rules if the intended Final Award were not taken up on time. Nevertheless, Mr Rotenberg let the deadline pass. There is no evidence at all before me as to any further exchanges between Mr Rotenberg and his solicitors between 30 November 2009 and 9 December 2009, but it would seem likely that, as the deadline approached, such exchanges would have occurred or at least been attempted. However, what was decided on 30 November and what specifically happened during this period remains largely unexplained. If Mr Rotenberg required further advice, such advice was available to him.
Moreover, it is not suggested that Mr Rotenberg was impecunious nor that it was impossible or even difficult to effect payment. On the contrary, Mr Rotenberg was able to pay the CTF’s costs, fees and expenses, in question before the deadline of 9 December 2009, as he had the relevant sums and also was able to effect payment using bank facilities in Europe.
For present purposes, I accept that the effect of refusing to grant the extension will (at the very least) be to deprive Mr Rotenberg of the opportunity of potentially recovering costs in an amount which is not insignificant (i.e. up to US$100,000) and that this is an important factor in favour of granting the extension particularly when compared with the relatively small sum of £2,250 which was required to be paid and the relatively short delay of only about 2 weeks in payment of that sum following the expiry of the 30 day time limit.
Nevertheless, in light of the above, I do not consider that Mr Rotenberg has satisfied the test of “substantial injustice”. In particular, I bear in mind:
The deadline is in clear terms.
The arbitral process had been existence for many years.
Mr Rotenberg has throughout been represented by London solicitors and Counsel.
This is not a case where it could or might be said that there was any act or omission by Sucafina (or any third party) which caused or contributed to the failure to comply with the deadline.
The sum of money required to be paid was relatively small and Mr Rotenberg had sufficient funds to pay it if he wanted to.
During the relevant period, Mr Rotenberg was in communication with his London solicitors. Although the full extent of the legal advice he received is uncertain, what is clear is that he was aware of the deadline and that failure to make payment and take up the award before the deadline would not be without some consequence.
The explanations given by Mr Rotenberg as to the reasons for his failure to pay are vague and unsatisfactory.
Discretion
Quite apart from the question of “substantial injustice”, I do not consider that this is a case where the Court should grant an extension of time as a matter of discretion. In my judgment, the considerations set out in the previous paragraph apply equally, if not even more forcefully, in the context of discretion. In addition, in the context of the Court’s discretion, Sucafina relied upon two further matters viz
The delay of some 9 weeks after the expiry of the 30 day limit before the present application was eventually issued on 23 February 2010. The explanation given for this delay is that Mr Rotenberg was again distracted by having to deal with the affairs of Mister Cast Transfert. In particular, it is said that he was (a) negotiating location by location to release the properties rented by the agencies, (b) continuing to refund customers, (c) deciding what to do with the equipment located inside agencies, (d) deciding what to do with staff, (e) reacting to unofficial visits by representatives of the National Bank, (f) dealing with tax issues raised by the administration, (g) holding discussions with the company’s bankers and potential purchasers and so on. However such explanation is, in my judgment, vague and unsatisfactory.
The further delay in progressing the application. The present hearing took place at the end of February 2011 well over a year since the original 30 day time limit expired. This is highly regrettable. The explanation for this delay is, I understand, that once the application was launched on 23 February 2010, the hearing was listed for hearing in June 2010. However, that hearing date was vacated by agreement in order for Mr Rotenberg to provide security for costs. The matter was then re-listed for hearing in September 2010. In the event, I was told that Mr Rotenberg failed to provide security for costs with the result that the hearing date was again vacated and put back until a date in mid-December 2010. There was then a further change in the date for the convenience of Sucafina’s Counsel. Plainly, part of this delay was not due to matters within Mr Rotenberg’s control. However, a period of at least 3 months (and probably more) was within his control and appears to have arisen from a failure to provide security for costs.
In my judgment, these are matters which the Court can and should take into account in considering the application for an extension of time under s.79 of the Act although I accept that these periods of delay did not as such cause any specific prejudice to Sucafina. Even if they are ignored, I would as a matter of discretion refuse to grant the extension having regard to the matters set out above. But, in my judgment, these further matters provide yet further reasons in support of that conclusion.
Conclusion
For these reasons, I grant the declaration in terms that the interim appeal awards published by the Appeal Board of the CTF on 1 October 2007 and 21 November 2008 remain final and binding between the parties; and I refuse the application under s.79 of the 1996 Act. Counsel are requested to seek to agree an appropriate order for approval by the court failing which I will deal with any outstanding issues.
APPENDIX
Coffee Trade Federation Limited
Arbitration Rules
2. The provisions of the Arbitration Act 1996 (and any statutory amendment, modification, re-enactment thereof for the time being in force) shall apply to every arbitration and/or appeal under these rules which shall have commenced on or after 1st January 1999, save insofar as such provisions expressly modified by, or are inconsistent with, these rules. The juridical seat of any arbitration and/or appeal under these rules shall be England, and is hereby designated as such pursuant to section 3 of the Arbitration Act 1996.
Arbitration at First Stage: Procedure
Interim order
26. The arbitrator(s) or umpire shall have the power to make such order(s) as he or they may think fit for the interim protection, warehousing, sale or disposal of the subject matter of the arbitration. No appeal shall lie from any such order until the tribunal shall have made its final award determining the issues between the parties.
Interim award
27. The arbitrator(s) or umpire shall have the power to make an interim award or awards.
Award
28. Within a reasonable time from the date of the hearing, the arbitrator(s) or umpire shall make in writing and sign a reasoned award on the official award form of the Federation which, subject to any valid appeal under rule 32, shall be final and binding. The award shall state the seat of the arbitration.
Taking up award
31.
a) The award shall be sent by the arbitrator(s) or umpire to the Secretary.
b) The Secretary shall notify the parties that the award is ready and can be taken up and will be published upon payment of the fees, costs and expenses.
c) If the award is not taken up within 30 days of the date of the award the Secretary can direct one of the parties to take up the award and to pay the fees, costs and expenses specified therein and that party shall immediately comply with such direction.
If the award has not been taken up within 10 days of the said direction the Federation may by action recover all outstanding fees, costs and expenses of the arbitration (including the fees of the arbitrators and of the Federation) from any or all of the parties.
d) Alternatively, should any monies deposited exceed the fees, costs and expenses so due, the Secretary shall immediately publish the award to the parties and thereafter refund the excess to the party which made the deposit.
e) For the purpose of these rules, an award shall be deemed to be published on the date which the Secretary shall apply to the award upon issue of the same to the parties in accordance with the provisions of this rule.
Appeal Procedure
Notice and Validity of Appeal
32. A party may appeal against the award of the arbitrator(s) or umpire, which appeal shall only be valid on the following conditions:-
a) the appellant shall give notice of appeal to the other party or parties so that it is received within 30 days of the date of publication of the award;
b) the appellant shall send to the Federation, to be received within 30 days of the date of publication of the award:-
i) a copy of the award;
ii) a copy of the contract;
iii) a copy of the notice of appeal sent to the other party or parties;
iv) a deposit towards the fees, costs and expenses of the Coffee Trade Federation....
33. Once an appeal against an interim award(s) is made pursuant to rule 32 hereof, the appeal shall be automatically stayed until the final award shall have been taken up and published and the time limits for the making of any appeal against such final award shall have expired.
The automatic stay provided for in this rule shall be subject to any directions of the committee which may be made from time to time on the application of any party to the arbitration.
In the event of appeals against an interim award(s) and the final award, these appeals shall be heard by the same board of appeal.
In all appeals involving an interim award(s), whether an appeal against an interim award(s) or appeals against an interim award(s) and the final award, procedural directions for the filing of submissions shall be given to the parties by the board of appeal and rule 42 c), d) and e), inclusive, shall not apply.
If any party fails to comply with directions given by the board of appeal, pursuant to this rule, the board of appeal shall have power to dismiss any appeal made by that party. In that event, the appeal shall be deemed to be withdrawn and the award of the arbitrator(s) or umpire appealed against shall become final and binding.
Submission of Written Statements
42.
a) An appeal shall constitute a new hearing and fresh evidence will be admitted.
The board of appeal may confirm, vary, amend or set aside the original arbitration award as it thinks fit.
f) The board of appeal can permit an extension of the above time provisions and/or permit the submission of additional statements and/or supporting evidence upon application of either party. In the absence of such permission, no additional statements, submissions or supporting evidence shall be served by either party.
g) If the appellant fails to send to the Secretary a statement of his case within the time limit under rule 42 c) or within any extension, the appeal shall be deemed to be withdrawn and the award of the arbitrator(s) or umpire shall become final and binding immediately upon expiry of the relevant time limit. The appellant shall be responsible for the payment of all fees, costs and expenses of the board of appeal and the Federation.
Interim order
47. The board of appeal shall have the power to make such order(s) as it may think fit for the interim protection, warehousing, sale or disposal of the subject matter of the arbitration.
Interim Award
48. The board of appeal shall have power to make an interim award or awards.
Appeal Award
49. Within a reasonable time from the date of the hearing, the board of appeal shall make in writing and shall sign a reasoned award which shall constitute the arbitration award and, subject to any valid appeal to the High Court (if available under these rules), shall be final and binding. The board of appeal may deal with the appeal and any cross-appeal together but the parties shall not be entitled to require separate awards. The award shall state the seat of the arbitration.
Taking Up Award
52.
a) The appeal award shall be sent by the board of appeal to the Secretary.
b) The Secretary shall notify the parties that the appeal award is ready and can be taken up and will be published upon payment of the fees, costs and expenses.
c) If the appeal award is not taken up within 30 days of the date of said notification the original award of the arbitrator(s) or umpire shall become final and binding immediately upon expiry of said period and
(i) The fees, costs and expenses of the board of appeal and of the Federation shall be paid by the parties immediately. Such payment shall not affect the right of the party who makes it to recover such payment or any part thereof from the other party.
If the Award has not been taken up the Federation may by action recover all outstanding fees, costs and expenses of the arbitration and of the board of appeal and of the Federation from any or all of the parties.
d) For the avoidance of doubt, payment of the fees, costs and expenses after the expiry of the said period of 30 days shall not constitute the taking up of the award.