Award Dismissing A Claim For Inordinate And Inexcusable Delay Survives Challenge In The English Court

In Grindrod Shipping Pte Ltd v Hyundai Merchant Marine Co. Ltd, the English High Court ("the Court") rejected an application under s68 of the Arbitration Act 1996 ("the Act") to challenge an Award (the "Award"). Six years after the proceedings had commenced, the tribunal ("Tribunal") issued a final award dismissing the claim under s41(3) of the Act on the ground of inordinate and inexcusable delay. Grindod Shipping challenged the award under s68 of the Act, arguing that the Tribunal's decision was based on grounds not advanced by the respondent. The Court concluded that the issues had been sufficiently "in play" for all sides to have had a fair opportunity to respond. There was no breach of the tribunal's duty to act fairly and impartially and therefore no procedural irregularity.

Background

In July 2011, Grindod Shipping commenced arbitral proceedings against Hyundai. By August 2016, the proceedings had only reached the stage of documentary disclosure, with each side blaming the other for the delay. Shortly thereafter, when the six year limitation period had just expired, Hyundai applied to the Tribunal under s41(3) of the Act to have the claim dismissed. After submissions by both parties, the application was determined "on the papers", with no hearing being thought necessary by either party or the Tribunal.

The Tribunal's Award

Under s41(3) of the Act, a tribunal may dismiss a claim if it is satisfied that there has been an inordinate and excusable delay which (i) gives rise, or is likely to give rise, to a substantial risk that it is not possible to have a fair resolution of the issues in that claim (s41(3)(a)); or (ii) has caused, or is likely to cause, serious prejudice to the respondent (s41(3)(b)).

The Tribunal found that there had been inexcusable and inordinate delay. Hyundai argued that the deterioration in the quality and availability of evidence gave rise to a substantial risk of unfairness under s41(3)(a). The Tribunal rejected this contention, finding that the merits of the case were unlikely to turn on the evidence of factual witnesses and would rest instead on contemporaneous documentation and expert evidence. However, the Tribunal considered that the delay caused "serious prejudice" to Hyundai under s41(3)(b). An application for security for the claim had been made in 2011 and was renewed and ordered against Hyundai in 2016, prompted by Hyundai's well-publicised financial difficulties. The Tribunal considered that the order...