Invalid Service Of Request For Arbitration Not A Failure Of Appointment Procedure, Says English Court

• Published date: 17 July 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Herbert Smith Freehills
• Author: Mr Charlie Morgan and Elizabeth Kantor

In Global Aerospares Limited v Airest AS [2023] EWHC 1430 (Comm), the English Commercial Court dismissed a claim for directions under s18 of the Arbitration Act 1996 (Act). Failing to serve a Request for Arbitration under s14(4) of the Act, with the consequence that the process for the appointment of an arbitrator had not validly begun, was not considered a failure of procedure for the appointment of an arbitrator. Accordingly, s18 of the Act was not engaged and the claim was dismissed.

Background

The Claimant, Global Aerospares Limited (GAL), supplied aircraft parts to the Defendant, Airest AS (Airest), an aircraft repair business at Tallinn airport. A dispute arose and GAL wished to commence arbitration proceedings. The arbitration clause was very basic and made no provision for the appointment of arbitrators. It simply said: "This Agreement is subject to English jurisdiction. If a dispute cannot be settled by negotiation it shall be settled by arbitration in London".

GAL sent a covering letter enclosing a Request for Arbitration (Request) in which it proposed the appointment of a sole arbitrator. It identified three potential arbitrators and invited Airest to respond within 21 days. It also stated that documentation had been filed with the LCIA in order to commence arbitration proceedings. GAL subsequently issued a claim in the English Commercial Court, seeking directions under s18 of the Act regarding the appointment of a sole arbitrator.

Airest opposed the application and made an application under CPR Part 11(1) for an order that the Court had no jurisdiction. The basis for this argument was that the Court's power under s18 of the Act was not engaged. Alternatively, it argued that GAL's Request was not a valid request to appoint an arbitrator within the meaning of s16(3) of the Act because it was not sufficiently clear to comply with the requirements of the Act and had not been validly served. It argued that, as a result, the process for the appointment of an arbitrator provided for by the Act had not been begun. If the process had not been begun, it could not be said that there has been a failure of that process, and so the Court's powers under s18 could not be exercised.

Relevant provisions of the Act

S14(4) of the Act provides that "where the arbitrator or arbitrators are to be appointed by the parties, arbitral proceedings are commenced in respect of a matter where one party serves on the other party or parties notice in writing requiring him or...