Negative Declarations - Section 66 Of The Arbitration Act 1996

The Court of Appeal in the case of West Tankers Inc v (1) Allianz Spa, (2) Generali Assicurazione Generali Spa, [2012] EWCA Civ 27 had to consider the Court's power under section 66 of the Arbitration Act 1996 to order that judgment be entered in the terms of an arbitral award granting a negative declaration, i.e. a declaration that the successful party has no legal liability to the other party in respect of the subject matter of the arbitration.

The Facts

The dispute was between the insurers of voyage charterers of the vessel Front Comor and the vessel's owners about responsibility for a collision during the voyage charter. An arbitral tribunal found that the owners had contractual immunity, under the terms of the charterparty, from responsibility to the charterers for the damage and made an award declaring that the owners were under no liability to the charterers' insurers in respect of the collision.

Section 66 of the Arbitration Act 1996 ("the Act") provides for the enforcement of an arbitration award as follows:

"(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.

(2) Where leave is so given, judgment may be entered in terms of the award. ..."

On 15 November 2010, on a without notice application by the owners, Simon J ordered that the owners should be permitted pursuant to section 66(1) of the Act to enforce the declaratory award in their favour and that:

"Pursuant to section 66(2) of the Arbitration Act 1996, judgment be entered against the defendants in terms of the said award, namely a declaration that the [owners] are under no liability (whether in contract or in tort or otherwise howsoever) to the [charterers and their insurers] in respect of the collision between the vessel Front Comor and the pier (and mooring dolphins) at Erg Petroli's Installation at Santa Panagia, Sicily on 8 August 2000."

An application by the insurers to set aside the order of Simon J was dismissed in a judgment by Field J dated 6 April 2011 but the insurers were given leave to appeal. In this appeal the insurers argued that the Judge had erred in law in his construction of section 66 and in holding that the Court had jurisdiction to order that judgment be entered in the terms of the award.

The judgment sets out the parties' submissions as follows. The insurers submitted that the Judge had erred in the following respects:

He...