AN ORDER UNDER THE ARBITRATION ACT IS NOT AN ORDER UNDER CPR 3.1(7)

The judgment  of Popplewell J in H -v- L [2017] EWHC 137 (Comm) relates to an application to remove an arbitrator.   Most of the judgment considers the principles relating to the independence of arbitrators.  The judge also considered points arising out of CPR 3.1.(7). This judgment gives a strong indication that CPR 3.1(7) is concerned with procedural and case management issues and not orders made under primary legislation.

KEY POINTS

• A court did not have power, under CPR 3.1.(7) to remove an arbitrator appointed by the court under s.24(1)(a) of the Arbitration Act 1996.
• CPR 3.1.(7) was concerned with case management powers under secondary legislation and not orders made under primary legislation.

THE CASE

The judge rejected the claimant’s application under Section 24(1)(a) of the Arbitration Act 1996 to remove an arbitrator. The claimant had a supplementary argument that the arbitrator could also be removed under the Civil Procedure Rules.  There had been no agreement in relation to the appointment of a third arbitrator. An application had been made to the High Court and an arbitrator appointed by Flaux J.  The claimant argued that the fact that the arbitrator had been appointed by the court meant that the court had a power under CPR 3.1(7) to remove that arbitrator.

THE CPR ARGUMENT

CPR Rule 3.1(7)

1. Mr Kitchener submitted in the alternative that the Court had power to revoke or vary the order of Flaux J appointing M under Rule 3.1(7); and should do so by replacing him with Sir Stephen Tomlinson, even if the s. 24 challenge failed. He advanced the following reasons: M has expressed a view that he would prefer not to continue if he does not retain the confidence of the parties; H remains concerned as to his impartiality; the possibility of an appeal against the s. 24 challenge ruling gives rise to the risk that the substantive hearing will result in an award which will be set aside and therefore a risk of delay and wasted expense; and if Flaux J had known then what the Court knows now, he would have selected a candidate with whom both sides were content.

2. None of these provide good reasons for revisiting Flaux J’s order. M has quite properly recognised that L is entitled to insist on the arbitrator appointed in accordance with the contractual machinery if the court finds there is no good reason for his removal for apparent bias. H’s subjective and unjustified concerns cannot themselves justify any variation; on the contrary for the reasons explained above, it would be wrong to replace M merely because H’s unjustified challenge had left it with a sense of grievance. The threat of an appeal does not assist: I must decide the issues before me in accordance with my own views. Flaux J’s order was made on the material before him, was not appealed, and has been acted on. There has been no material change of circumstances. Sir Stephen Tomlinson is not an agreed replacement, as the contested hearing demonstrates.

3. There is, however, a more fundamental objection to the argument, which is that Rule 3.1(7) does not provide jurisdiction to make such an order.

4. Rule 3.1(7) provides:

“A power of the court under these Rules to make an order includes a power to vary or revoke the order.”

1. Flaux J was not exercising any power under the Civil Procedure Rules. He was exercising the statutory powers conferred by s. 18 of the Act. But for such powers expressly conferred by the Act, the Court would have no jurisdiction to interfere in the arbitral process by appointment of an arbitrator. As its heading suggests, Rule 3.1 is concerned with case management powers, which are governed by secondary legislation. Flaux J was exercising powers under primary legislation, which carefully circumscribes the limits of permissible judicial intervention. Those limits form part of the contractual bargain between the parties when choosing to arbitrate in London subject to the supervisory jurisdiction of the courts of the seat of the arbitration.

2. Once a power of appointment has been exercised in accordance with section 18, the effect is identified in s.18 (4): the court appointment is deemed to be made with the agreement of the parties. The position is the same as if the Court had not been involved and the parties had agreed the appointment. The arbitration clause in this case also provides expressly that once the third arbitrator accepts the appointment the tribunal is “deemed fixed”. The Court has no power to undo such an appointment, save in accordance with the express terms of the Act. The powers to effect or sanction removal contained in sections 23 to 26 are exhaustive. None apply in this case.

3. Mr Kitchener argued that the order was made “under the Rules” because the s. 18 Claim Form was issued and pursued in accordance with Part 8 and Part 62. However those rules merely dictate the procedure by which the court can be invited to exercise its statutory powers. The order is not made under them. The power derives from the Act, not the Rules. This is illustrated by the fact that an Arbitration Claim Form is a form of originating process which is concluded by an unappealed judgment determining whether to grant the relief sought. H’s Rule 3.1(7) application was advanced informally in argument; but it could not properly have formed the subject matter of a formal application notice in the current proceedings commenced by an Arbitration Claim Form seeking s.24 relief; nor in the separate proceedings which were before Flaux J in which he made his order, which have been finally determined without appeal.