Armada Ship Management v Schiste Oil and Gas Nigeria

This analysis was first published on Lexis ® PSL on 4 June 2021 and can be found here ( subscription required ):

Arbitration analysis : In recognition of the relative rarity of applications under section 32 of the Arbitration Act 1996 ( AA 1996 ), Mrs Justice Cockerill in the Commercial Court elected to hand down a written judgment in respect of an application for declarations confirming the jurisdiction of a sole arbitrator and the validity of his appointment . AA 1996 , s 32 grants the court power to determine jurisdictional issues in two narrowly defined scenarios . It is intended to be an exceptional remedy and the courts have , in general , treated it as such . This was further demonstrated by the decision in this case where the court dismissed the claimant ’ s application , concluding that it would be inappropriate for it to exercise its AA 1996 , s 32 powers in circumstances where a determination on jurisdiction could prejudice the rights of an alleged party who has not participated in the proceedings under AA 1996 , s 72 . Written by Alistair Calvert and Laura Young of Bracewell ( UK ) LLP .

Armada Ship Management ( S ) PTE Ltd v Schiste Oil and Gas Nigeria Ltd [ 2021 ] EWHC 1094 ( Comm )

What are the practical implications of this case ?

In accordance with the general scheme of AA 1996 , a tribunal should determine its own jurisdiction to resolve a dispute pursuant to AA 1996 , s 30 . The Departmental Advisory Committee on Arbitration Law Report on the Arbitration Bill of February 1996 ( the DAC Report ) stated this to be the ‘ basic rule ’ and confirmed that AA 1996 , s 32 should be reserved for exceptional cases so as not to detract from the rule .

Consequently , AA 1996 , s 32 is ‘ narrowly drawn ’ to give the court a discretionary power to determine jurisdictional issues in limited circumstances . Specifically , where :

• the application is made with the agreement in writing of all the other parties to the proceedings , or

• the application is made with the permission of the tribunal and the court is satisfied :

◦ that the determination of the question is likely to produce substantial savings in costs

◦ that the application was made without delay , and

◦ that there is good reason why the matter should be decided by the court

In this case , the court considered that , prior to determining whether the AA 1996 , s 32 conditions were met , a further threshold question ought to be considered : was AA 1996 , s 72 , which provides continuing rights of challenge to ‘ a person alleged to be a party to arbitral proceedings but who takes no part in the proceedings ’, engaged ?

AA 1996 , s 72 is recognised as a vital protection for a party that disputes the validity of arbitral proceedings . Cockerill J referred to the decision of Mr Justice Mann in Law Debenture Trust Corporation plc v Elektrim Finance BV [ 2005 ] EWHC 1412 ( Ch ) in which he identified various scenarios where a party might have legitimate grounds to object to a tribunal ’ s jurisdiction , including circumstances where :

• it claims not to be a party to the agreement containing the arbitration agreement