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The English Commercial Court's decision underscores the importance of acting promptly when challenging an arbitral award, since extensions of time are not granted as a matter of course
Introduction
In JSC "Kazan Oil Plant" v Aves Trade DMCC [2025] EWHC 2713 (Comm) , the English Commercial Court (the Court) considered a challenge brought by JSC "Kazan Oil Plant" (Kazan) under s.69 of the Arbitration Act 1996 (the 1996 Act) in relation to arbitration proceedings between Kazan and Aves Trade DMCC (Aves) under the Rules of the Federation of Oils, Seeds and Fats Association Limited (FOSFA).
The court dismissed the challenge on the basis that: (a) the claim form for the challenge was not issued within time under s.70(3) of the 1996 Act; and (b) it was not appropriate to grant an extension of time under s.80(5) of the 1996 Act. This judgment clarifies the relevant date on which time begins to run for challenging an award, particularly where the relevant arbitral institution (in this case FOSFA) provides a bespoke appeal or review process.
Background
A FOSFA first-tier tribunal issued its award in favour of Aves on 27 March 2024 (FTT Award). Pursuant to the FOSFA Rules, Kazan appealed the FTT Award to the FOSFA Board of Appeal. After an oral appeal hearing in London in December 2024, the FOSFA Board of Appeal issued an appeal award against Kazan on 26 March 2025 (Appeal Award).
FOSFA notified the parties on the same day that the award was available to them, upon payment of outstanding fees, costs and expenses which Kazan owed in connection with the arbitration proceedings. Kazan, as a Russian entity, faced difficulties in making the payment due to sanctions, but ultimately made the payment via an intermediary in the UAE on 8 April 2025. The Appeal Award was subsequently released by FOSFA and received by Kazan on 10 April 2025.
English Commercial Court Proceedings
Kazan sought to challenge the Appeal Award pursuant to s.69 of the Act. It issued a claim form (Appeal Claim Form) on 8 May 2025 – 43 days after the date of the Appeal Award (26 March 2025), and 28 days after receiving the Appeal Award (10 April 2025). The issues for the Court to decide were: (a) whether the Appeal Claim Form was issued in-time under s.70(3) of the 1996 Act; and (b) if not, then alternatively whether Kazan should be granted a time extension.
Timing of the Appeal Claim Form
Under s.70(3) of the 1996 Act, an award must be appealed within 28 days of either: (a) "the date of the award"; or (b) "if there has been any arbitral process of appeal or review, of the date when the applicant or appellant was notified of the result of that process". Consequently, Bright J had to consider whether time for Kazan to bring the challenge began to run on the date of the Appeal Award (26 March 2025), or on the date that Kazan received the Appeal Award (10 April 2025).
Having considered the decisions of Gross J and Hamblen J in UR Power GmbH v Kuok Oils and Grains Pte Ltd [2009] EWHC 1940 (Comm) and PEC Ltd v Asia Golden Rice Co Ltd [2012] EWHC 846 (Comm), Bright J held that where the award that is being challenged is subject to an "arbitral process of appeal or review", then the second limb of s.70(3) of the 1996 Act applies, such that the 28-day period for challenging this award is extended pending the outcome of such appeal process. However, where there is not, or there cannot, be any "arbitral process of appeal or review", then the first limb of s.70(3) of the 1996 Act applies.
In this case, Kazan's s.69 challenge specifically related to the Appeal Award, not the FTT Award, meaning there was no further arbitral process of appeal or review other than the challenge to the Court. Therefore, the first limb of s.70(3) applied and time began to run from 26 March 2025, the date of the Appeal Award. Consequently, the challenge was not brought in time. Bright J did note, however, that had the s.69 challenge related to the FTT Award, rather than the Appeal Award, then it was arguable that the second limb of s.70(3) of the 1996 Act would apply, meaning that time would have begun to run when Kazan was informed of the result of the appeal process on 10 April 2025.
Extension of time
The principal considerations for an extension of time under s.80(5) of the 1996 Act were summarised by Colman J in AOOT Kalmneft v Glencore International AG & Anor [2001] EWHC QB 461 and include, among others, length of delay, reasons for delay, prejudice, and the merits of the substantive appeal. Citing Terna Bahrain Holding Company WLL v Al Shamsi [2012] EWHC 3283 (Comm), Bright J placed significant weight on the principle that "the length of the delay must be judged against the yardstick of the 28 days provided for in the Act." On that basis, Kazan's 15-day delay – over 50% of the entire time allowed under s.70(3) of the 1996 Act – while not "enormous", was "not trifling" either.
While Bright J accepted that Kazan's initial delay from 26 March 2025 to 10 April 2025, due to sanctions making it difficult to make the payment to FOSFA, was excusable, he considered that Kazan did not effectively use the 12 remaining days. Kazan presented two arguments for why its additional delay was excusable. First, its English counsel did not take the case on until 22 April 2025 and their engagement letter was not signed until 24 April 2025, which Bright J did not accept as an effective excuse. Second, in PEC Ltd v Asia Golden Rice Co Ltd and UR Power GmbH v Kuok Oils and Grains Pte Ltd the uncertainty regarding the proper application of s.70(3) of the 1996 Act justified the delay (albeit in obiter in the latter). Bright J also rejected this, noting that in the 15 years following these two cases, the principles they set out regarding s.70(3) of the 1996 Act had become established, so misunderstanding the application of this provision was no longer excusable.
The extension of time was therefore denied, and Kazan's s.69 challenge struck out.
Comment
Bright J's decision clarifies the position for parties seeking to challenge arbitration proceedings in the English courts, particularly where such arbitration proceedings are subject to an appeal or review process within the arbitral institution, such as those in the FOSFA and GAFTA Rules. Importantly, time limits for bringing such challenges may differ depending on whether a party seeks to challenge a first instance award or an award rendered following an arbitral appeal process. In either case, it is important to act promptly, as extensions of time are not given as a matter of course.
The authors would like to thank Xani Lawrence for his contribution to this post.
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