Key Facts
- •AZ, an LNG producer, breached a contract with BY, a trading company, leading to BY's breaches with CX and DW.
- •A UNCITRAL arbitration (Spot CN Arbitration) awarded BY damages and indemnity for liabilities to CX and DW.
- •AZ challenged the enforceability of the indemnity, arguing that the CX and DW arbitration awards needed an endorsement confirming their inclusion within the indemnity.
- •The CX arbitration concluded with an award, followed by an additional award (CX Additional Award) addressing AZ's endorsement requirement.
- •AZ brought a claim (11 Claim) seeking a declaration against enforceability and BY brought a claim (117 Claim) seeking enforcement of the Award.
Legal Principles
The dispositive section of an arbitral award, typically containing the orders made, should be read in conjunction with the reasoning sections, construing the entire award in a reasonable and commercial way.
Bank Mellat v GAA Development and Construction Co [1988] 2 Lloyd’s Rep. 44 at [55], Cadogan Maritime Inc v Turner Shipping Inc [2013] EWHC 138 (Comm)
Courts strive to uphold arbitration awards, interpreting them consistently and commercially, avoiding overly meticulous scrutiny.
Obrascon Huarte Lain SA v Qatar Foundation [2019] EWHC 2539 (Comm)
Once a final award is made, the arbitrator becomes functus officio, their jurisdiction ending unless revived by court order or party agreement (including the arbitrator's consent).
Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630, Emirates Trading Agency LLC v Sociedade de Fomento Industrial Private Ltd [2015] 2 Lloyd’s Rep. 487, IRC v Hunter [1914] 3 KB 423
Parties to an arbitration may agree to revive a tribunal's jurisdiction, requiring agreement from both parties and the arbitrator(s).
Compagnie Europeene de Cereals S.A. v Tradax Export S.A. [1986] 2 Lloyd's Rep. 301, K/S Norjarl A/S v Hyundai Heavy Industries Co Ltd [1992] QB 863
Outcomes
The Spot CN Award's indemnity did not require express endorsement from the CX and DW arbitral tribunals.
The dispositive section of the Spot CN Award (Section XVIII), clearly expressing the tribunal's decisions and awards, should be treated as comprehensive. Paragraph 607 did not add an additional order; it was contextual guidance clarifying approval of settlements, particularly consent awards.
The CX Tribunal's jurisdiction to issue the CX Additional Award was valid.
The parties' agreement to re-open the arbitration and the CX Tribunal's agreement were sufficient to revive its jurisdiction. The functus officio principle does not preclude parties from agreeing to revive an arbitrator's jurisdiction if all parties and the arbitrator concur.