Key takeaways
Loining arbitration means you can’t challenge it later
Once charterers took part, they lost the right to question the tribunal’s authority.
Fraud claims need strong, clear evidence
The court dismissed vague allegations and asked for solid proof.
Late or weak challenges are likely to fail
Timing and preparation matter as poorly presented claims won’t succeed.
Charterers who took part in arbitration proceedings prevented from challenging tribunal’s jurisdiction
A&N Seaways and Projects PVT Ltd -v- Allianz Bulk Carriers DMCC (Bharadwaj) [2025] EWHC 2126 (Comm)
S.72(2)(a) of the Arbitration Act 1996 (1996 Act) provides that a person who takes no part in arbitral proceedings has the same right as a party to the proceedings to challenge an award pursuant to s.67 of the 1996 Act on the ground of lack of substantive jurisdiction over him.
A party cannot have its cake and eat it. It must elect at the outset to snub the arbitral process entirely or to engage. However, any engagement at all will cost that party the right to apply under s.72.
Whether a party takes no part in the proceedings will all depend on the exact circumstances. In this case, charterers who faced arbitration proceedings brought by owners had initially protested the tribunal’s jurisdiction and had asked owners to withdraw their notice of arbitration, reserving their rights in relation to the arbitrability of the dispute. However, they subsequently sought a time extension from the Tribunal in order to obtain counsel’s advice and prepare any appropriate application or submissions. No such submissions were ever served. Nonetheless, the Court found that the Charterers had taken part in the reference, which was fatal to any s.72 claim.
The background facts
The Disponent Owners (Owners) of the Vessel entered into a time-trip charterparty with Charterers pursuant to a fixture note and amended New York Produce Exchange time charter 1946 (NYPE 1946) form, both dated 5 July 2023 (Charterparty).
When a dispute arose over non-payment of hire and the subsequent withdrawal of the Vessel, Owners commenced arbitration against Charterers on 6 November 2023 and appointed a sole arbitrator (Tribunal).
Charterers served an “interim response” (Interim Response) on Owners and sought and received an extension of time in which to file submissions but ultimately did not do so.
In their Interim Response, Charterers alleged the Charterparty had been procured by fraud between a Mr Sashank Puria (one of two of Charterers’ directors) and Owners and was therefore void.
The Tribunal subsequently issued a peremptory order that it would treat the Charterers’ Interim Response as the defence in the arbitration if no further defence was received.
Owners entered a reply dealing with Charterers’ arguments put forward in the Interim Response.
In particular, Owners said that (a) there was no fraud by Owners, nor any basis on which to allege it; (b) Mr Puria at all times had actual authority, alternatively apparent authority, to enter into the Charterparty (being just one of two directors of Charterers); and (c) in any event, the Charterparty had been affirmed by Charterers’ conduct (including people other than Mr Puria) and unambiguous commitments to Owners to perform the Charterparty.
The Tribunal proceeded, treating the Interim Response as Charterers’ defence. It reviewed Charterers’ allegations and accepted Owners’ arguments, including as to affirmation.
The arbitration award
The Tribunal found the Charterparty contained a London-seated arbitration governed by English law. It further held that the Charterparty was partially performed, but that the Vessel was subsequently withdrawn on 22 September 2023 due to Charterers’ non-payment of hire.
At the time of withdrawal, Charterers had accrued a liability to Owners, predominantly in respect of hire and bunkers, of USD 304,912.75. On 9 July 2024, the Tribunal made an award of USD 295,508.13 (Arbitration Award).
Court proceedings
The Charterers issued an arbitration claim form on 6 August 2024, seeking to challenge the Arbitration Award under s.72(2)(a) of the 1996 Act.
On 20 September 2024, Owners applied to strike out the Charterers’ appeal, alternatively seeking reverse summary judgment.
On 16 January 2025, the Charterers sought leave to amend the claim form to introduce allegations of fraud.
The Commercial Court decision
The amendment application
The Court refused the Charterers’ amendment application because it was out of time, defective and had no real prospect of success.
As to delay:
The 1996 Act provides that any application or appeal against an award must be brought within 28 days of the date of the award.
Where a party wishes to adduce a fresh ground of challenge after the expiry of the 28-day period, the following criteria may be considered:
2.1 whether the length of the delay is material must be judged against the 28-day period stipulated in the 1996 Act.
2.2 whether the delay was reasonable; this requires an investigation into the reasons for the delay, and the onus is on the applicant to provide an explanation.
2.3 whether the respondent or the arbitrator caused or contributed to the delay.
In this case:
3.1the Charterers’ delay in seeking to amend was lengthy in comparison to the 28-day time period.
3.2 they had failed to offer any good reason for the delay.
3.3 neither the Tribunal nor the Owners had contributed to the delay.
As to defects in the application:
The claim form as issued within 28 days must be capable of standing on its own as a “complete, particularised statement of the case to be advanced”. Evidence must be contained in the arbitration claim form or filed at the same time because the parties are entitled to know the specific grounds which are to be advanced in challenging an arbitration award.
The arbitration claim form in this case lacked such particularisation and the supporting witness statement was filed some time after the claim form. No good reason was offered for this.
Any allegations of fraud must be pleaded properly and adequately. This is not a requirement specific to arbitration claims but applies more widely. Nothing was produced by Charterers in evidence to show that Mr Puria was not authorised to enter the Charterparty. Overall, the Charterers’ particulars of dishonesty lacked coherence and they had shown no grounds to infer fraud. The Court noted that Owners had nothing to gain from the alleged fraud. In fact, they had spent considerable time and expense trying to enforce a relatively small debt claim.
The Court concluded, therefore, that the application had no real prospect of success.
The strike-out application
The Court found that the Owners were entitled have the claim struck out because the statement of case disclosed no reasonable grounds for bringing the challenge.
As stated above, the allegations of fraud were inadequate and not credible. Furthermore, the Court agreed with the Tribunal that Mr Puria had at all times at least apparent authority to enter into the Charterparty. Among other relevant considerations, Mr Puria had used the company stamp and his company email address, and he was one of only two of the company’s directors. Even if this were incorrect, the Court found that the Charterers had affirmed the Charterparty by making various unambiguous commitments to the Owners to perform the Charterparty.
Importantly also, an appeal under s.72 of the 1996 Act imposes a condition that a party “takes no part in the proceedings”. The Court concluded that by seeking an extension of time, the Charterers took part in the proceedings such that their s.72 claim failed.
Interestingly, the Tribunal had taken the view that the Charterers had not participated in the arbitration proceedings. However, the Court distinguished between “participating in” and “taking part” in the proceedings. Its view was that seeking an extension was engaging in the arbitral process because it was an implicit acknowledgement of the process and inconsistent with the Charterers’ previous reservation of rights regarding the arbitrability of the captioned dispute.
Comment
The decision highlights that issuing an arbitration claim form within the 28-day time-period will not necessarily assist if the basis for challenging an arbitration award is not sufficiently particularised at the same time. This is particularly so where the applicant wishes to make serious allegations of fraud. It is also a sobering reminder of the strictness that applies to s.72 appeals.
