Court finds appeal from LCIA arbitration award out of time and declines to grant extension

Court finds appeal from LCIA arbitration award out of time and declines to grant extension

RTI Ltd & another -v- OWH SE i.L. [2025] EWHC 1945 (Comm)

The Court has usefully clarified that an application to an arbitral tribunal to admit an irregularity in its award does not postpone the running of the 28-day time-period prescribed in s.70(3) of the Arbitration Act 1996 for applying to the Court to challenge an arbitration award. 

The background facts

The first claimant is RTI Ltd (RTI), a Jersey subsidiary of the second claimant, United Company Rusal, International PJSC (Rusal) which is incorporated in the Russian Federation. The defendant, OWH SE i.L. (OWH) is a German financial institution and a subsidiary of VTB Russia PJSC, a Russian financial institution designated as a sanctioned entity in a number of jurisdictions.

RTI and OWH were parties to an agreement dated 11 September 2019 consisting of a 2002 edition ISDA Master Agreement (Master Agreement) and 11 US dollar – Russian rouble transactions. RTI’s obligations to OWH were guaranteed by Rusal under a guarantee and indemnity.

Following Russia’s invasion of Ukraine on 24 February 2022 and the resulting imposition of sanctions on Russia, there was a steep depreciation in the value of the Russian rouble. OWH issued a margin call on 25 February 2022, which RTI did not pay. OWH sent Default Notices by email on 1 March, 4 March, and 9 March 2022. 

On 23 March 2022, OWH sent RTI a Notice of an Early Termination Event (Termination Notice). This was followed, on 28 March 2022, by a statement of calculation demanding payment by RTI of what was said to be the relevant Termination Amount. This was not paid, and the resulting dispute was referred to LCIA arbitration, subject to LCIA Rules.

The arbitration proceedings

On 25 September 2024, the Tribunal issued an award, which dismissed RTI’s arguments as to why the Termination Notice was invalid, including that the Default Notices were not served in compliance with the Master Agreement because they had been served by email (the Award). The Tribunal found that the parties had proceeded on the common assumption that no objection was being taken to the Default Notices on service grounds, and that OWH had relied on that common assumption. The Tribunal concluded that it would be unconscionable for RTI to resile from that common assumption and to take the point that the Default Notices had not been validly served.

The Tribunal awarded OWH over Euros 213 million, but the claimants (RTI and Rusal) did not pay any part of that sum. 

On 19 February 2025, the claimants applied to the Tribunal, requesting that it admit to a serious irregularity in the conduct of the arbitration proceedings within the meaning of s.68(2)(i) of the Arbitration Act 1996 (the 1996 Act). The claimants alleged that there was a textual error in the Award and that there was no ‘common assumption’ regarding validity of service.

In a Procedural Ruling on 1 April 2025, the Tribunal stated that it did not admit any such error or irregularity.

Court applications

On 11 April 2025, the claimants issued an arbitration claim form, seeking orders under s.68(3) of the 1996 Act that the Award be remitted to the Tribunal for reconsideration and/or set aside and/or declared to be of no effect due to serious irregularities, including that the Award was obtained by fraud. Among other things, they alleged that OWH had knowingly failed to disclose relevant and disclosable documents that fell within the scope of an agreed Redfern Schedule and had made false statements in this regard to the Tribunal.

The claimants argued that their s.68 application had been issued in time because their application to the Tribunal for an admission of irregularity had postponed the running of time because it constituted the pursuit of an “available arbitral process of appeal or review” under s.70(2) of the Act. This states that,

an application or appeal may not be brought if the applicant or appellant has not first exhausted – (a) any available arbitral process of appeal or review…”. 

Accordingly, the claimants said that they could not have brought the s. 68 application until they had exhausted that process of seeking the Tribunal’s admission of an error. Alternatively, they sought an extension of time to make their application outside of the 28-day time-limit prescribed by s.70(3) of the 1996 Act.

OWH applied for summary dismissal of the s.68 application. 

The Commercial Court decision

The Court rejected the argument that the claimants’ application to the Tribunal extended time, and that the s. 68 application was brought within the 28-day period specified in s.70(3) of the 1996 Act. Asking the Tribunal to admit an irregularity did not constitute an arbitral process of appeal or review, which was a reference to a process by which an award was subject to an appeal or review by another arbitral body. 

There was no process here within the meaning of the section. The request for an admission was not made on the basis of a procedural rule applicable to the arbitration, whether contained in the LCIA Rules or in the arbitration agreement. It was entirely ad hoc. Even if an “arbitral process” was involved, it was not a process of appeal, nor a process of review. An LCIA tribunal cannot review or reconsider its decision. When presented with a request for an admission or an irregularity, such a tribunal’s options are limited to making the admission (which would facilitate an application to the Court) or decline to make it. This was not accurately described as a process of review.

The Court also concluded that no extension of time should be granted. The delay, from 1 November 2024 to 11 April 2025, was substantial when measured against the 28-day yardstick. No good reason was given for the delay. Neither OWH nor the Tribunal had contributed to that delay. 

Additionally, the application was intrinsically weak. The claimants had not put forward a case with any real prospect of success that the Award was obtained by fraud or that the way it was procured was contrary to public policy. Serious irregularity imposed a high threshold and the claimant’s case was entirely speculative as to the existence of any other disclosable documents and what they might have said.

The s.68 application was, therefore, dismissed.

Comment

The decision highlights that the Court will not lightly grant time extensions for bringing an appeal to an arbitration award, particularly where there is no good reason for the delay and the challenge has no realistic prospect of success.