BRODA AGRO TRADE (CYPRUS) LTD V ALFRED C TOEPFER INTERNATIONAL GMBH

[2010] EWCA Civ 1100, Court of Appeal, Lord Justice Mummery, Lord Justice Lloyd and Lord Justice Stanley Burnton, 11 October 2010

Arbitration - Jurisdiction - Denial of jurisdiction of arbitrators - Whether applicant entitled to relief under section 72 of the Arbitration Act 1996 - Extension of time for appeal under section 67 of the 1996 Act - Exercise of discretion - Arbitration Act 1996, section 80(5)

On 31 October 2007 Toepfer commenced GAFTA arbitration proceedings against Broda claiming damages for breach of an alleged contract for the supply by Broda of wheat, which included a GAFTA arbitration agreement providing for arbitration in London. On 3 January 2008 Toepfer presented its claim submissions to GAFTA claiming damages against Broda in the sum of US$5,462,668.35. Broda denied that a contract had been concluded. On 15 February 2008 GAFTA informed the parties that the arbitrators would make a separate award on jurisdiction, and gave directions for submissions. Toepfer served submissions, but Broda refused to reply and simply asserted that the dispute should be resolved in the Russian courts. Broda also informed GAFTA that the Russian courts had ruled that there was no binding contract. On 3 July 2008 the arbitrators issued an interim award concluding that there was a binding contract, and gave directions for submissions by both parties on the substantive dispute. Broda filed submissions denying Toepfer's right to damages on the ground that there was no contract. It subsequently unsuccessfully sought to have the arbitrators removed. On 15 February 2009 the arbitrator issued a final award in favour of Toepfer, awarding damages in the sum of US$5,462,668.25 together with interest and costs. On 31 July 2009 Teare J gave permission to Toepfer to enforce the final award subject to an application by Broda to set aside his order within 28 days of service. Broda sought a declaration under section 72 of the Arbitration Act 1996 to the effect that the award was not binding. The question was whether Broda had taken part in the proceedings, in which case section 72 was not available. The Court of Appeal held as follows. (1) Section 72 debarred a claim by a person who took part in arbitration proceedings, even if only by taking steps to challenge the jurisdiction of the arbitrators. (2) Broda was out of time to challenge the award under section 67 of the Arbitration Act 1996, and time would not be extended under section 80(5). Broda chose not to consult an English lawyer, but it was obvious that if the award was to be challenged it had to be in London.