In Mobile Telecommunications Co KSC v HRH Prince Hussam Bin Saud Bin Abdulaziz Al Saud and others [2019] EWHC 3109 (Comm), the English Commercial Court (the Court) considered the scope of an arbitral tribunal’s powers to correct an arbitral award under Article 27.1 of the LCIA Rules 1998.

The issue arose in the context of an application by Prince Hussam Bin Saud Bin Abdulaziz al Saud (Prince Hussam) to set aside an earlier court order which extended the deadline for a correction to an award under s79 of the English Arbitration Act 1996. The extension had been ordered to enable an LCIA tribunal (the Tribunal) to correct the language of a 2015 award (the Award) in favour of Mobile Telecommunications Co (MTC). Enforcement of the award in Saudi Arabia had previously been refused on the basis that the Award did not impose an explicit obligation to pay on Prince Hussam. The main question that arose in the application was whether the Tribunal had the power to issue the correction to the Award under Article 27.1 of the LCIA Rules 1998. The Court ultimately held that the Tribunal did have such a power in these circumstances and dismissed Prince Hussam’s application.

Background

In December 2015, the Tribunal upheld a claim by MTC against Prince Hussam arising out of a 2010 loan agreement and issued an award finding that MTC was “entitled to payment” of over US$ 527 million. MTC subsequently sought to enforce the Award in Saudi Arabia. However, by its judgment of 29 August 2019, a Saudi court held that the Award was not enforceable because the wording used in the Award did not impose an “explicit obligation” to pay on Prince Hussam.

Shortly after the Saudi judgment, MTC applied to the Tribunal to include an express obligation to pay on Prince Hussam by way of a correction to the Award. This request was made pursuant to the 1998 LCIA Rules that were applicable to the dispute, which provide in Article 27.1 that a tribunal has the power to make such corrections in case of “any errors of computation, clerical or typographical errors or any errors of a similar nature“. The Tribunal responded that it was ‘functus officio’ (i.e. its mandate had expired) in light of the 30-day deadline for corrections in Article 27.1 and that it could therefore not issue the correction unless this deadline was extended by the English courts. On 6 September 2019, MTC duly obtained an order to this effect from the English Court  pursuant to the Court’s powers under s79 of the English Arbitration Act 1996 to grant an extension if it is satisfied that a substantial injustice would otherwise be done. The Tribunal issued the correction sought by MTC that same day.

This latest  action was an application by Prince Hussam to set aside the s79 order extending the deadline for corrections. The main issue arising before the Court was whether the Tribunal had the power under Article 27.1 of the 1998 LCIA Rules to make the correction to the Award.

Prince Hussam submitted that:

  • Article 27.1 did not include a power for the clarification or removal of any ambiguity in an award. The Tribunal therefore had no mandate under the Article to correct the Award in the present circumstances; and
  • unlike some other arbitration rules – such as the UNCITRAL Rules –  the 1998 LCIA Rules did not include a right to apply to a tribunal to interpret an award. The present request by MTC was in substance a request for interpretation and hence impermissible.

Decision

The Court dismissed the application. It started by noting that the correct approach is to determine whether the circumstances were capable of coming within the language of Article 27.1. It was not considered helpful first to ponder whether the requested correction was an ‘interpretation’ or a ‘clarification’; the question to ask was whether there had properly been an “error of similar nature” to the types of error (computational, clerical or typographical) identified in Article 27.

On the facts, the Court found that it was clear that the Tribunal had intended to order Prince Hussam to pay the awarded amounts to MTC. It had formulated this order in a way that was conventional in arbitral awards by using the words “entitled to payment” and, even though the courts in another country had misunderstood this wording, there was no dispute as to what was intended. However, the Court considered that the Award contained an “error of expression” because its language could be misread to the point of not giving effect to the Tribunal’s intention. Such an error was similar to the types of error listed in Article 27.1 and the Court held that it therefore fell within the scope of this Article. As a result, the Court found that the Tribunal had the power to issue the correction sought by MTC under Article 27.1 of the 1998 LCIA Rules.

The Court went on to consider briefly the 2016 Xstrata v Benxi judgment (covered in an earlier blog post), where the High Court had concluded that “clarifying or removing ambiguity would fall within the words ‘any errors of a similar nature‘” of Article 27.1 of the LCIA Rules 1998. Prince Hussam had submitted that this finding in Xstrata was wrong and should not be followed. The Court noted that it was not necessary to conduct an analysis of the Xstrata case as the present application fell “fairly and squarely” within Article 27 of the LCIA 1998 Rules. However, the Court held that it would in any event follow the “sensible” decision in Xstrata as a matter of judicial comity as there were no cogent reasons not to. The Xstrata decision was therefore considered an additional reason why the application should be dismissed.

Comment

This decision demonstrates the willingness of the English courts to use their powers to extend time limits if substantial injustice would otherwise result. It further cements the courts’ practical and robust approach to the correction of awards, in line with the Xstrata judgment a few years prior. It is noteworthy that the 2014 version of the LCIA Rules expressly include the power of arbitral tribunals to issue corrections if an award contains “any ambiguity“, which means that this application would also have succeeded if made under the 2014 Rules. The courts’ pragmatic approach to issues of correction in this case is in line with the English courts’ pro-arbitration stance and is an important reminder that  oversights with unintended consequences in an award can be corrected to give effect to the intentions of the tribunal.

Craig Tevendale
Craig Tevendale
Partner
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Rutger Metsch
Rutger Metsch
Associate
+44 207 466 2291