CL-2024-000678 - [2025] EWHC 2531 (Comm)

The legal principles governing contractual interpretation are very well known, and the Tribunal was referred to familiar authorities, notably Rainy Sky SA v Kookmin Bank [2011] UKSC 50; Arnold v Britton [2015] UKSC 36; Wood v Capita Insurance Services Ltd [2017] UKSC 24. In the Award, the Tribunal set out key passages from the speech of Lord Neuberger in Arnold v Britton and that of Lord Hodge in Wood v Capita Insurance Services Ltd. Before doing so, the Tribunal said:

“155.

Unsurprisingly, there was no dispute between the Parties in relation to the principles involved, but each Party emphasized different principles or aspects of the principles in support of its own case.

156.

In short, contractual interpretation is the ascertainment of the objective meaning of the relevant contractual language. This requires the Tribunal to consider the ordinary meaning of the words used, in the context of the contract as a whole and the background knowledge reasonably available to the Parties at the time of the contract.”

Before me, it was common ground not only that the Tribunal set out the relevant principles accurately, but also that it is not apparent from the Award that the Tribunal failed to apply those principles properly and faithfully.

Mr Chapman KC placed particular reliance on the passage in Lord Neuberger’s speech in Arnold v Britton at [17] – which was part of the citation set out in the Award – to the effect that the parties’ meaning is most obviously to be gleaned from the language of the provision, i.e., its natural and ordinary meaning.

Both he and Mr Quirk KC submitted that their respective arguments reflected the natural and ordinary meaning of the words used in Article 4(A)(1). It seems to me very telling that the two of them, both intelligent and experienced practitioners acting in good faith and with full sincerity, were able to say such entirely inconsistent things about natural and ordinary meaning.

There are three other things that I should say at this stage about the legal principles.

First, neither before the Tribunal nor before me was it argued by either side that the relevant language had a special meaning, established and recognised in the trade or industry. Before the Tribunal, AML relied on evidence from one of its factual witnesses, Mr Kipferler, to the effect that “factory price” meant the commercial price (i.e., one established by an arm’s length commercial arrangement) that an external party pays for a vehicle from an entity within the corporate group of the car manufacturer, whether that entity is the original manufacturer or not. The Tribunal refused to pay any regard to this evidence, on the basis that it merely reflected Mr Kipferler’s own subjective view. That was undoubtedly right.

Second, neither before the Tribunal nor before me was it argued by either side that the issue should be treated as one requiring an implied term. An arbitral or judicial decision that explains the meaning of a particular phrase necessarily adds a gloss to the actual words used, but this is not the same as implicitly writing in some extra words. It follows that the legal principles to be applied are those relating to contractual interpretation, not those relating to implied terms.

Third, when AMMENA sought leave to appeal, it had to persuade the Court that the Tribunal’s Award was “obviously wrong”, this being the test prescribed for the granting of leave to appeal under Section 69(3)(c)(i) of the Arbitration Act 1996. Permission to appeal having been granted, I simply have to decide the appeal. It is AMMENA’s appeal, so the persuasive burden is on AMMENA to persuade the Court that the Award was wrong and that the question of law that the appeal identifies should now be given a different answer. However, the test to be applied is not “obviously wrong.” Mr Quirk KC suggested that, even after leave has been granted, the Court dealing with the substantive appeal on the merits can and should still apply the “obviously wrong” test. I see no support for this in the language of Section 69, and I note that this appears to have been the view of Moulder J in Fehn Schiffahrts GmbH & Co. KG v Romani SpA [2018] EWHC 1606 (Comm), at [15]; of Sir Nigel Teare in Regal Seas Maritime SA v Oldendorff Carriers GmbH & Co. KG [2021] EWHC 566 (Comm), at [1]; and of Cockerill J in CVLC Three Carrier Corp v Arab Maritime Petroleum Transport Co. [2021] EWHC 551 (Comm), at [34]. Mr Quirk KC relied in particular on the decision of HHJ Waksman QC (as he then was) in Agile Holdings Corp. v Essar Shipping Ltd. [2018] EWHC 1055 (Comm), at [19]; but I do not regard that judgment, fairly read, as intending to suggest that an appeal such as the one before me can only succeed if the Award was obviously wrong, even after leave to appeal has been granted.