CL-2025-000207 - [2025] EWHC 2713 (Comm)

The principal factors relevant to the exercise of the court’s power to extend time under section 80(5) of the Arbitration Act 1996 were summarised in AOOT Kalmneft v Glencore International AG [2002] 1 Lloyd’s Rep 128, per Colman J at [59]. Of these, most do not really assist either side in this case: neither the Defendant nor the FOSFA Board of Appeal contributed to the delay; the Defendant would suffer no particular prejudice if the extension were granted; the arbitration has not continued during the delay; and the merits of the substantive appeal are neither so strong nor so weak as to affect matters.

At 15 days, the length of the delay is not enormous. However, at over 50% of the entire time allowed under section 70(3), nor is it trifling. I regard it as significant, having regard to the observation of Popplewell J in Terna Bahrain Holding Company WLL v Al Shamsi [2012] EWHC 3283 (Comm), at [28], that:

“… the length of delay must be judged against the yardstick of the 28 days provided for in the Act. Therefore a delay measured even in days is significant.”

In these circumstances, the critical factor in this case must be whether the Claimant acted reasonably in permitting the permitted period of 28 days to expire.

I have already noted that the principal reason for delay from 26 March 2025 to 10 April 2025 was that the Claimant had difficulty in remitting the required funds to FOSFA, because of sanctions. This I regard as excusable, so far as it goes. However, if the Claimant had appreciated that it only had 28 days in total, it should have been at pains then to use the remaining 13 days effectively.

Unfortunately, the Claimant did not appreciate that only 12 days remained. In the arbitration proceedings, the Claimant was represented by Russian lawyers – originally Rybalkin, Gortsunyan, Dyakin & Partners, then Orion Partners – with English counsel. It changed its Russian lawyers to a new firm, LEVEL Legal Services, in mid-April (the precise date is not clear). The previous Russian lawyers apparently took the view that time only started to run from 10 April 2025, but it is not clear on what basis; for example, whether they received advice on this from the English counsel. When LEVEL Legal Services took over, they took steps to instruct English solicitors for the first time. The Claimant’s solicitors, Madison Legal, were not able to take the case on until 22 April 2025, and their letter of engagement was not signed until 24 April 2025 – by which date, time had already expired.

When Madison Legal started working, they researched the time available to commence proceedings, apparently by considering both Russell on Arbitration (4^th ed) and Merkin & Flannery on the Arbitration Act 1996 (6^th ed), in relation to section 70(3). Russell §6-070 cites UR Power GmbH v Kuok Oils and Grains Pte Ltd, at footnote 278; Merkin & Flannery §70.2.1 cites both UR Power GmbH v Kuok Oils and Grains Pte Ltd and PEC Ltd v Asia Golden Rice Co Ltd, at footnote 1019. The learning in these textbooks, and above all the authorities that they cited (which any interested reader should then have considered), ought to have warned Madison Legal of the perilous position that the Claimant was in. However, the Claimant’s evidence is that Madison Legal in fact understood the position to be that time ran only from receipt of the Appeal Award, on 10 April 2025.

I accept that Madison Legal presumably did not commence work until 24 April 2025. However, it is not an excuse for the Claimant to rely on the fact that it had no English lawyers advising it before that date: see AOOT Kalmneft v Glencore International AG at [64]-[65]. In any event, it has not been explained why no effort was made by LEVEL Legal Services to obtain advice from the English counsel who had represented the Claimant in the arbitration.

Mr Pennington-Benton drew attention to the extension of time that Hamblen J granted in PEC Ltd v Asia Golden Rice Co Ltd, on the basis that the true effect of section 70(3) was uncertain so the failure to comply in that case was explicable. He might also have pointed to the extension that Gross J would otherwise have granted in UR Power GmbH v Kuok Oils and Grains Pte Ltd. I do not regard these as good comparators. These both look generous to me, but there are explanations. In UR Power GmbH v Kuok Oils and Grains Pte Ltd, this was the first time that the meaning of section 70(3) ever came before the court; there were no authorities for Kuok’s legal advisers to consider; their mistake accordingly was perhaps forgivable. In PEC Ltd v Asia Golden Rice Co Ltd, it cannot be ignored that the parties had agreed that an extension should be granted, and the period of delay was shorter than here; furthermore, the only authority on the point was the obiter view of Gross J in UR Power GmbH v Kuok Oils and Grains Pte Ltd, which was still relatively recent.

Now, more than 15 years have passed since UR Power GmbH v Kuok Oils and Grains Pte Ltd, and 13 years since PEC Ltd v Asia Golden Rice Co Ltd. Subject to the difference between Gross J and Hamblen J as to the former’s comments at [60], both judgments have been adopted by the leading textbooks. The general understanding of the profession, which Gross J adverted to at [58(i)] and which I have recognised at [29] above, has become ever more entrenched. I find it difficult to regard the Claimant’s error as forgivable.

I therefore do not grant an extension of time under section 80(5) of the Arbitration Act 1996.