England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		17/12/2009

Mr. Justice Teare:

1. This is the determination of two issues which arise for determination on the Claimant's claim for a declaration under section 72 of the Arbitration Act 1996 or at common law that a GAFTA arbitration tribunal lacked jurisdiction to determine a claim brought by the Defendant to this application or, in the alternative, for an order under section 67 of the Arbitration Act 1996 setting aside an Interim Award by the tribunal ruling that it had jurisdiction. The two issues which are now to be decided are:

i) whether the Claimant "took part" in the arbitration thereby disabling them from making an application under section 72 or at common law; and

ii) whether the period of 28 days allowed for making an application under section 67 should be extended.

The facts

2. On 31 October 2007 the Defendant ("Toepfer") commenced GAFTA arbitration proceedings against the Claimant ("Broda"). Toepfer claimed damages from Broda for breach of a contract said to have been concluded in February 2007 and varied in July 2007 for the supply by Broda to Toepfer of a quantity of milling wheat.
3. Broda maintains that no concluded contract was made. On 19 December 2007 Broda issued proceedings in the Arbitration Court of the Krasnodar Territory, Russia, for a declaration that there was no contract.
4. On 3 January 2007 Toepfer filed its first submission with GAFTA claiming damages against Broda in the sum of US$5,462,668.35.
5. On 31 January 2008 Argyrou & Co, a firm of lawyers in Cyprus wrote to GAFTA disputing jurisdiction on behalf of Broda. It is necessary to summarise what they said.
6. The letter was headed "without prejudice and with full reservation of rights". Broda referred to Toepfer's claim and said "we are herewith contesting the jurisdiction of GAFTA to hear this dispute on the grounds that a valid contract was never entered into and therefore that the arbitration clause therein is not binding on the parties." Broda then said that it was not appropriate "to advance herein the detailed reasons for our view that a binding contract was never formed" but then noted three points which, it seems, were mentioned as support for their view. That was all done in paragraph 1. The remainder of the letter, paragraphs 2-8, purports to explain why Broda had brought proceedings in the Russian Federation seeking a declaration that a binding contract was never formed and requesting that the GAFTA proceedings be stayed until the proceedings in the Russian Federation had been concluded. A copy of the Particulars of Claim issued in the Russian Federation was enclosed "for your convenience."
7. On 15 February 2008 GAFTA wrote to both parties stating that jurisdiction would be decided first and as a separate issue. GAFTA referred to Broda's letter dated 31 January 2008 as "submissions".
8. On 3 March 2008 Toepfer provided their "reply submissions". Having set out their detailed submissions over 28 paragraphs as to why there was a binding contract and arbitration clause Toepfer requested GAFTA to reject the request for a stay and to proceed with the arbitration on the merits.
9. On 14 March 2008 GAFTA gave Broda the opportunity to submit "rejoinder submissions".
10. On 23 March 2008 Argyrou & Co., on behalf of Broda, wrote to GAFTA again. They began by saying that they wished only to address the issues "that pertain to GAFTA's jurisdiction to hear this dispute" (paragraph 1). But they emphasised that their letter was not intended to be a reply to Toepfer's reply submissions (paragraph 2). They said that the issue as to jurisdiction should be considered by a court of law (paragraphs 3-5). The most appropriate court was the Russian court (paragraphs 6-9) where service had been accepted (paragraph 10). The letter ended by saying:

"For all of the aforementioned reasons we hereby strongly contest GAFTA's jurisdiction to hear the present dispute and we thus request that it does not accept jurisdiction to hear the case."

11. On 28 May 2008 the Russian Court decided that there was no contract.
12. On 7 June 2008 Argyrou & Co. on behalf of Broda informed GAFTA of the decision. They said that since there was no contract GAFTA had no jurisdiction. They said that a translated copy of the decision would be provided to GAFTA. The letter concluded by saying:

"We are of the view that the reasoning of the said Court should play an integral part in a decision by GAFTA to decline jurisdiction in this case."

13. On 3 July 2008 GAFTA issued an Interim Award on Jurisdiction. The award referred to Broda's "challenge to jurisdiction" and referred to Broda's submissions. But the award also noted that Broda had not addressed the detailed evidence placed before the Tribunal by Toepfer. "The tribunal has therefore not had any assistance from [Broda] upon the emails produced by Mr. Schmidt, upon the negotiations relating to the setting up of the contract and the amendment to it nor on any statement which challenges the contents of the Statutory Declaration of Mr. Schmidt." The tribunal concluded that there was a binding contract. It noted the decision of the Russian court but disagreed with it. The tribunal therefore ruled that it had jurisdiction to determine the substantive dispute and gave directions for submissions by both parties on the substantive dispute.
14. On 3 September 2008 Argyrou & Co., on behalf of Broda, provided a "set of submissions" to GAFTA in response to Toepfer's submissions dated 3 January 2008 and 3 March 2008. These submissions were divided into 7 chapters. Chapters 1-5 dealt with issues of liability and damages. Chapter 6 dealt with "the arbitration issue". Broda summarised its reasons for continuing to contend that the GAFTA tribunal lacked jurisdiction. In chapter 7 Broda asked the tribunal to dismiss the claim and order Toepfer to indemnify Broda in respect of its legal costs.
15. Toepfer responded on 23 September 2008.
16. On 29 October 2008 Broda wrote to GAFTA seeking removal of the tribunal on the grounds that since the tribunal had determined in the interim award that there was a contract "it renders any attempt of Broda to defend the substantive claim futile." Doubts were also expressed as to the impartiality and competence of the tribunal.
17. GAFTA replied on 31 October 2008 to the effect that the request for removal was denied.
18. On 7 November 2008 Broda reiterated its request for the tribunal to be removed and threatened an application to the English Court pursuant to section 24 of the Arbitration Act 1996 for removal but said that if the tribunal were not removed it would serve its Rejoinder on 10 November 2008. Those submissions were provided on 10 November 2008. They reiterated the argument that there was no contract and that there should be no award of damages.
19. On 19 February 2009 the tribunal delivered its Final Award. The tribunal reviewed its procedure and findings as to jurisdiction in view of the criticisms that been made of it. The tribunal then addressed the substantive dispute and found that Broda had acted in breach of contract. Damages in the sum of US$5,462,668.25 were awarded together with interest and costs.
20. Thereafter, on 30 July 2009, Broda appealed the Final Award to a GAFTA appeal tribunal.
21. On 31 July 2009 I gave permission to Toepfer to enforce the Final Award subject to an application by Broda to set aside my order within 28 days of service. On 12 August 2009 Broda served its appeal submissions and on 2 September 2009 Toepfer did so.
22. On 7 September 2009 Broda applied to this court to set aside my order giving permission to enforce the award and wrote to GAFTA requesting a stay of the appeal pending the application to this court. On 17 September 2009 a stay was refused. On 8 and 10 November 2009 Broda and Toepfer served further submissions in the GAFTA appeal. On 30 November 2009 Broda's application to this court was heard.

Section 72

23. Section 72 of the Arbitration Act 1996 provides:

(1) A person alleged to be a party to arbitral proceedings but who takes no part in the proceedings may question

a) whether there is a valid arbitration agreement

b) ……………

c) ……………

by proceedings in the court for a declaration or injunction or other appropriate relief

(2) …………..

24. Section 72 preserves the common law entitlement to seek a declaration that an arbitration tribunal lacks jurisdiction but limits its application to circumstances where the applicant has taken no part in the arbitration proceedings. It follows that if an applicant has taken part in the arbitration proceedings he has no additional right at common law to seek a declaration that the arbitration tribunal lacks jurisdiction.
25. The apparently simple question which arises for decision is whether it can properly be said that Broda took no part in the GAFTA arbitration. However, before seeking to answer that question it is necessary to refer to two previous cases which have considered section 72 of the Arbitration Act 1996 and to a submission made on behalf of Broda as to the true construction of s.72.
26. The first case is Caparo Group Limited v Fagor Arrasat Sociedad Cooperative 2000 ADRJ 254, a decision of Clarke J. (as he then was). That case involved an ICC arbitration. Caparo had by letter dated 14 August 1997 requested the ICC to reject the arbitration on the grounds that it had no jurisdiction. The letter contained a simple statement that Caparo was not a party to the contract and was not therefore a party to the arbitration agreement.
27. Clarke J. accepted the submission that "if a person takes any part in an exercise of the jurisdiction of the arbitral tribunal to determine its own substantive jurisdiction within section 30, he will not have taken no part within the meaning of section 72." Thus if a person takes part in the exercise of such jurisdiction he will have taken part in the arbitration and as a result he will have no right to seek relief pursuant to section 72. Clarke J reached the conclusion that it could not fairly be held that Caparo intended to take part in any part of the process. He considered that Caparo were simply saying "it has nothing to do with us. The ICC has no jurisdiction."
28. The second case is Law Debenture Trust Corporation PLC v Elektrim Finance BV [2005] 2 Lloyd's Reports 755, a decision of Mann J. That case concerned an LCIA arbitration. One of the matters to be decided was whether Law Debenture had taken part in the arbitration proceedings by seeking to bring about a dismissal of the proceedings in correspondence and by participating in the selection process of a second arbitrator (see para.22). Mann J. held that Law Debenture had not taken part in the arbitration proceedings. First, he held that Law Debenture had merely objected to the arbitration and taken the jurisdiction point. Second, he held that Law Debenture had not sought to appoint a second arbitrator (see para.27). He drew a distinction between, on the one hand, a submission that an arbitrator should not be acting and, on the other hand, attempting to argue the case against jurisdiction so that the arbitrators can consider it. He put the point this way (at para. 28):

"[Law Debenture] was asserting non-jurisdiction, not participating in the exercise of it."

29. Both of these cases must be understood by reference to their own facts but they do give some guidance as to what may amount to taking part in an arbitration and what may not. A person may inform a tribunal of his view that the tribunal lacks jurisdiction without being held to have taken part in the arbitration proceedings. But if he makes submissions to the tribunal for it to take into account when exercising its jurisdiction under section 30 of the Arbitration Act 1996 to rule on its own substantive jurisdiction he risks being held to have taken part in the arbitration proceedings.
30. Counsel for Broda submitted that section 72 was concerned only with taking part in the arbitration proceedings in order to challenge the jurisdiction of the tribunal. He submitted that taking part on the merits or substance of the alleged claim did not amount to taking part in the arbitration proceedings for the purposes of section 72. This was an important submission in the context of the present case because Broda made submissions on the merits of Toepfer's claim.
31. The principal points made in support of this submission were as follows:

i) Section 72 is concerned with jurisdiction only. Its terms mirror those of section 30 which is concerned with the tribunal's power to rule on its own jurisdiction.

ii) Paragraph 295 of the DAC Report, which comments on what became section 72, states that a person who disputes that an arbitral tribunal has jurisdiction cannot be required to take part in the proceedings or to take positive steps to defend his position. He must be entitled to ignore the arbitration process. But those who decide to take part in the arbitral proceedings in order to challenge the jurisdiction are in a different category (emphasis added).

iii) In Caparo Clarke J. accepted that a person who takes part in any part of an arbitral proceeding which involves a consideration of the tribunal's jurisdiction does not satisfy the test in section 72 (emphasis added).

32. I am not able to accept Broda's submission.

i) Section 72 states that the condition to be satisfied by a person wishing to avail himself of section 72 is that he "takes no part in the proceedings". It does not state in terms that the condition to be satisfied is that he "takes no part in the proceedings in order to challenge the jurisdiction of the arbitration."

ii) There is no reason to imply any such condition in section 72. Section 72 provides that a person who takes no part in the arbitration proceedings may question the jurisdiction of the tribunal by seeking a declaration or injunction. Just as a person who takes part in the arbitration proceedings to challenge the jurisdiction of the tribunal can fairly and properly be required to abide by section 67 if he wishes to challenge the jurisdiction of the tribunal (save as provided by section 72(2)) so a person who takes part in the arbitration proceedings to make submissions on the merits of the claim can fairly and properly be required to abide by section 67 if he wishes to challenge the jurisdiction of the tribunal (save as provided by section 72(2)).

iii) The circumstance that the right provided by section 72 is a right to question the jurisdiction is not therefore a reason for limiting the simple words "takes no part in the proceedings" in the manner suggested.

iv) The commentary on section 72 in the DAC report refers to those who take part in arbitral proceedings in order to challenge jurisdiction but I do not consider that the author of the commentary meant thereby to say that those who take part in arbitral proceedings to make submissions as to the merits of the claim have taken "no part in the arbitration proceedings". It seems to me likely that the author mentioned the case of those persons who take part in arbitral proceedings in order to challenge jurisdiction as an example of those who would forfeit their rights under section 72. But if that is wrong then there is, as I have said, no support for the suggested limitation in the language of section 72.

v) Commercial Arbitration, 2001 Companion Volume, by Mustill and Boyd agrees with the view I have reached. At p.362 it is said:

"It is we think clear that a person takes part in arbitral proceedings not only by taking steps to contest the merits but also by simply taking steps to challenge the substantive jurisdiction of the tribunal."

In a footnote it is added:

"We do not read [para.295 of the DAC Report] as indicating that the Arbitration Act s.72 applies only to a person who has an objection to the jurisdiction, although this is the only case mentioned here."

vi) I do not consider that the judgment of Clarke J. in Caparo can fairly be read as support for the suggested limitation. The facts of that case concerned a person who was said to have taken part in arbitral proceedings which involved consideration of the tribunal's jurisdiction. Neither counsel nor the judge was concerned with a case where a person took part in arbitral proceedings by making submissions on the merits of the claim. Therefore what Clarke J. said cannot fairly be taken as saying that such a person should not be regarded as having taken part in the arbitration proceedings.

33. I can now return to consider whether, on the facts of the present case, Broda took no part in the arbitration proceedings.
34. I do not consider that Broda's correspondence with the tribunal between 31 January 2008 and the making of the Interim Award on jurisdiction on 3 July 2008 amounted to taking part in the arbitration. Broda informed GAFTA that they contested the tribunal's jurisdiction but did not seek to participate in the exercise by the tribunal of its jurisdiction to rule on its own jurisdiction. Instead, they requested the Russian court to decide the question of jurisdiction. I agree that there are passages in the correspondence which might suggest that Broda were inviting the tribunal to rule that it had no jurisdiction (eg when Broda passed on the Russian court's judgment to the tribunal Broda stated that "the reasoning of the said Court should play an integral part in a decision by GAFTA to decline jurisdiction in this case"). But I consider that it is necessary to stand back and take a broader view of what Broda were doing. Throughout this period Broda were arguing the question of jurisdiction in the Russian court. They were not arguing that question before the arbitration tribunal.
35. However, after the Interim Award on jurisdiction was published Broda clearly took part in the arbitration. By their submissions dated 3 September 2008 and 10 November 2008 they made submissions on the merits of the claim. The greater part of these submissions was taken up with the question whether or not there was a contract which had already been determined by the tribunal in the Interim Award so that it can be said that Broda maintained their objection to the tribunal's jurisdiction. But I do not consider that this assists Broda. Chapters 1-5 of the submissions dated 3 September 2008 were expressly about liability, breach and damages. Broda were seeking to persuade the tribunal, when exercising its jurisdiction (which it had ruled that it had) to determine the merits of Toepfer's claim, to dismiss the claim and order that Toepfer indemnify Broda in respect of its legal costs. That appears to me to be clearly taking part in the arbitration proceedings.
36. That being so the right to seek a declaration pursuant to section 72 would appear to be lost.
37. It is at this stage that I must address an argument addressed to me based upon Article 6 of the European Convention on Human Rights (ECHR) which provides:

"In the determination of his civil rights and obligations……everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law …….. "

38. Section 3 of the Human Rights Act 1998 requires that all legislation be interpreted consistently with Convention Rights insofar as possible.
39. Broda's argument was as follows. The right to a public hearing protected by Article 6 of the ECHR can be waived. Thus the right to a public hearing can be waived by a party who agrees to submit a dispute to arbitration; see Sumukan Ltd. v The Commonwealth Secretariat [2007] EWCA Civ.243, Stretford v Football Association [2007] EWCA Civ 238 and [2007] 2 Lloyd's Rep.31 and Fiona Trust Holdings v Privalov [2008] 1 Lloyd's Rep 254 at para.20. However, such a waiver must, pursuant to the Strasbourg jurisprudence, be unequivocal, made with informed consent and accompanied by guarantees commensurate with the importance of the right being waived; see Stretford v Football Association [2007] EWCA Civ 238 and [2007] 2 Lloyd's Rep.31 at para.54 (unequivocal), Sumukan Ltd. v The Commonwealth Secretariat [2007] EWHC 188 (Comm) at para.80 (informed consent) and Suovaniemi v Finland Application No. 31737/96 (commensurate guarantees). Since the effect of taking part in arbitration proceedings deprives a person of his common law right to a public hearing of the issue whether or not an arbitration tribunal has jurisdiction to determine a claim, the phrase in section 72 "a person …who takes no part in the [arbitration] proceedings" must be interpreted as a person who has waived his right to have the question of the tribunal's jurisdiction determined at a public hearing. If it is not so interpreted then a person such as Broda will be unjustifiably deprived of his right to a public hearing of that issue. On the facts of this case it is said that it cannot be shown that Broda has unequivocally and with informed consent waived its right to seek a declaration from this court that the GAFTA arbitration tribunal has no jurisdiction. That is because Broda, in the person of its director Igor Pinkevich, was unaware of certain matters of the English law of arbitration, in particular that after the publication of the Interim Award on jurisdiction Broda "should in fact have applied to the High Court". He was taking advice from the in house lawyers in Nastyusha LLC, another grain company with which Broda is affiliated and of which Mr. Pinkevich is a director. It was only when he instructed English lawyers that he became aware of the "catalogue of errors" in the advice he had received.
40. I do not accept that the effect of taking part in arbitration proceedings deprives a person of the right to a public hearing of the question whether an arbitral tribunal has jurisdiction to determine a claim. The substantive jurisdiction of a tribunal may be challenged pursuant to section 67 of the Arbitration Act 1996 by a person who has taken part in the arbitration proceedings in question. Where an application under section 67 is based on the argument that there was no agreement to arbitrate at all the court can hear evidence and in effect rehear matters already determined by the arbitral tribunal; see Azov Shipping v Baltic Shipping [1999] 1 Lloyd's Rep.68.
41. The remedies provided by sections 72 and 67 are different in that the former provides for a declaration or an injunction whereas the latter provides for the award to be set aside. But I do not consider that this matters in the present context. In both cases the question would be (in the present case) whether the parties had made a binding agreement containing an arbitration clause.
42. There is a time limit for applications under section 67, namely 28 days from the date of the award; see section 70(3) of the Arbitration Act 1996. Where, as here, that period of time elapses without an application under section 67 being made to challenge an Interim Award on jurisdiction and subsequently a person takes part in the arbitration he will only have lost his right to challenge the jurisdiction of the tribunal pursuant to section 67 if he fails to obtain an extension of time pursuant to section 80(5) of the Arbitration Act 1996. It was not contended that the time limit of 28 days, coupled with the discretion to extend time, was a breach of Article 6 of the ECHR.
43. For these reasons I do not accept the submission that the phrase in section 72 "a person …who takes no part in the [arbitration] proceedings" must be interpreted as a person who has waived his right to have the question of the tribunal's jurisdiction determined at a public hearing.
44. After this excursion to the law of the ECHR I can return to section 72 of the Arbitration Act 1996. I conclude, for the reasons which I have already expressed, that Broda has taken part in the arbitration proceedings and therefore cannot apply for a declaration that the tribunal has no jurisdiction pursuant to section 72 of the Arbitration Act 1996. Broda still has, however, a right to apply for an extension of time in which to seek an order that the Interim Award on jurisdiction be set aside pursuant to section 67 of the Arbitration Act 1996 on the grounds that the tribunal had no jurisdiction.

Section 67

45. The second matter which arises for decision at this hearing is Broda's application for an extension of time for challenging the jurisdiction of the GAFTA tribunal pursuant to section 67 of the Arbitration Act 1996. There was no dispute that the time limit for such a challenge expired 28 days after the Interim Award on jurisdiction was published on 3 July 2008. Thus time expired on 31 July 2008. The application to extend time was made on 2 October 2009. The court has discretion to extend that time limit pursuant to section 80(5) of the Arbitration Act 1996.
46. The manner in which this discretion should be exercised was considered by Colman J. in Kalemneft v Glencore [2002] 1 Lloyd's Rep.128. In Nagusina Naviers v Allied Maritime Inc [2002] EWCA Civ 1147 and [2003] 2 CLC 1 the Court of Appeal was referred to the guidance given by Colman J. and did not dissent from it. Since then the guidance given by Colman J has been followed in this court; see The Joanna V [2003] 2 Lloyd's Rep 617 per Thomas J., DDT Trucks of North America Ltd. [2007] 2 Lloyd's Rep. 213 per Cooke J. and The Amer Energy [2009] 1 Lloyd's Rep. 293 per Flaux J. The guidance has also been followed in the Technology and Construction Court; see L. Brown and Sons Ltd. v Crosby Homes [2008] EWHC 817 per Aikenhead J.
47. Notwithstanding this consistent approach to applications for an extension of time pursuant to section 80(5) counsel for Broda submitted that the court's approach should be rooted more firmly in the language of the rules of the CPR, and in particular Rule 3.9, because it is to those rules that section 80(5) makes reference. However, Colman J. was well aware that section 80(5) made reference to the CPR; see paragraphs 47 and 48 of his judgment. He then went on (at paragraphs 48-58) to consider the philosophy of the Arbitration Act 1996 and the manner in which it differed from that of the CPR. He considered that was relevant when determining the weight to be applied to the discretionary criteria when an application for an extension of time was made pursuant to section 80(5). This approach has not been criticised in any subsequent case and, as I say, has been followed in this court.
48. I consider that I should address the matters identified by Colman J. as likely to be material on an application under section 80(5) and then address such other matters as counsel for Broda submitted were relevant.
49. The length of the delay: The delay in the present case is very considerable. It is 14 months from 31 July 2008 to 2 October 2009.
50. Whether Broda acted reasonably in permitting the time limit to expire and the subsequent delay to occur: The essential reason that time expired and delay occurred was that Broda was not in receipt of correct advice on the English law of arbitration. It was not aware of the time limit of 28 days in section 70(3) of the Arbitration Act 1996.
51. Broda's evidence, which has had to be corrected, is that it took advice from Russian lawyers only. Argyrou and Co. were only used to check documents drafted by the Russian lawyers for errors of grammar and syntax, to sign the documents and send them to GAFTA. In taking advice from Russian lawyers only I am unable to accept that Broda acted reasonably. Broda is a grain trader and has been such since 1994. It has concluded contracts with some of the largest and most reputable grain trading companies in the world. Its trading partners are located all over the world in England, France, Switzerland, Israel, Egypt, Morocco, Japan, Turkey and Singapore. On 3 January 2008 the claim in this case was advanced against Broda in London before GAFTA for the sum of $5,462,668.25. In my judgment it was unreasonable not to incur at that time the cost obtaining the advice of an English lawyer in connection with such a claim before GAFTA in London. The Interim Award on jurisdiction was issued by the GAFTA tribunal in London on 3 July 2008. That award disagreed with the decision of the Russian court. If an English lawyer had not been instructed to advise before, he should have been instructed then. The Final Award on liability was issued on 19 February 2009. Even then an English lawyer was not instructed. It was not until 21 August 2009 that English lawyers were instructed. The application for an extension of time was then issued on 2 October 2009.
52. Mr. Pinkevich says that it is only with hindsight that he realises that an English lawyer ought to have been instructed in relation to the GAFTA arbitration. I disagree that hindsight is required. The making of a claim in London for almost $6m. was good reason for instructing an English lawyer. The publication of an Interim Award that the GAFTA tribunal had jurisdiction, contrary to the contention of Broda, was a further good reason for instructing an English lawyer; cf Kalemneft v Glencore at paragraphs 63-65.
53. Whether the respondent or the tribunal caused or contributed to the delay: Neither did.
54. Whether the respondent would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if time were extended: Toepfer would not suffer such prejudice.
55. Whether the arbitration has continued during the delay: It has. The Final Award was issued and an appeal is underway.
56. The strength of the application: Broda did not suggest that I could form a view of the merits at this time. There are different accounts of the negotiations, including telephone conversations, which require to be tested at trial. By contrast Toepfer suggested that it was clear that the parties had agreed upon a binding arbitration clause, whether or not a binding contract of sale had been agreed. Whilst I understand why this is arguable it is not possible to say that it is "clear". The essence of Broda's case is that price was never agreed. In the circumstances I will assume that Broda had an arguable case that it had not agreed to arbitration.
57. Whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined: Broda says that it would be unfair because it faces an award of $6m. in circumstances where it has not had its evidence on the question as to whether there was a contract considered by either the arbitration tribunal or the court. If one assumes that its claim that there was no contract is arguable this is an undoubted hardship. But the question is whether that hardship is unfair. Had Broda acted reasonably and appointed an English lawyer in either January or July 2008 an application under section 67 is likely to have been made within 28 days of the Interim Award on jurisdiction or very shortly thereafter. That is a simple step to have taken and would have avoided any hardship. By not instructing an English lawyer in relation to an arbitration in London Broda took a risk that the advice it received from Russian lawyers would not be appropriate or correct. Taking a broad view I am unable to say that it would be unfair for Broda to be denied the opportunity of having its application under section 67 determined.
58. This therefore is a case where there is considerable delay caused by Broda's unreasonable failure to seek advice from an English lawyer. Whilst Toepfer would not suffer irremediable prejudice were time extended Toepfer incurred the cost of proceeding to a Final Award and obtained leave to enforce the Final Award before any challenge was made to the Interim Award on jurisdiction. Although Broda has an arguable case on jurisdiction it would not be unfair to Broda if Broda were denied the opportunity to establish its case pursuant to section 67 of the Arbitration Act 1996. I was not persuaded that it was appropriate to extend time.
59. As I have indicated counsel for Broda has relied on other matters arising out of CPR Part 3.9. The first is the administration of justice. Broda relies upon the fact that it faces an award of US$6m. without having had the opportunity to put forward its case on the alleged contract. I have already considered whether that hardship is unfair in the circumstances of this case. The second is whether the application for relief has been made promptly. It plainly has not been made promptly. The third is whether the failure to comply was intentional. It was not. The fourth is whether there is a good explanation for the failure. For the reasons I have given there was not. The fifth is whether the party in default has complied with other rules. The GAFTA rules have been complied with save that the appeal was filed late. The sixth is whether the failure to comply was caused by the party or his legal representative. It was caused by the fault of Broda to seek advice from an English lawyer as to the English law of arbitration. The seventh is whether the trial date can still be met. There has been a Final Award and an appeal is pending. The eighth is the effect of the failure to comply on each party and the ninth is the effect of granting relief on each party. As I have said Toepfer will not suffer irremediable prejudice if time is extended. Broda will suffer a hardship if time is not extended.
60. I do not consider that the factors listed in CPR 3.9 materially add to the matters which I had previously considered or persuade me that it is appropriate to extend time.
61. Lastly, it is said that the extension of time would accord with the overriding objective in the CPR Part 1 of putting the parties on an equal footing, encourage a just resolution of the dispute and avoid a disproportionate hardship to Broda. These considerations can fairly be said to be part of the overall assessment as to whether a refusal of an extension of time would, in all the circumstances of this case, be unfair to Broda. I have already said why I do not consider that it would be unfair but I will examine the question again with express reference to the considerations relied upon by Broda.
62. Broda does not claim to be a novice in the grain trading market or to lack resources to defend its interests. The suggestion that Broda and Toepfer are not on an equal footing stems, I think, from the circumstance that Toepfer's evidence has been considered by the GAFTA tribunal whereas Broda's evidence has not been considered. This situation results, however, from the decision of Broda not to participate in the exercise by the GAFTA tribunal of its jurisdiction to rule on its own jurisdiction. In so deciding Broda took the risk that the tribunal might rule that it had jurisdiction. Broda made its situation worse by not seeking the advice of an English lawyer and thus not being aware that after the Interim Award on jurisdiction had been issued Broda could have applied to the English court for a declaration that the tribunal had no jurisdiction pursuant to section 72 of the Arbitration Act 1996 or for an order setting aside the Interim Award of the tribunal pursuant to section 67 of the Act on the grounds that the tribunal had no jurisdiction. Thus, to the extent that the parties are not on an equal footing, that flows from Broda's own conduct.
63. Broda say that an extension of time will encourage the just resolution of the dispute. The dispute has been ruled on by the GAFTA tribunal. It did so without evidence from Broda. As I have said, that was because Broda chose not to provide such evidence. To the extent that that creates an injustice it flows, as I have said, from Broda's own conduct.
64. Thus one comes to the last question: is the hardship which Broda will suffer if time is not extended disproportionate to its fault in not instructing an English lawyer ?
65. It appears that Broda sought oral advice from two Russian lawyers who worked for a company associated with it. Although a very substantial claim was being brought against it before GAFTA in London no attempt was made to seek advice from an English lawyer. This was a serious error.
66. Broda's error was not a momentary error. Broda persisted in it from January 2008 until August 2009. During that time the Interim Award on jurisdiction was issued in July 2008 and the Final Award on the merits was issued in February 2009. Neither award provoked Broda to seek advice from an English lawyer. The result of this continued failure to seek advice from an English lawyer was that the delay in seeking an extension of time was very long indeed, from August 2008 until October 2009.
67. In these circumstances I am unable to agree with the submission that the hardship which will be suffered if time is not extended is disproportionate to Broda's fault in not seeking advice from and English lawyer.
68. I have therefore concluded that the court should not extend time by some 14 months to enable Broda to challenge the ruling on jurisdiction made by the GAFTA tribunal in July 2007.

Stay of enforcement

69. In the event that Broda failed on the two issues which I was asked to determine Broda nevertheless sought a stay of the enforcement of the award. This was on the grounds that the award was under appeal and there was good reason to consider that the quantum of the award may be reduced. That was because the tribunal itself at paragraphs 35 and 36 of its Final Award expressed concern at the evidence before it but felt that it must be accepted in the absence of evidence to the contrary. Broda says that it has now provided such evidence.
70. A stay was opposed on the grounds that Toepfer had also provided further evidence which supported the award. In any event it was said that that if Broda's evidence were accepted there would still be an award of damages in excess of US$4m. Broda did not challenge that figure. Reference was also made to Socadec SA v Pan Afric Impex Company Limited [2003] EWHC 2086 which identified as material on such applications the strength of the argument against the award and the ease or difficulty of enforcing the award.
71. With regard to the latter consideration I was informed that Broda was presently on the list of GAFTA defaulters in respect of its failure to pay an earlier award. That was not challenged.
72. The text of the Final Award suggests that the appeal on quantum may succeed. That is not certain because Toepfer have lodged further evidence. However, there is also reason to think that enforcement of the award may be difficult. In those circumstances I consider that the appropriate order is to stay enforcement upon terms that Broda provide security in such sum as is likely to be awarded on appeal if Broda's evidence on quantum is accepted, namely, US$4m.

Conclusion

73. (i) Broda is unable to apply for a declaration that the GAFTA tribunal lacked jurisdiction pursuant to section 72 of the Arbitration Act 1996 or at common law because it took part in the arbitration.

(ii) The time for applying for an order setting aside the Interim Award on jurisdiction pursuant to section 67 of the Arbitration Act 1996 is not extended

(iii) A stay of enforcement is granted on condition that Broda provided security in the sum of US$4m.

74. I shall ask counsel to prepare a draft order.