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Irish High Court extends time for commencing arbitration proceedings
Practical Law UK Legal Update Case Report 1-507-1322 (Approx. 4 pages)
Irish High Court extends time for commencing arbitration proceedings
| Published on 04 Aug 2011 • Ireland |
Joe Kelly (Partner) and Andrew Walsh (Associate), A&L Goodbody
On 23 May 2011, the Irish High Court used its discretionary power under section 45 of the Irish Arbitration Act 1954 to grant an application to extend the time for commencing arbitration that was stipulated in the arbitration agreement.
Background
Section 45 of the Irish Arbitration Act 1954 (1954 Act) provided that the court may extend the time period in which disputes can be referred to arbitration that are fixed by an agreement, if it is of the opinion that undue hardship would otherwise be caused.
Section 4(2) of the Irish Arbitration Act 2010 (2010 Act) provides that the repeal of the 1954, 1980 and 1998 Acts shall not:
"prejudice or affect, any proceedings, whether or not pending at the time of the repeal, in respect of any right, privilege, obligation or liability and any proceedings taken under those Acts in respect of any such right, privilege, obligation or liability acquired, accrued or incurred under the Acts may be instituted, continued or enforced as if the Acts concerned had not been repealed".
Facts
The applicant sought to extend the time period stipulated in the arbitration agreement within which a dispute could be referred to arbitration.
The relevant arbitration clause provided that any dispute relating to liability:
"shall, in default of agreement, be referred within nine calendar months of the dispute arising, to an arbitrator…….If the dispute has not been referred to arbitration within the aforesaid nine-month period, then the claim shall be deemed to have been abandoned and not recoverable thereafter".
It should be noted that the court considered this application by reference to the legislation preceding the enactment of 2010 Act.
Decision
Application of the 1954 Act
Notwithstanding that the nine month period had expired, the court, on the basis of the discretionary power vested in it pursuant to section 45 of the 1954 Act, granted an extension of time to allow the dispute to be referred to arbitration.
Why the 1954 Act and not the 2010 Act?
The court determined the case in accordance with the provisions of the 1954 Act on the basis that the right of the applicant was acquired prior to the operative date for the 2010 Act (8 June 2010). The 2010 Act was signed into law on 8 March 2010 and entered into force on 8 June 2010 (see Legal update, Scottish and Irish Arbitration Acts enter into force). The 2010 Act repealed the Arbitration Act 1954, Arbitration Act 1980 and Arbitration (International Commercial) Act 1998.
In this regard, the court referred to section 4(2) of the 2010 Act, which deals with the repeal of the 1954, 1980 and 1998 Acts and confirms that any arbitration commenced after 8 June 2010 is governed by the 2010 Act (for more information on the 2010 Act, see Practice note, The Irish Arbitration Act 2010). The fact that there is no provision similar to section 45 of the 1954 Act in the 2010 Act means that any residual power the court might have had to intervene in such a manner has now de facto and de jure, been abolished.
Application of the 2010 Act – Post 8 June 2010
It is interesting to note that the court, in granting the application under the 1954 Act, then ordered that the arbitration would be governed by the provisions of the 2010 Act. This was on the basis that the arbitration would commence after 8 June 2010 and thus come under the remit of the 2010 Act.
It is also noteworthy that the court, in delivering its judgment, considered what additional orders should be made. The court held that the applicant was liable for the respondent's costs of the application to extend time, as it was the failure on the part of the applicant to comply with the time limit contained in the arbitration clause which gave rise to the application.
However, the court declined to follow two previous Irish High Court authorities relied on by the respondent, which provided a precedent for the grant of the extension of time being conditional on a further order being made that would require the applicant to be responsible for the costs of the arbitration, even if the applicant were to be successful. The court based its decision on not wanting to interfere with the arbitrator's jurisdiction as to where liability for costs should lie.
Comment
The court's decision in this case is an endorsement of a growing body of court decisions which reflect the judicial support for the arbitral process in this jurisdiction. It also demonstrates Irish judicial support for the independence of arbitrators in deciding disputes in line with Article 5 of the UNCITRAL Model Law, which is adopted under section 6 of the 2010 Act. Section 6 provides that "in matters governed by this law, no Court shall intervene except where so provided in this law". The 2010 Act provides for very limited court interference in the arbitral process, and this combined with the new powers given to arbitrators, serves to promote the integrity of the arbitral process in Ireland and strengthens the finality of arbitration awards.