The Scottish Courts have refused an application made under Rule 58 of the Scottish Arbitration Rules (SAR) relating to when the petitioner could have an arbitrator’s part award clarified, or the removal of an alleged ambiguity within it.
The arbitration related to a rent review, with the arbitrator being asked to determine the Open Market Rent, as defined in the lease. A preliminary legal issue on the interpretation of “Open Market Rent” was dealt with in a part award, issued on 11 December 2018. In the part award, the arbitrator favoured part of the tenant/petitioner’s interpretation, but his summary contained certain observations and suggestions which appeared to be based on the respondent’s interpretation.
The petitioner was initially content with the part award. The arbitration continued, with various further procedure between January 2019 and July 2019. In July 2019 the arbitrator directed that he wished to have a hearing, and to cross-examine the respondent/landlord’s expert witness. The petitioner/tenant argued that this was inconsistent with the arbitrator’s part award, which rejected the respondent’s interpretation of the lease. The arbitrator disagreed there was any “variance” between his request for further procedure and the part award. The petitioner applied to the court under Rule 58 of the SAR to have the part award corrected.
SAR 58, which is a default rule, and so applies unless excluded or modified by the parties, is as follows:
“(1) The tribunal may correct an award so as to—
(a) correct a clerical, typographical or other error in the award arising by virtue of accident or omission, or
(b) clarify or remove any ambiguity in the award.
(2) The tribunal may make such a correction—
(a) on its own initiative, or
(b) on an application by any party
…
(4) Such an application is valid only if made—
(a) within 28 days of the award concerned, or
(b) by such later date as the Outer House or the sheriff may, on an application by the party, specify (with any determination by the Outer House or the sheriff being final).”
The petitioner argued that the part award should be corrected so as to remove the parts of the “summary” which were inconsistent with the petitioner’s interpretation (which the arbitrator broadly agreed with). The petitioner argued that on first reading this inconsistency was not obvious, and only came to light much later, when further procedure was being discussed.
The respondent argued that the part award should be read in its entirety, to include the summary, and that there was no ambiguity to be corrected. Further, it argued there was no reasonable basis for the “egregious delay” on the part of the petitioner, which was contrary to the founding principles of the Arbitration (Scotland) Act 2010, to avoid “unnecessary delay and expense”.
Lord Clark refused the application, on the basis that the part award did not require to be clarified (or part of it removed), and the application was made too late. Lord Clark commented that Rule 58 does give the court discretion to allow longer than 28 days for an application to be made to correct an award, or part award. However, on looking to the English Courts for guidance on how to use this discretion, he held that “any significant delay beyond 28 days is to be regarded as inimical to the policy of the Act” (page 17) and set out the “relevant factors” to support any such application.
This is another example of the Scottish Courts continuing to take guidance from their English counterparts in interpreting the language of the 2010 Act, given its similarities to the equivalent 1996 Act.
For tailored advice on this or related matters please get in touch with Leigh Herd at leigh.herd@shepwedd.com or your usual Shepherd and Wedderburn contact.