Court Has Power To Remit Cost Award To Arbitrators For Amendment Under Slip Rule In Case Of Simple Error Of Arithmetic

Danae Air Transport SA v Air Canada (CA), Times Law Report August 5 1999

Commentary

It may be arguable whether the error made by the arbitrators was a simple arithmetical error such as could ordinarily be amended under the slip rule in section 17 of the Arbitration Act 1950 but the Court of Appeal found that, unless the appeal was allowed, a substantial injustice would clearly have resulted which would have "sullied the integrity of international arbitration in London". On the other hand, the Court of Appeal was aware of the need to achieve finality in arbitration, to uphold the freedom to exclude appeals and to ensure that awards could only be challenged after leave to appeal had been obtained. A free and easy unstructured resort to doing justice could otherwise lead to a plethora of ill founded applications. We would certainly agree that these factors are equally important to maintaining the reputation and integrity of any arbitration centre.

Decision

The Court of Appeal allowed Danae's appeal and remitted the award to the arbitrators. The reasoning behind the decision was that a simple error of arithmetic could ordinarily be amended by the arbitrators under the slip rule in section 17 of the Arbitration Act 1950 and that, if the arbitrators did not make the correction, their failure to do so would constitute a procedural mishap which gave the court jurisdiction to remit the matter to the arbitrators.

Background

The decision at first instance was reported earlier on this site under the heading Court Has No Jurisdiction Under Arbitration Acts 1950 And 1979 To Remit Arbitration Award To The Arbitrators For Reconsideration For Errors Of Law Or Fact. The Commercial Court had held that the court’s jurisdiction to remit cases under section 22 of the Arbitration Act 1950 was confined to circumstances where there had been an excess of jurisdiction, misconduct or procedural mishap by the arbitrators but found that the error of arithmetic, of which Danae complained, was an error of factor law and that the court would have granted leave to appeal on a point of law had all rights to appeal not been excluded in the arbitration agreement. The arbitrators' cost decision was based on the erroneous finding that Danae had not beaten Air Canada's Calder bank offer because the arbitrators had not taken the value of the counterclaim correctly into account.

For further information on this topic please contact Neil Aitken,
Charles Spragge or Gregor Kleinknecht at CMS Cameron McKenna
by telephone (+44 171 367 3000) or by fax (+44 171 367 2000) or
by e-mail ([email protected] or [email protected] or [email protected]).