I need more time!

Arbitration - extensions of time for issuing proceedings

Many arbitration agreements contain a strict time limit for issuing a claim. Often the time period can be short, perhaps 14 to 28 days, which can be very onerous. This can lead to claims being issued out of time, particularly if the time limits are not clear. So, if a claim is issued late, can it be saved?

Where an arbitration agreement contains such a time limit, section 12 of the Arbitration Act 1996 (the Act) permits the court to extend time. This is a mandatory provision, ie you cannot contract out of it. However, the situations in which an extension may be granted are very limited. Under the Act, the court will only grant an extension if it is satisfied:

“(a)    that the circumstances are such as were outside the reasonable contemplation of the parties when they agreed the provision in question, and that it would be just to extend the time, or

(b)     that the conduct of one party makes it unjust to hold the other party to the strict terms of the provision in question.” (the Act section 12(3))”.

While it is difficult to obtain an extension of time, the recent Court of Appeal case of Haven Insurance Company Limited v EUI Limited (trading as Elephant Insurance) [2018] EWCA Civ 2494 shows that it is not impossible.

Haven and Elephant were in dispute over who should pay out for injuries resulting from a road traffic accident. The matter was heard by the Technical Committee of the Motor Insurance Bureau (MIB), on 13 February 2015 which found in Haven’s favour. MIB’s articles stated that any member wishing to appeal:

“...  shall give to the [MIB] written notice within 30 days of the Member’s MIB representative being notified of the decision of the Technical Committee.” (Art 75(6)(a) of the MIB’s Articles)

On 30 April 2015, Elephant gave notice of intention to appeal. Unsurprisingly, Haven claimed that the appeal was time barred as Elephant was at the meeting on 13 February 2015. However, Elephant contended that the 30-day period did not commence until it received the final draft meeting minutes on 31 March 2015. It was fortified in its position by an email from a senior representative of the MIB, which indicated that the MIB believed the circulation of the final draft minutes started the 30-day period.

The MIB had known for some time that article 75(6)(a) was unclear. In a June 2013 meeting of the technical committee, it was stated that the article should be amended to make clear that the 30-day period commenced on the issue of the final draft minutes.

The change was not ratified until 30 June 2015, after Elephant had launched its appeal. However, it had been circulated to members earlier with a note against the change stating “this has been the practice and is changed just for the sake of clarity.”

Haven, from its evidence, apparently was unaware of this.

Knowles J (sitting in the High Court and upheld on appeal) found that Elephant was out of time in issuing its appeal, but granted an extension of time. He found that Elephant had formed a reasonable, if incorrect, view that it had 30 days from the issue of the final draft minutes to give notice of its appeal. As such, it would be just to extend the time for issue.

The clear message coming out of the Haven case is that parties should be very wary of any time limits that may exist for issuing arbitration proceedings. On its own, a misinterpretation of the rules will not generally be sufficient to obtain an extension.

However, in exceptional circumstances, a claim may be saved.