Xstrata Coal Queensland Pty Ltd. and others v. Benxi Iron & Steel (Group) International Economic & Trading Co. Ltd.

At a glance

Parties

Xstrata Coal Queensland Pty Ltd (now Rolleston Coal Holdings Pty Limited), Sumisho Coal Australia Pty Limited, Itochu Coal Resources Australia Pty Limited and ICRA OC Pty Limited v. Benxi Iron & Steel (Group) International Economic & Trading Co Ltd

Case no.

CL-2014-000446 ([2016] EWHC 2022 (Comm)); CL-2016-000796 ([2020] EWHC 324)

Court

High Court of England and Wales, Queen's Bench Division, Commercial Court

Underlying award(s)

LCIA award of 23 August 2010 by sole arbitrator Gerald Aksen (London seat, LCIA Rules 1998); Article 27.1 decision of 23 November 2016

Forum and rules

Arbitration Act 1996 (ss. 68, 70(3), 79); LCIA Rules 1998

Treaty

Arbitration clause in the Oaky Contract (coking coal sale contract), governed by English law

Court

Knowles J (5 August 2016); Butcher J (21 January 2020)

Sector

Coal; commodity sale

Outcome

Time to seek correction under LCIA Article 27.1 extended (2016); after the arbitrator refused correction, the award was remitted to him under s. 68(2)(f) for uncertainty or ambiguity as to its effect (2020).

Amount

Award: USD 27,846,000 with simple interest at 1.5% from 1 January 2009, plus costs.

The dispute

Benxi, a Chinese company, agreed to buy coking coal under the "Oaky Contract". Xstrata Coal Queensland signed it as agent for the Oaky Creek Joint Venturers. The contract listed the fourth joint venturer as "ICRA NCA Pty Limited", but the joint venture agreement named ICRA OC Pty Limited. An LCIA tribunal in London ordered Benxi to pay USD 27,846,000 to all four claimants jointly, including ICRA OC, without explaining the discrepancy. On 25 April 2014 the Shenyang Intermediate People's Court refused recognition and enforcement under the New York Convention. It held that ICRA OC had no contractual relationship with Benxi, so no arbitration agreement existed as to ICRA OC. The award creditors then asked the English court first to extend time for a correction request under LCIA Article 27.1 and, once the arbitrator refused that request, to remit the award under section 68 of the Arbitration Act 1996. Benxi argued that the arbitrator had no power to clarify, that the section 68 application was out of time, and that the award's effect was not ambiguous.

Key holdings

1. Article 27.1 of the LCIA Rules 1998 allows an award to be clarified or an ambiguity removed: these fall within "any errors of a similar nature". The 2014 Rules only state expressly what was already implicit. 2016 Judgment ¶¶ 32–34
2. Under s. 79, substantial injustice would be done if time were not extended. The lack of any explanation of the ICRA NCA/ICRA OC discrepancy left the award uncertain. The claimants did not delay unduly, because it was reasonable for them to wait for the Shenyang decision. Time was extended to 16 September 2016. 2016 Judgment ¶¶ 38–50
3. A correction request under s. 57 or LCIA Article 27 is not an arbitral process of appeal or review. But where the request is material to the later challenge, the 28-day period under s. 70(3) runs from the date the outcome becomes known, even if no correction is made (following McLean Homes v Blackdale). The s. 68 claim, issued on 19 December 2016, was therefore in time. 2020 Judgment ¶¶ 29–42
4. Section 68(2)(f) does not always require default by the tribunal. An award can be uncertain or ambiguous in its effect, even if English lawyers would agree on its meaning, where an enforcing court can misunderstand it, as the Shenyang court did (applying Mobile Telecommunications v Prince Hussam). 2020 Judgment ¶¶ 46–56
5. The ambiguity caused substantial injustice: it led to refusal of enforcement in China and creates a real risk of refusal elsewhere. The award was remitted under s. 68(2)(f). The subsidiary ground under s. 68(2)(c) did not need to be decided. 2020 Judgment ¶¶ 57–60
6. The arbitrator had refused the Article 27.1 request. In his view, a finding on the true identity of the contracting party would be an addition to the award and would require new fact-finding, which Article 27.1 does not permit. 2020 Judgment ¶ 21 (quoting Decision of 23 November 2016)

Procedural history

1. 4 September 2008Benxi and Xstrata Coal Queensland execute the Oaky Contract, which contains an LCIA arbitration clause with a London seat.
2. April 2010The arbitrator allows the second to fourth claimants, including ICRA OC, to join as co-claimants. A hearing follows on 17–19 May 2010.
3. 23 August 2010Award: Benxi to pay USD 27,846,000 plus interest and costs to the four claimants jointly.
4. 16 August 2011The claimants apply for recognition and enforcement before the Shenyang Intermediate People's Court.
5. 25 April 2014The Shenyang court refuses recognition and enforcement. On 11 June 2014 the LCIA confirms that the tribunal is functus officio unless time is extended.
6. 5 August 2016Knowles J extends time under s. 79 for an Article 27.1 request.
7. 23 November 2016The arbitrator denies the Article 27.1 request.
8. 19 December 2016The claimants issue the s. 68 application.
9. 21 January 2020Butcher J holds the application in time and remits the award under s. 68(2)(f).

Tribunal, counsel and experts

Decided by

• Robin Knowles Judge, High Court of England and Wales, Commercial Court
• Gerald Aksen Sole arbitrator (arbitrator in the underlying LCIA arbitration)

For the claimant

Clyde & Co

For the respondent

Gateley LLP · King and Wood

Experts

Gao Yifeng (other)

Run a conflict check on these names →

Keywords

• coking coal
• Oaky Contract
• Oaky Creek Joint Venture
• ICRA OC
• LCIA Rules 1998 Article 27
• correction of award
• extension of time section 79
• section 68(2)(f) uncertainty or ambiguity
• serious irregularity
• remission
• section 70(3) time limit
• New York Convention
• refusal of enforcement China
• Shenyang Intermediate People's Court
• misnomer of party
• award creditor challenge
• Arbitration Act 1996

Summary generated with AI from the published documents — refer to the award for the authoritative text.