ARBITRATION APPEAL NO 2 OF 2022 [2023] ScotCS CSOH

OUTER HOUSE, COURT OF SESSION

[2023] CSOH 68

P397/22

OPINION OF LORD RICHARDSON

In the petition

ARBITRATION APPEAL NO 2 OF 2022

Petitioner: MacColl KC; Currie Gilmour & Co

Respondents: Webster KC; Davidson Chalmers Stewart LLP

6 October 2023

Introduction

[1]

By this petition the petitioner challenges the Part Award of an Arbitrator dated

12 April 2022 (the "Third Part Award").

[2]

The petitioner challenges the Third Part Award on the basis of an alleged legal error

by the Arbitrator pursuant to rules 69 and 70 of the Scottish Arbitration Rules. Grounds of

appeal made under these rules require the leave of the court to proceed unless they are

made with the agreement of the parties.

[3]

In related proceedings, (Arbitration Appeal No 3 of 2022 (P400/22)), the respondents in

the present proceedings also challenge the Third Part Award. The ground advanced by the

respondents in the related proceedings also allege legal errors by the Arbitrator pursuant to

rules 69 and 70 of the Scottish Arbitration Rules. The present petitioners are respondents in

those proceedings.

[4]

As I set out in my Opinion in the related proceedings (issued concurrently with this

Opinion), after certain other procedure, the parties reached an agreement that all of their

challenges to the Third Part Award should be dealt with together. Accordingly, no issue of

leave required to be resolved and I heard argument from both parties in relation to their

respective challenges to the Third Part Award. This Opinion deals with the ground of

appeal advanced by the petitioner. In my Opinion in the related proceedings (P400/22) I

deal with the respondents' grounds of challenge.

[5]

In order to avoid unnecessary duplication, this Opinion should be read along with

the narrative of the background to the present proceedings which I have set out at

paragraphs [7] to [33] in my Opinion in the related proceedings (Arbitration Appeal No 3

of 2022 (P400/22)).

The petitioner's argument

[6]

Senior counsel for the petitioner challenged the finding by the Arbitrator in the Third

Part Award that the petitioner had waived its right to insist upon advancing the claims set

out in the letter dated 13 November 2020 (see paragraph [21] of the Opinion in the related

proceedings (P400/22).

[7]

He advanced three arguments in support of this challenge.

[8]

First, Mr MacColl submitted that it was not clear from the Third Part Award when or

how precisely the Arbitrator considered that the petitioner had waived its right. It appeared

that the Arbitrator was founding upon the email from the petitioner's agents dated

15 August 2019. The material parts of that email are in the following terms:

"Dear Mr Kelly,

Thank you for your email of 8th August. [...] In terms of further procedure, my client

also agrees that it would be appropriate for you to issue a Direction requiring parties

to lodge submissions in relation to the expenses of the arbitration.

Given the time that will be required for the framing of submissions, and recognising

that one might expect parties to spend some time in seeking to negotiate an agreed

position in relation to any expenses disposal, I would suggest that a period of say

4 weeks for the lodging of submissions would be reasonable."

[9]

However, Mr MacColl submitted that this email did not satisfy the requirements

authoritatively set out by Lord Osborne in City Inn Limited v Shepherd Construction

Limited 2011 (SC) 127:

"[73] In Evans v Argus Healthcare (Glenesk) Ltd, the court decided that a pursuers'

averments of waiver directed at the defenders' right to rely on the pursuers' failure to

provide a deed of servitude were relevant for inquiry. Thus the averments of waiver

related to the defenders' right to state a particular defence to the action for specific

implement raised against them. That decision appears to me to show that the

principle of waiver may apply to the stating of a particular defence to a claim.

Reliance by the reclaimers on cl 13.8 I consider would be comparable to that. In his

Opinion, Lord Macfadyen conducted a thorough review of the law of waiver. He

stated his conclusions from that review in this way (para 11):

`It is, in my view, sufficient for the purposes of the present case to take from

those authorities the propositions that (1) that waiver is constituted by the

giving up or abandonment of a right; (2) that such abandonment may be

express or may be a matter of inference from the actings of the party in whom

the right in question was vested; (3) that determination of whether

abandonment is to be inferred requires objective consideration of the facts

and circumstances of the case; and (4) that circumstances which are also

consistent with retention of the right in question will not support an inference

that the right has been abandoned. It appears also to be necessary, for the

purpose of relevantly supporting a plea of waiver, to aver that the party

taking the plea has conducted his affairs on the basis that the right has been

abandoned, but the issues between the parties in the present case does not

turn on that aspect of the matter.'

[74]

It appears to us that further support for the position of the respondents on

this ground of appeal is to be found in Millar v Dickson in the Opinion of

Lord Bingham of Cornhill. Although the case concerned was a criminal one, taken to

the Privy Council on a devolution issue, relating to the status of temporary sheriffs,

his Lordship dealt with the law of waiver in this way (para 31):

`In most litigious situations the expression "waiver'' is used to describe a

voluntary, informed and unequivocal election by a party not to claim a right

or raise an objection which it is open to that party to claim or raise.'

For present purposes, it appears to me that that observation is of importance, having

regard to the view expressed that the principle of waiver might operate in relation to

the opportunity of a party to raise an objection. That seems to me to show that, for

the purposes of deciding the nature of a right that may be waived, a wide view

should be taken. That view directly supports the respondents' contention that the

opportunity conferred upon the reclaimers by cl 13.8.5 to object to a claim for an

extension of time may be the subject of a plea of waiver."

[10]

In particular, Mr MacColl submitted that the actions of the petitioner which were

founded upon by the Arbitrator could not be said to be "unequivocal". In his submission,

the words of the email could not be said to go that far.

[11]

Mr MacColl's second argument was that the Arbitrator had erred in allowing the

respondents a proof before answer in respect of the question of whether they had conducted

their affairs in reliance on the petitioner's alleged waiver. Mr MacColl's short point was

that, as the Arbitrator had himself recognised (at paragraph [154] of the Third Part Award),

the respondents had no pleadings making any averments in this regard. As such, the

respondents had not put any factual matters in issue for proof.

[12]

Finally, Mr MacColl submitted that the Arbitrator's decision to allow the

respondents a proof before answer on this limited question was inconsistent and illogical.

There was no proper basis for the Arbitrator's decision, on the one hand, to conclude that

the petitioner's actions might amount to waiver without hearing evidence, but, on the other,

to allow the respondents a proof before answer on the question of the conduct of their

affairs.

The respondents' arguments

[13]

In response, Mr Webster submitted that the Arbitrator had been clear in the Third

Part Award as to what he had considered constituted the waiver by the petitioner. The

Arbitrator founded upon the correspondence from the petitioner, and in particular, the

email dated 15 August 2019, which had been issued following the First Part Award and in

response to the Arbitrator's invitation to each party to confirm its position in relation to

further procedure in that arbitration. The Arbitrator had been fully entitled to consider, as

he did, the terms of this correspondence against the agreed factual background (see

paragraph [298] of the Third Part Award).

[14]

In this regard, Mr Webster drew my attention to paragraph 13 of the Joint Minute of

Admissions prepared for the hearing before the Arbitrator on 20 September 2021. (This was

the hearing after which the Arbitrator issued the Third Part Award). Paragraph 13

provided:

"[13] The Arbitrator invited parties to confirm what should be the further

procedure in the arbitration on or about 8 August 2019. The parties confirmed that

the formal procedure in the arbitration should be brought to an end and that the only

outstanding matter was the expenses of the arbitration."

[15]

In relation to the second argument, Mr Webster submitted that the petitioner's

argument proceeded on a misreading of the Third Part Award. In paragraph [154], the

Arbitrator had made clear that he considered that the respondents had set out, in the context

of making an argument based on personal bar, how they had conducted their affairs

following the petitioner's waiver. The Arbitrator had not erred in reaching this conclusion.

[16]

As to petitioner's criticism of the Arbitrator's conclusion that proof was only

required on the question of the respondents' conduct, Mr Webster emphasised that his

primary position was that there was no need for proof at all. (This was the position he

advanced in the related proceedings see paragraphs [56] to [59] of the Opinion P400/22).

As the Arbitrator had pointed out (see paragraph [264] of the Third Part Award), this was

not a case where a third party decision maker, who had had no involvement in the relevant

factual background, was looking at that background to determine whether there had been a

waiver. He submitted that if I did not accept the respondents' primary submission in

respect of waiver, the Arbitrator could not be faulted for proceeding as he had on the basis

of what was before him.

Decision

[17]

I consider that the petitioner's ground of appeal must be rejected.

[18]

First, I consider that the Arbitrator is perfectly clear in the Third Part Award as to

what he considered could, subject to the unresolved question of the respondents' conduct,

constitute a waiver by the petitioner. Paragraph [153] of the Third Part Award refers back to

the factual matters which had been founded upon by the respondents. The Arbitrator set

these out at paragraph [142] of the Third Part Award as follows:

"142. The [respondents'] case on waiver was set out briefly at Paragraph [28] of

the [respondents'] Note which is in the following terms: "In any event,

the [petitioner's] conduct in not inviting the Arbitrator to consider the issue of the

validity of the notices, nor the issue of damages, when invited to do so: and allowing

the arbitration with the [respondents] to conclude on the issue of expenses, amounts

to a waiver of the [petitioner's] ability to now present the Statement of Claim.

The [petitioner's] actions were a voluntary, informed and unequivocal election not to

make any further claims in the arbitration other than expenses, which the Arbitrator

has resolved. City Inn v Shepherd Construction 2011 (SC) 127 per Lord Osborne

at [73] - [74]".

[19]

Accordingly, is quite clear to me that the Arbitrator considered that the petitioner's

action in agreeing to conclude the arbitration which was then proceeding (the "first

arbitration") when construed against the relevant factual background was capable of

constituting a waiver. In particular, in relation to the background, at paragraph [148] of the

Third Part Award the Arbitrator drew attention to the way in which the question he

addressed in the First Part Award had been formulated (see paragraphs [11] and [12] of the

Opinion P400/22). First, in agreeing to the question which he had addressed in the First Part

Award, all of the parties had expressly instructed him not to consider the question of the

validity of notice served by the petitioner. Second, the parties had expressly reserved their

rights in respect of this point and in respect of all other matters not covered by the question

referred pending resolution of that question. Finally, the parties had also informed him that

they were of the view that what had been proposed was the most efficacious way of

proceeding with the arbitration.

[20]

A further important part of the background to which the Arbitrator drew attention

was the duty, incumbent on parties and enshrined in rule 25 of the Scottish Arbitration

Rules, to ensure that the arbitration is conducted without unnecessary delay and without

incurring unnecessary expense.

[21]

Against this background, I do not consider that the Arbitrator erred in concluding

that the petitioner's actions satisfied the test set down authoritatively by Lord Osborne in

City Inn Limited v Shepherd Construction Limited (above at [9]). Viewed objectively against

this background, the agreement by the petitioner to the disposal of the first arbitration

following the issuing of the First Part Award, and the determination of the single question

referred to the Arbitrator, constituted the giving up by the petitioner of the rights it had

expressly reserved when that question had been formulated.

[22]

As to the particular criticism made by the petitioner that its actions were not

sufficiently "unequivocal", given the terms of the email from the petitioner's agent dated

15 August 2019, I consider that this argument overlooks the fact that waiver need not be

constituted by express words. As Lord Macfadyen makes clear in Evans v Argus Healthcare

(Glenesk) Limited (see paragraph [9] above), waiver may arise as a matter of inference from a

party's actions. I agree with the Arbitrator that it is reasonable to infer from the petitioner's

action in agreeing to the disposal of the first arbitration that it was giving up its rights to

pursue further the issues arising from the validity of the notices set out in its letter dated

13 November 2020 to the Arbitrator.

[23]

I consider that Mr MacColl's second argument proceeds on the basis of a misreading

of the Third Part Award. When the Arbitrator says in paragraph [154] of the Third Part

Award that the element of conduct is not "specifically addressed" by the respondents in

their Note of Argument, I do not understand him to be concluding that the respondents

were not asserting that they had so conducted their affairs. On the contrary, as the

Arbitrator goes on to make clear in paragraph [154], he considers that the respondents'

position in respect of personal bar makes it clear that the respondents do assert that they

have conducted their affairs on the basis that the petitioner had abandoned its right.

However, it is in respect of these matters that the Arbitrator considers, correctly in my

opinion, that he needs to hear evidence.

[24]

Finally, I consider that Mr MacColl's final argument is also without merit. I do not

consider that there can be said to be any inconsistency in the Arbitrator's treatment of the

various constituent elements of waiver. There is a clear distinction between reaching a

conclusion as to what can be inferred from the actions of the petitioner in agreeing to the

disposal of the first arbitration based on the agreed facts and documents before him, on the

one hand; and, on the other, in considering that he requires to hear evidence as to how the

respondents' conducted themselves thereafter, which was not a matter of agreement.

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You are here: BAILII >> Databases >> Scottish Court of Session Decisions >> ARBITRATION APPEAL NO 2 OF 2022 [2023] ScotCS CSOH_68 (06 October 2023) URL: http://www.bailii.org/scot/cases/ScotCS/2023/2023_CSOH_68.html Cite as: [2023] CSOH 68, 2023 GWD 40-326, [2023] ScotCS CSOH_68

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