The discretion of the court

Section 2(1) of the Arbitration Act 1979 introduced into English law – as a counterbalance to the repeal by that Act of the long-established right of the arbitrators to refer a case to the court on a case-stated basis – a procedure whereby a party could apply to the court to determine a preliminary point of law arising in the arbitration. That provision was re-enacted in modified form by s45 of the Arbitration Act 1996. Section 45 now provides that any party to an arbitration may apply to the court for the determination of a preliminary point of law, the court having jurisdiction over the matter if either all of the other parties to the arbitration, or the arbitrators themselves, supported the application. In either case, the court’s determination must substantially affect the rights of the parties. Unless the parties themselves have agreed to the application, it is also necessary for the court to be satisfied that its determination of the question is likely to produce a substantial saving in costs and that the application was made without delay. Although the provision is regarded as a useful one, in removing the potential delays involved in requiring the arbitrators to resolve the point for themselves only for the award to be subjected to an appeal on the grounds of error of law under s69 of the 1996 Act, there appears to be only one reported case in which the procedure has been used (Beegas Nominees v Decco Ltd [2003] EWHC 1891 (Ch) – rent review). It was decided under the 1979 Act that the court had a discretion to give a preliminary ruling and was not obliged to do so even where all the procedural requirements were satisfied. The questions before Jackson J in (1) Taylor Woodrow Holdings Ltd (2) George Wimpey Southern Counties Ltd v Barnes & Elliott Ltd [2006] EWHC 1693 (TCC) were whether the Court had a discretion to hear or refuse the application if the parties had agreed that application was possible and, if there was a discretion, how the Court should exercise it.