s63(4) Arbitration Act 1996 | Application Required Before SCCO Can Assess Costs

Costs Judge James found that the claimant had failed to comply with the provisions of the Arbitration Act 1996 when attempting to bring the matter before the SCCO:

“I respectfully agree with Master Whalan’s decision from 7 November 2019. By reference to the breach of the provisions at section 63(3) of the 1996 Act, the Claimant ‘s assertion of jurisdiction was wrong, and the N252 was invalid (so that the DCC was issued in circumstances where the Claimant was not entitled to it). Almost five years on, the N258 filed by the Claimant in June 2024 referenced this same, invalid, N252.” [25]

She further determined that the provisions of section 63 of the Arbitration Act 1996 continued to apply even after the arbitration tribunal ceased to function:

“Whereas Master Whalan found that this was incorrect, and that the Tribunal did (in 2019) continue to function, it no longer does and has not since October 2020 or thereabouts. However, I agree entirely with Master Whalan in finding that the Claimant’s analysis of the law is simply wrong. The provisions of section 63, as incorporated in this arbitration (by the Claimant and the Defendant agreeing that they should be incorporated) did not cease to have effect when the Tribunal ceased to function. One of the purposes of section 63 is to provide for a procedure in precisely those circumstances; it sets out the manner in which jurisdiction should pass from the Tribunal to the Court (here, the SCCO). In agreeing to go to Arbitration, the Claimant agreed to the operation of section 63 if it wished to proceed before the SCCO.” [30]

The judge rejected the claimant’s argument that the defendant had waived the jurisdictional point:

“The ‘reasons set out above’ had to do with whether the Defendant had waived the jurisdiction point under the 1996 Act by purporting to apply set-off against the Claimant’s costs (and serving notice of set-off upon the Claimant). The Defendant denies that this is so, and given the dismissal of the Claimant’s PTA applications by both the High Court and the Court of Appeal, I am certainly in no position to accept the Claimant’s argument on waiver, not least because the Defendant had barely half an hour from the Claimant’s Skeleton Argument appearing on CE-file to consider and respond to it.” [28]

She concluded that the claimant had fundamentally failed to comply with the provisions of section 63(4) of the Arbitration Act:

“It is manifestly clear to me (as it was to Master Whalan five years ago) that there has been a fundamental failure by the Claimant to comply with the provisions of subparagraph (4) of the 1996 Act. For all those reasons, the jurisdiction of the SCCO is not invoked in this assessment and the Claimant’s Bill has not been brought properly within the SCCO’s jurisdiction. An application, on notice to the Defendant, is required as the Claimant was told by Master Whalan almost five years ago.” [33]

The judge also addressed the issue of the defendant’s own costs, noting a potential discrepancy in the order of HHJ Pelling KC:

“It is noted that HHJ Pelling KC ordered the Defendant to file and serve N252; as stated at paragraph 28 above, the N252 is a document that, according to the CPR, need only be served on the paying party (here, the Defendant). There is no requirement in the CPR that N252 be filed at the SCCO. Oftentimes upon receipt of N252 the parties enter into commercial negotiations and the costs are settled without the SCCO ever becoming involved, although I appreciate that is unlikely to happen here.” [36]

Ultimately, the judge found in favour of the defendant on the main issue before him:

“On the point which was before me, I find in the Defendant’s favour. The Claimant was told in the Judgment of Master Whalan dated 7 November 2019 that it needed to make an on-notice application to the SCCO under the 1996 Act, to bring this matter within the jurisdiction of the SCCO. Master Whalan specifically addressed the question of whether the 1996 Act would still apply even if the Tribunal was not willing and able to deal with costs, to which his answer was, yes it would. I respectfully agree with Master Whalan and am in good company given that both the High Court and Court of Appeal have refused PTA applications regarding Master Whalan’s Judgment, from the Claimant, most recently on 23 April 2024.” [41]