Introduction

The case of Bartos v Thomson ([2020] CSOH 51) adjudicated by the Scottish Court of Session explores significant aspects of arbitration, particularly focusing on the clarity and ambiguity of part awards issued by arbitrators. The parties involved, Bartos representing CMS Cameron McKenna Nabarro Olswang LLP, and Thomson, represented by Brodies LLP, were engaged in an arbitration concerning a commercial lease's rent review mechanism. The crux of the dispute revolved around the interpretation of the term "Open Market Rent" and the applicability of Rule 58 of the Scottish Arbitration Rules for clarifying ambiguities in arbitrator awards.

Summary of the Judgment

In this case, the petitioner sought court intervention under Rule 58 to have the court specify a date by which Bartos could apply to the arbitrator for clarification or removal of alleged ambiguities in the arbitrator's part award. The respondent opposed this application, arguing that the part award was clear and unambiguous and that the petition was filed outside the stipulated 28-day period. The Outer House ultimately refused the petition, holding that the part award was sufficiently clear and that the delay in seeking clarification was unreasonable. The court emphasized the importance of adhering to procedural timelines to avoid unnecessary delays in arbitration proceedings.

Analysis

Precedents Cited

The judgment references several key precedents, notably:

• World Trade Corporation Ltd v C Czarnikow Sugar Ltd [2004]: Addressed the interpretation of arbitrator awards.
• Rollitt (t/a CD Consult) v Ballard [2017], Terna Bahrain Holding Co WLL v Al Shamsi [2012]: Discussed extensions of time for challenging arbitration awards.
• Gold Coast Ltd v Naval Gijon SA [2006]: Focused on retrospective extensions for applications under arbitration rules.

These cases collectively underscore the judiciary's approach to handling ambiguities in arbitration awards and the strict adherence to procedural timelines to uphold the arbitration's principle of swift resolution.

Legal Reasoning

The court's decision hinged on interpreting Rule 58 of the Scottish Arbitration Rules, which allows for correction or clarification of arbitrator awards. The petitioner argued that the part award contained ambiguities that necessitated clarification to prevent procedural complications. However, the court found that:

• The part award was clear when read in its entirety.
• The alleged ambiguities emerged only over time, not from the award's language itself.
• The petitioner failed to act promptly within the 28-day period to seek clarification.
• The delay was unjustifiable, and the petitioner had ample opportunity to address concerns earlier.

The court emphasized the importance of the arbitration's efficiency and finality, rejecting the petitioner's application based on both the lack of inherent ambiguity and the unreasonable delay in seeking remedy.

Impact

This judgment reinforces the judiciary's stance on upholding arbitration's swift resolution ethos by:

• Affirming that arbitrator awards should be clear and unambiguous when properly drafted.
• Emphasizing strict adherence to procedural timelines to prevent unnecessary delays.
• Limiting the court's role in intervening in arbitration awards unless clear procedural or substantive errors are evident.

Future cases will likely reference this judgment when addressing issues related to the clarity of arbitration awards and the permissible avenues for seeking clarifications or corrections.

Complex Concepts Simplified

Rule 58 of the Scottish Arbitration Rules

Rule 58 allows parties involved in arbitration to request the arbitrator to correct or clarify an award. Corrections can address typographical errors, ambiguities, or oversights that affect the award's interpretation. However, such applications must typically be made within 28 days of the award unless the court specifies otherwise.

Part Award

In arbitration, a part award is a decision issued by an arbitrator on specific issues within the broader case, rather than a final award covering all aspects. This can help streamline the arbitration by resolving preliminary matters early in the process.

Open Market Rent

"Open Market Rent" refers to the fair rental value of a property, determined based on what a willing landlord would accept from a willing tenant under current market conditions. In this case, the term's interpretation was central to determining the appropriate rent review for the commercial premises.

Fitting-Out Period

The fitting-out period is the time a tenant is allowed to customize or prepare leased premises for their specific use, typically before fully commencing operations. Rent-free periods often account for such periods to offset the tenant's costs.