Inco Europe Ltd and Others v. First Choice Distribution (A Firm) and Others

Factual and Procedural Background

The Appellants shipped a consignment of nickel cathodes from Rotterdam to Hereford. After the goods were allegedly lost, they issued proceedings in the High Court in The City seeking damages. One Respondent applied for a stay of those proceedings under section 9 of the Arbitration Act 1996, asserting that the dispute was subject to an arbitration agreement requiring reference to arbitration in the Netherlands.

Judge Hegarty (sitting as a High Court judge) dismissed the stay application on the ground that the arbitration agreement was “null and void, or inoperative.” The Respondent needed permission to appeal; leave was refused by Judge Hegarty but renewed to the Court of Appeal.

The Court of Appeal (Judges Hobhouse, Thorpe and Mummery) first considered whether it even had jurisdiction to hear an appeal in light of section 18(1)(g) of the Supreme Court Act 1981 (as amended by the 1996 Act). Concluding that jurisdiction existed, it granted leave, allowed the substantive appeal, and stayed the High Court proceedings.

The Appellants then appealed to the House of Lords but only on the jurisdictional point—arguing that, properly interpreted, section 18(1)(g) barred any appeal to the Court of Appeal from a decision under section 9.

Legal Issues Presented

1. Whether section 18(1)(g) of the Supreme Court Act 1981, as amended by Schedule 3 paragraph 37(2) of the Arbitration Act 1996, excludes an appeal to the Court of Appeal from a High Court decision made under section 9 of the Arbitration Act 1996.
2. More broadly, whether—and how—the courts may correct an obvious drafting error in primary legislation in order to give effect to Parliament’s intention.

Arguments of the Parties

Appellants’ Arguments

• Section 18(1)(g) unequivocally states that “no appeal shall lie to the Court of Appeal … from any decision of the High Court under [Part I of the Arbitration Act 1996]” unless Part I itself provides otherwise.
• Because section 9 is silent on appeals, there is no statutory basis for an appeal; therefore the Court of Appeal lacked jurisdiction.
• Interpreting the statute differently would override clear, unambiguous language and violate the principle that courts should not intervene except as expressly provided (section 1(c) of the 1996 Act).

Respondents’ Arguments

• The amendment in Schedule 3 was intended merely to replicate, for the 1996 Act, the pre-existing scheme under the Arbitration Act 1979—i.e., to carry forward only those limitations on appeal that are expressly stated in individual sections.
• Reading section 18(1)(g) literally would effect a “radical” change in the law, abolishing long-standing appellate rights without any indication in the body of the 1996 Act or in the preparatory materials.
• The courts possess a limited power to correct obvious drafting errors; exercising that power here would give effect to Parliament’s true intention and preserve the right of appeal where no express restriction exists.

Table of Precedents Cited

Court's Reasoning and Analysis

Judge Nicholls (with Judges Jauncey, Steyn, Clyde and Millett concurring) delivered the leading opinion. The reasoning proceeded as follows:

1. Context of section 18(1)(g). Originally, section 18(1)(g) merely mirrored the on appeals that were expressly contained in the Arbitration Act 1979. It did not itself abolish appellate jurisdiction.
2. Structure of the 1996 Act. Part I repeatedly demonstrates that when Parliament wished to curtail appeals it did so expressly (e.g., sections 12(6) and 32). Silence in a section (such as section 9) signals no intention to restrict appeals.
3. Legislative history. Reports and consultation papers leading to the 1996 Act showed no intention to abolish the existing right to appeal from stay decisions; abolition would therefore be “radical and additional,” not “consequential.”
4. Drafting error in Schedule 3 paragraph 37(2). By using the phrase “from any decision of the High Court under that Part,” the amendment accidently swept far wider than the consequential purpose.
5. Corrective interpretation. Applying the three-stage test from Jones v. Wrotham Park, the Court was “abundantly sure” (i) of Parliament’s intended purpose (to import only express restrictions), (ii) that the draftsman failed to give effect to it, and (iii) of the minimal wording required to correct the error.
6. Textual repair adopted. The Court read the phrase as if it referred only to “any decision of the High Court under a section in that Part which provides for an appeal from such decision,” thereby preserving the pre-existing right to appeal where Part I is silent.

Holding and Implications

Appeal DISMISSED. The House of Lords affirmed that the Court of Appeal had jurisdiction to entertain an appeal from a High Court decision under section 9 of the Arbitration Act 1996.

Implications: The decision maintains the availability of appellate review for stay decisions and other High Court determinations under Part I of the 1996 Act unless the individual section expressly restricts it. More broadly, the judgment confirms the judiciary’s limited but real power to correct obvious drafting errors to give effect to Parliament’s true intention, reinforcing a purposive approach to statutory construction without venturing into judicial legislation.