If I were the grain buyer in the Court of Appeal case of Frontier Agriculture v Bratt, decided on 25 June 2015, I would be asking myself one question. Why had I agreed to arbitration to sort out a relatively low value dispute?
There is a widely held belief that arbitration is the best way of resolving business disputes. It is for that reason that arbitration clauses are prevalent in standard form contracts. I can only deduce that those who include arbitration clauses in their contracts have never had to undertake an arbitration themselves. Don’t get me wrong; there are many features of arbitration which make it an attractive method of dispute resolution. It can be very useful to maintain confidentiality, or for contracts with a very technical subject matter. However, it is by no means straightforward and parties engaged in an arbitration need to be alive to procedural matters.
The report of Frontier Agriculture v Bratt [2105] EWCA Civ 611 appears at first sight to have been a victory for Mr Bratt against his grain-buyer. Indeed, the sense of victory is enhanced by the fact that Mr Bratt represented himself in court. In the autumn of 2009, Mr Bratt agreed to supply Frontier with 670 tonnes of Einstein variety feed wheat in accordance with Frontier’s standard form contract. There was no dispute that Mr Bratt had not fully complied with it.
Mr Bratt did dispute that he had agreed a second contract in July 2010 to supply Frontier with another 300 tonnes of feed wheat, this time Hereward variety. Frontier said that he had contracted to do so, first orally with its buyer, and then by a second standard form document which it said was sent in confirmation. Mr Bratt said that he made no such agreement with the buyer, he hadn’t been growing Hereward variety wheat at the time, and he didn’t receive the second contract’s paperwork anyway. Despite a trip to the Court of Appeal, these issues still remain undecided.
Both the disputed and undisputed contracts contained arbitration clauses. Mr Bratt didn’t take part in the arbitration other than agreeing who to appoint as arbitrator. The Arbitrator made an Award that Mr Bratt pay Frontier £46,000 as damages for breach of both contracts plus costs. Until that point, the arbitration process seems to have worked well for Frontier. It obtained the Award in around 2 months, which is quick for an arbitration. Having had that quick result, it then took over two years for Frontier to apply to court to enforce the arbitrator’s award. That’s where things began to run into the mud.
Mr Bratt applied to set aside the order giving permission to enforce the Award, he was unsuccessful in front of the High Court judge and appealed to the Court of Appeal.
From the lawyer’s perspective, Frontier Agriculture v Bratt is about the principles for setting aside a court order enforcing the award of an arbitrator. This is where the case got bogged down in the procedural formalities. The High Court judge had found that by agreeing the appointment of the Arbitrator, he had participated in the arbitration and so had lost any right to challenge the Award (s.73 Arbitration Act 1996). The Court of Appeal reversed this decision as it had not been clear whether Mr Bratt’s confirmation that he thought the proposed arbitrator would be suitable, related to both the first and the second grain contract. They held it did not apply to the second and as Mr Bratt did not participate in that second arbitration, he did not lose the right to challenge the jurisdiction on that contract. Hence, over two years have now passed since the arbitrator was appointed and Frontier are no further forward in recovering the sums that they claim are due to them on the second contract.
For those involved in the buying and selling of agricultural produce on standard terms (which usually involve arbitration clauses), it is a salutary story to do with choosing the most cost effective method for resolving contractual disputes should things go wrong. With the benefit of hindsight, arbitration probably wasn’t the best choice and those using standard documents need to appreciate the consequence of all the contractual terms they are offering.
For more information please contact Andrew Baines, Partner in the Agriculture team on andrew.baines@michelmores.com or 0117 906 9336
