In Shell Egypt West Manzala GmbH & Others v Dana Gas Egypt Limited (formerly Centurion Petroleum Corporation) [2009] EWHC 2097 (Comm) Dana Gas Egypt Limited (Dana) submitted that the court had no jurisdiction to hear Shell’s application for permission to appeal, allowed under section 69(1) of the Arbitration Act (the Act), or any substantive appeal because of the phrase “final, conclusive and binding” in the relevant arbitration clause.

The dispute arose in connection with a cooperation agreement between Shell and Dana in relation to two concessions for crude oil and gas exploration in Egypt. The cooperation agreement was subject to a mandatory arbitration provision which provided that:

“the decision of the majority of the arbitrators … shall be final, conclusive and binding on the parties.”

The matter went to arbitration and the tribunal made an award against Shell. Shell applied for permission to appeal on the points of law arising out of the tribunal’s award at arbitration. Dana cross-applied for an order that the court had no jurisdiction to hear Shell’s application because the phrase “final, conclusive and binding” showed that the parties had agreed in unequivocal terms that there should be no ability to appeal an award.

Gloster J held that the phrase “final, conclusive and binding” as it appeared in the arbitration clause is not to be construed as an agreement excluding the parties’ rights to appeal. The parties can agree not to appeal an award under Section 69(1) of the Act, which provides that:

“Unless otherwise agreed by the parties, a party to arbitral proceedings may…appeal to the court on a question of law arising out of an award made in the proceedings.”

The court found, following Essex County Council v Premier Recycling Ltd [2006] EWHC 3594, that in order to amount to an agreement not to appeal an arbitration award, as envisaged by section 69(1) of the Act, sufficiently clear wording was necessary, although no express reference to section 69 of the Act was required. In the context of arbitration the use of the words “final, conclusive and binding” in isolation did not convey the meaning that the parties intended to exclude all rights of appeal under section 69(1) of the Act. Also “final and binding” have long been used to state the well-recognised rule in relation to arbitration, namely that the award is final and binding and creates a res judicata, finality in litigation, between the parties.  The addition of “conclusive” in the clause did not connote, by its normal or any other meaning, that the parties agreed to exclude their statutory right to appeal on points of law. Gloster J also found that there was sufficient material upon which it could be said that Shell’s appeal raised questions of law and, in those circumstances, permission was granted to appeal against the arbitral award.

It is important, therefore, when drafting an arbitration clause intending to exclude the right of appeal, pursuant to section 69(1) of the Act, that sufficiently clear wording  to that effect is used.