Limitation of Actions Consultation - Law Commission

2. ARBITRATION
(1) Arbitration Awards
7.3 Under section 7 of the 1980 Act the limitation period for an action to enforce an
arbitration award is six years from the date when the cause of action accrued. In
Agromet Motoimport v Maulden Engineering Co (Beds) Ltd 7
the plaintiffs sued on an
arbitration award after the limitation period in respect of the original breach of
contract, which had given rise to the award, had expired. The defendants argued
that the cause of action referred to in section 7 accrued when the breach of the
original agreement occurred. This argument was rejected. It was held that the
action to enforce the award is an independent action arising from an implied term
in the agreement that the arbitration award will be honoured, distinct from the
original breach of contract occasioning the arbitration. The cause of action
therefore accrues from the breach occasioned by the defendants’ failure to honour
the award when called upon to do so. 8
(2) Arbitral Proceedings
7.4 Under section 13 of the Arbitration Act 1996, the provisions of the Limitation Act
1980 and any other enactment relating to the limitation of actions apply to arbitral
proceedings as they apply to legal proceedings. 9
The term “cause of action” in
the Limitation Act 1980 has been interpreted as the “cause of arbitration” in the
case of an arbitration. So, for example, in Christian Salvesen (Properties) Ltd v
Central Electricity Generating Board 10
the claimants applied for compensation under
the Electricity Lighting Act 1882 for the loss of the development value of their
land because of the construction of five pylons carrying overhead power lines on
that land, which had led to an application for planning permission for residential
development being rejected. The Act provided for such compensation to be
assessed by arbitration. The Lands Tribunal noted, obiter, that the application
was an action to recover a sum recoverable by virtue of an enactment under
section 9 of the 1980 Act (so that the limitation period was six years from when
the cause of action or arbitration arose), and that the cause of arbitration accrued
when the pylons were first constructed, rather than when the applicants were
refused planning permission. The application was therefore time barred. 11
7.5 Section 14 of the Arbitration Act 1996 provides that the parties are free to agree
when arbitral proceedings are to be regarded as commenced for the purposes of
7 [1985] 1 WLR 762.
8 Ibid, 773, per Otton J.
9 The Arbitration Act 1996 ss 13 - 14 replace s 34 of the Limitation Act 1980. Under ss 94 -
95 of the Arbitration Act 1996 (which replaces s 34(6) of the Limitation Act 1980) these
provisions apply in the same way to arbitrations under an enactment. Section 13(3) of the
Arbitration Act 1996 provides that in determining when a cause of action accrued for the
purpose of the Limitation Acts, any provision that an award is a condition precedent to the
bringing of legal proceedings in respect of a matter to which the arbitration agreement
applies is to be disregarded.
10 (1984) 48 P & CR 465. See also Pegler v Railway Executive [1948] AC 332.
11 See also Vincent v Thames Conservancy (1953) 4 P & CR 66 and International Bulk Shipping
and Services Ltd v Minerals and Metals Trading Corp of India [1996] 1 All ER 1017.
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