Arbitration Act 1979 — Application for leave to appeal — Point of law — One-off contract — Test for granting leave — Arbitration as to future conduct — Lucas test applied — Application granted
Pursuant to an agreement of 1955, the defendant constructed an office block on land owned by the plaintiffs at Princes Street, Ipswich, and, as part of that agreement, received a 99-year lease in the terms set out in a schedule to the agreement. The lease made no provision for rent reviews. The 1955 agreement contained an undertaking by the plaintiffs to offer certain land for car parking. In 1982 the parties entered into a further agreement, clause 25 of which provided that the plaintiffs should offer a lease of an area of land already used for car parking.
A lease of the car park land was offered in October 1984; it contained a three-year rent review clause and the lease was to expire at the same time as the main lease. The defendant contended that the new lease should be on the same terms as the 1955 lease and, therefore, should not contain rent reviews. In accordance with the arbitration clause in the 1982 agreement, the dispute was referred to an arbitrator; he decided that as the agreements of 1955 and 1982 were both enforceable, the car park lease should not contain rent reviews. The plaintiffs sought leave to appeal the arbitrator’s award under section 1(3) of the Arbitration Act 1979.
Held Application for leave to appeal was granted. Section 1(4) of the 1979 Act provides that “The High Court shall not grant leave … unless it considers that, having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of one or more of the parties to the arbitration agreement …”. The tests for considering whether to grant leave are to be found in the House of Lords’ decisions in The “Nema” [1982] AC 724 and The “Antaios” [1985] AC 191; in one-off contracts leave should be given only if the arbitrator is prima facie wrong in law. In the case of rent review arbitrations, there is a test of “real doubt” in Lucas Industries plc v Welsh Development Agency [1986] 1 EGLR 147; if there was real doubt whether the arbitrator was right in law, leave should be given.
In the present case the arbitrator was not prima facie wrong, but there was real doubt. However, none of the principles seen as important in the Lucas case were present; it was a one-off contract and no general principle of law was involved.
The “Nema” and “Antaios” cases were not decisive; arbitrations regulating future conduct could be distinguished from those concerned with present disputes. The instant case was concerned with the terms of a lease to run to 2054. The Lucas test should be used in the regulation of future property rights.
Kirk Reynolds (instructed by Westhorp Ward & Catchpole, of Ipswich, for the solicitor to Ipswich Borough Council) appeared for the plaintiffs; and David Grant (instructed by Birketts, of Ipswich) appeared for the defendant.
