Although the Arbitration Act 1996 is founded on the principle of upholding party autonomy, ensuring that an arbitral award is ‘final and binding’ (section 58), it also provides limited and narrowly interpreted grounds for challenging an award.
One such ground is the appeal on a question of law under section 69 of the act. Before granting permission to appeal, the court must be satisfied, inter alia, that the decision of the tribunal on the question of law is ‘obviously wrong’ (section 69(3)(c)(i)). The test to be met under section 69(3)(c)(i) is a high one and will rarely be satisfied. As Hobhouse J put it in President of India v Jadranska Slobodna Plovidba [1992] 2 Lloyd’s Rep 274, it is to be ‘tantamount to persuading the court that the appeal will almost certainly be successful’. However, where permission has been granted, the application need only show that the tribunal’s decision was ‘wrong’. The recent decision of Aston Martin MENA Ltd v Aston Martin Lagonda Ltd [2025] EWHC 2531 (Comm), in which Aston Martin MENA Ltd (AMMENA), was granted leave to appeal under section 69(3)(c)(i)), helpfully illustrates the approach the courts will adopt.
Background
The dispute arose from a distribution agreement between the manufacturer, Aston Martin (AML), and its independent distributor (AMMENA). The pricing clause (article 4(A)(1)) provided that the price for products ‘shall not be materially higher than the UK factory price applicable to the other territories’. The disagreement centred on how this comparator should be defined. AMMENA argued that the price should be compared to the internal transfer prices (ITPs) charged by AML to its affiliated or captive distributors (such as Aston Martin Lagonda North America Inc). AML, however, contended that the appropriate comparator was the dealer net prices (DNPs), the higher prices reflecting the commercial arm’s-length relationship with independent third-party retailers. The arbitral tribunal accepted AML’s position, dismissing the ITPs as being a mere ‘accounting tool’ that was set unilaterally and commercially irrelevant as a comparator. The Commercial Court granted AMMENA permission to appeal.
Commercial Court judgment
Mr Justice Bright dismissed the appeal and in doing so, affirmed that the test on the substantive appeal was simply whether the tribunal’s decision was ‘wrong’, not ‘obviously wrong’. As Bright J explained, AMMENA was only required to show that the tribunal was ‘wrong and that the question of law that the appeal identifies should now be given a different answer’ (see Moulder J in Fehn Schiffahrts GmbH & Co. KG v Romani SpA [2018] EWHC 1606 (Comm) (para 38)); Regal Seas Maritime SA v Oldendorff Carriers GmbH & Co. KG [2021] EWHC 566; CVLC Three Carrier Corp v Arab Maritime Petroleum Transport Co. [2021] EWHC 551 (Comm)). Bright J held that the court’s jurisdiction was limited because the appeal concerned ‘contractual interpretation’, a matter recognised not as a pure ‘question of law’ but rather a ‘mixed question of law and fact’.
He also highlighted the tribunal’s superior position in assessing such issues when he said ‘the fact that these submissions were made to me highlights the stark reality that a court which has to determine an issue of contractual interpretation on the basis of very limited materials (typically, the award and the contract) is simply not in the same position as a tribunal which conducted a multi-day evidentiary hearing’. This reinforces the tribunal’s greater command of the factual matrix and the court’s unwillingness to second-guess its commercial judgment.
Commentary
The decision in Aston Martin MENA Ltd illustrates the limits of section 69 of the 1996 act in practice. Although permission to appeal may be granted on the basis that a decision is ‘obviously wrong’, this does not translate into a greater willingness of the courts to interfere at the substantive stage. The courts remain slow to intervene in arbitration, especially where the issue is one of contractual interpretation.
Bright J’s reasoning reflects a familiar point: questions of interpretation are rarely pure questions of law. They are shaped by the factual and commercial context within which they are formed, which the arbitral tribunal is better placed to assess. The courts, working from the award and limited materials before them, will not readily substitute their own view.
In that sense, the distinction between ‘law’ and ‘fact’ under section 69 is narrower than it might appear. The case also demonstrates that focusing solely on section 69, especially on an issue tied closely to the facts, is unlikely to succeed. Other grounds, including those under section 68, may at least merit consideration depending on the nature of the challenge and the submissions made before the courts.
Raghad Hamed is a final-year LLB student at the University of Leicester and a student adviser with the University of Leicester Legal Advice Clinic. Masood Ahmed is an associate professor at the University of Leicester and a member of the Law Society’s Dispute Resolution Advisory Committee
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