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Antony Smith & Anna Braden

Two decisions in the Technology and Construction Court (in the cases of A v B [2018] EWHC 3366 (TCC) and Bond v Mackay and Others [2018] EWHC 2475 (TCC)) have provided some useful guidance and clarification on the grounds for challenging an Arbitrator's award.

The cases focus on the Court's discretion to vary an award by a tribunal as to its substantive jurisdiction under section 67 of the Arbitration Act 1996 (“Act”); and to set aside an award for serious irregularity under section 68 of the Act.

Arbitrator’s jurisdiction under section 67 of the Arbitration Act

In Bond v Mackay and Others [2018] EWHC 2475 (TCC) the Court took a broad view of the factual matrix of a dispute as shown by the correspondence leading up to the appointment of the arbitrator and held that an additional dispute fell within the substantive jurisdiction of the arbitrator.

The claimant brought an application under s.67 of the Act to challenge the arbitrator’s decision that an additional issue (pursuant to clause 2(i) of a deed) was not within his reference. The statement of case served by the claimant contained no specific reference to clause 2(i), but according to the claimant, this did not matter as it argued that you should look at the ‘big picture’ and the dispute was about the entitlement to compensation, which was the subject matter of the original dispute. The defendant argued that the dispute under clause 2(i) was not within the arbitrator’s reference as there had been no mention of a claim under this clause prior to the appointment of the arbitrator (only reference to disputes under 5 and 6 were made).

Decision

The Court held that the claim for compensation under clause 2(i) fell within the substantive jurisdiction of the arbitrator and accordingly varied the award. Mr Jonathan Acton Davis QC, as Deputy High Court Judge, stated that the circumstances of the case required a broad view of the factual matrix to be taken. The fact that the clause was not referred to in the statement of case was irrelevant and if the claim is part of a matrix (as it was in this case), the scope of reference to arbitration cannot be reduced by the pleadings.

Comment

The decision in Bond v Mackay and Others [2018] EWHC 2475 (TCC) highlights to those drafting the scope of reference for arbitration that the Court is willing to examine the broader factual matrix of the dispute and go further than the words used in the statement of case and the pleadings. Therefore the scope of the arbitration may not be limited to a narrow consideration of the legal documents forming the subject matter of the dispute.

Arbitrator’s discretion under section 68 of the Arbitration Act

In A v B [2018] EWHC 3366 (TCC) the Court refused an application to challenge part of an arbitral tribunal’s award (to exclude oral evidence given in examination-in-chief) on the grounds of serious irregularity under section 68 of the Act.

A dispute arose between ‘A’ and ‘B’ pursuant to an agreement which provided for ICC arbitration.

The procedural timetable provided for A to provide its Reply to the Defence to the Counterclaim with witness evidence and documents which were limited to responding to the Defence and Counterclaim and upon which it intended to rely in respect of the Defence and Counterclaim.

A served its Defence and Counterclaim together with 3 witness statements, with one from Mr X. A subsequently served its Reply to B’s Defence to the Counterclaim but without submitting any additional witness statements contrary to the procedural timetable. B, at a subsequent hearing, objected to certain oral evidence given by Mr X given in examination-in-chief. The tribunal initially allowed the oral evidence but later determined that it was inadmissible because the oral evidence referred to facts and matters outside the original witness statement. A challenged the tribunal’s decision pursuant to section 68 of the Act and submitted that the exclusion of Mr X’s evidence was a serious irregularity affecting A’s ability to defend the claims against it and to pursue its counterclaims. A submitted that the tribunal had incorrectly exercised its discretion by disallowing evidence because it came later, rather than addressing the discretion appropriately.

Decision

The TCC refused A's appeal determining that the tribunal had given a judgment which it was wholly entitled to make after giving both parties fair opportunity to address the issue of admissibility of Mr X’s oral evidence. The Court held that the balancing exercise undertaken by the tribunal in exercising its discretion, even if it was “harsh” as characterised by A’s counsel, was well within the bounds of its wide discretion and it was entitled to make the order that it did. The Court stated that decisions must be effectively outside of the bounds of what can be characterised as an exercise of discretion at all to allow a party to bring a challenge under s.68 of the Act.

Comment

This case demonstrates the wide discretion that an arbitral tribunal is afforded and even in the event that a court finds the tribunal to have exercised its discretion in a harsh manner, this will not in itself be sufficient grounds for a party to challenge the tribunal’s award under s.68 of the Act. This case also serves as a useful reminder to parties and their legal representatives that they should not ignore the procedural directions set by an arbitral tribunal.

 

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