English court sets aside arbitration award for serious irregularity due to tribunal’s non-disclosure of novel point central to award

The odds of successfully challenging an arbitral award in the English Courts on the basis of s68 of the Arbitration Act 1996 (serious irregularity) remain low. In the recent past over 95% of s68 challenges have been unsuccessful and in the period from 2015 to 2017 only 3 out of 112 s68 appeals succeeded, approximately 2.7% of applications made.

However, the English High Court has recently set aside an arbitral award for serious irregularity under s68(2)(a) in the case of RJ and another v HB [2018] EWHC 2833 (Comm). This case is a relatively rare and interesting example of a successful s68(2)(a) challenge.

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Award dismissing a claim for inordinate and inexcusable delay survives challenge in the English court

In Grindrod Shipping Pte Ltd v Hyundai Merchant Marine Co. Ltd, the English High Court (“the Court“) rejected an application under s68 of the Arbitration Act 1996 (“the Act“) to challenge an Award (the “Award“). Six years after the proceedings had commenced, the tribunal (“Tribunal“) issued a final award dismissing the claim under s41(3) of the Act on the ground of inordinate and inexcusable delay. Grindod Shipping challenged the award under s68 of the Act, ¬†arguing that the Tribunal’s decision was based on grounds not advanced by the respondent. The Court concluded that the issues had been sufficiently “in play” for all sides to have had a fair opportunity to respond. There was no breach of the tribunal’s duty to act fairly and impartially and therefore no procedural irregularity.

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English High Court refuses to set aside award made without awaiting outcome of relevant domestic court proceedings

In its recent decision in SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm) (available here), the English High Court (“Court“) refused to set aside an award on the ground of serious irregularity in circumstances where the London-seated tribunal applying the LCIA rules (“Tribunal“) proceeded to issue an award rather than await the outcome of domestic court proceedings which could have had a significant impact on the issues before the Tribunal.

The Court’s decision is significant because it highlights the wide discretion afforded to tribunals to manage the proceedings as they see fit, and demonstrates that there is an high bar to a successful challenge under section 68 of the Arbitration Act 1996 (“Act“). The decision also provides interesting observations on the relationship between arbitral and domestic court proceedings, and the inherent risk of inconsistent decisions should a party choose to arbitrate.

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Challenges to an LCIA award on grounds of serious irregularity and substantive jurisdiction dismissed by the English Court

In C v D [2016] EWHC 1893 (Comm), the Commercial Court (the Court) dismissed an attempt to set aside an LCIA Award.  The claimants brought challenges to a partial award on the grounds of substantive jurisdiction (s67 of the Arbitration Act 1996 (AA 1996)) and serious irregularity (s68 AA 1996).  Both challenges were squarely rejected by the Court.  Click here for a copy of the judgment.

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Arbitral tribunal’s refusal to strike out a claim could not be challenged under s68 or s69 of the Arbitration Act 1996

In a recent decision, the Mercantile Court dismissed two appeals under s68 (procedural irregularity) and s69 (error of law) of the Arbitration Act 1996 (the "Act") which sought to challenge an arbitral tribunal's refusal to strike out a claim. The appeals were dismissed on the basis that the tribunal's orders did not constitute "awards" for the purposes of the Act.  The fact that the parties had consented to the s69 appeals did not remove the need to establish that the court had jurisdiction under s69 of the Act: Enterprise Insurance Co Plc v (1) U-Drive Solutions (Gibraltar) Ltd (2) James Drake QC [2016] EWHC 1301 (QB). 

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English Court identifies “weaknesses” in the 2014 IBA Guidelines on Conflicts of Interest when considering challenge of an Award for apparent bias

In the case of W Limited v M SDN BHD [2016] EWHC 422 (Comm) the Claimant, W Limited, sought to challenge two awards in the English Court for serious irregularity under s68(2) of the Arbitration Act 1996. The challenge was founded on apparent bias of the arbitrator based on an alleged conflict of interest. No actual bias was alleged.

The case has wider importance for the international arbitration community because the Claimant referenced the 2014 IBA Guidelines on Conflicts of Interest in International Arbitration (IBA Guidelines) to substantiate its position, in particular, paragraph 1.4 of the Non-Waivable Red List.

Having applied the English law test for apparent bias and considered the IBA Guidelines, the English Court identified a number of "weaknesses" in the IBA Guidelines. This included the inability of parties or arbitrators to apply "case-specific judgment" to a Non-Waivable Red List situation. The court also commented that the conflict situation identified in this case was, in many respects, less serious than some of those identified in the Waivable Red List. Despite the conflict situation falling squarely within paragraph 1.4 of the Non-Waivable Red List, the court concluded that there was no apparent bias and dismissed the challenge.

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