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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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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Remission or Set Aside for an arbitral award where a challenge for serious irregularity is made out before the English courts?

In the case of The Secretary of State for the Home Department and Raytheon Systems Limited [2015] EWHC 311 (TCC) and [2014] EWHC 4375 (TCC), the English Court has set aside an arbitral award for serious irregularity under s68(2)(d).

Mr Justice Akenhead found that the Tribunal in question had failed to consider two important issues (one of liability and another of quantum) such that a serious irregularity had occurred which had caused substantial injustice to the claimant. In a later hearing, the judge considered the appropriate relief for that serious irregularity, concluding that the case was one in which it was appropriate to set aside the Award and for the case heard by a new Tribunal.

The two decisions add to the relatively sparse caselaw on these two provisions of the Act. The first is one of very few to consider and make a finding of serious irregularity under s68(2)(d). In grappling with when it is “inappropriate” to remit a matter back to the original arbitral tribunal, the second decision provides helpful parameters for when set-aside is the correct relief for such a finding. Continue reading