Recent arbitral award challenges underscore high bar for overturning tribunal decisions
Serle Court’s Jennifer Haywood examines a series of recent cases that have tried – and failed – to challenge an award under section 68 of the English Arbitration Act
There have been a number of cases recently in which a party has sought, but failed, to challenge an arbitral award under section 68 of the Arbitration Act 1996 on the grounds that: the tribunal decided an issue without the relevant point having been canvassed or put to a witness; or in a manner that was inconsistent with a previous finding or procedural decision; or that the tribunal failed to decide an issue or overlooked evidence.
The cases highlight the high threshold required by the two limbs of section 68 – (i) a serious irregularity of one or more of the kinds specified in s68(2); and (ii) substantial injustice to the applicant. As Popplewell J emphasised in Reliance Industries Ltd v The Union of India  EWHC 822, the test for serious irregularity involves a high threshold and only an extreme case justifies the court’s intervention.
Each of the applicants sought to rely on s68(2)(a), a breach of section 33 of the act, namely the tribunal’s duty to “(a) act fairly and impartially as between the parties, giving each a reasonable opportunity of putting his case and dealing with that of his opponent” and (b) adopt suitable procedures.
Two failed because, as Popplewell J pointed out in the Reliance Industries case, there is an important distinction between having no opportunity to address a point or an opponent’s case, and failing to recognise or take an opportunity which exists. If a point is in play, a tribunal is not obliged to put to the parties all aspects of the analysis in support of its conclusion.
In BPY v MXV  EWHC 82, two of the complaints were that the tribunal had (a) decided there had been dishonesty when such a case had not been properly put to the witnesses; and (b) failed to determine a relevant issue, namely that certain documents should not have been admitted in evidence.
The judge observed that fairness does not always require a witness to be cross-examined on a particular point to be disbelieved, and that tribunals have a wide discretion as to procedure. He found that the tribunal would determine what weight to give the evidence regardless of whether it had been expressly dealt with in cross-examination, and BPY had not questioned that direction or sought to clarify what evidence might be given weight.
The judge rejected the claimant’s complaint that the tribunal had failed to deal with the question of whether documents should be excluded from the arbitration if obtained illegally, because the claimant had not asked the tribunal to consider the point and because even if the relevant documents had been excluded, the tribunal would probably have reached the same conclusion.
In SUI Northern Gas Pipelines Ltd v National Power Parks Management Company (Private Ltd)  EWHC 316, the claimant complained that the tribunal’s finding had turned on a point of construction – whether or not invoices had to be issued before the end of the relevant month – that had not been canvassed during the hearing. The challenge failed because the judge held that the award did not have the effect contended for by the claimant. The judge observed that, had he found that the award had the effect contended for, there would have been a breach of s33 of the act, because the point of construction was not in play. However, the claimant would have had to establish injustice, which had not been pleaded, and the judge would at most have remitted the award, rather than set it aside.
In Cipla Ltd v Salix Pharmaceuticals Inc  EWHC 910 (Comm), the claimant complained that there was a fundamental incompatibility between a procedural decision not to allow evidence to be admitted by the defendant and a conclusion in the merits award that the claimant had failed to establish product infringement. The claimant argued that, by excluding the defendant’s evidence as to whether the allegedly infringing product had the same X-ray powder diffraction (XRPD) pattern as the patented product, the tribunal had ruled that the question of whether the allegedly infringing product had the same XRPD pattern was no longer an issue.
However, the tribunal had made clear during closing submissions that the burden was still on the claimant to establish that the allegedly infringing product had the same XRPD pattern as the patented product and the claimant had accepted this rather than press the point.
The claimant also complained that the tribunal had breached its duty by overlooking agreed evidence, but the judge, citing Teare J in UMS Holdings v Great Station Properties  Bus LR 650, emphasised that the assessment of evidence is a matter for the tribunal and that one cannot infer from the absence of any reference to a piece of evidence in an award that the tribunal has breached its duty under s33 of the act.
The judgments all emphasise the difficulty in challenging an award on the basis of an irregularity – particularly if an issue is to some extent in play – and the burden on advocates to press points during an arbitration if they should need to raise them later.
The cases also serve as a reminder, however, that even unsuccessful challenges can significantly increase costs and lengthen the time to resolution. In two of the cases decided this year, the awards had been delivered in 2021. In order to minimise the scope for an application to challenge an award for serious irregularity, party representatives should ensure that as far as possible, the issues that a tribunal is required to determine are clearly identified.
Jennifer Haywood is an arbitrator at Serle Court.