Warborough Investments Ltd. v S.Robinson & Sons (Holdings) Ltd.

An arbitrator does not breach the statutory duty of fairness merely by analysing evidence in a manner which neither party specifically advocated. The decisive question is whether the relevant issue and material were sufficiently placed before the tribunal, so that each party had a reasonable opportunity to address them.

A challenge for serious irregularity under section 68 of the Arbitration Act 1996 supports rather than interferes with arbitration. The court should allow arbitrators a reasonably generous margin of appreciation. Relief is reserved for serious procedural failures causing substantial injustice, not disagreements about the merits or minor irregularities.

A landlord appealed from Lawrence Collins J's dismissal of its application under section 68 of the Arbitration Act 1996. The application concerned an award fixing the reviewed ground rent of an industrial estate.

The arbitrator selected a comparable supported by the landlord, but adjusted its rent by reference to differentials appearing in 1989 rent reviews. The landlord contended that neither party had advocated the arbitrator's precise method, that it had received no warning of the method, and that it had therefore lost an opportunity to present responsive submissions and evidence.

The central questions were whether the arbitrator's use of that material without inviting further representations breached the duty of fairness under section 33, and, if so, whether the breach caused substantial injustice for section 68 purposes.

1. Appeal dismissed unanimously. Jonathan Parker LJ, with whom Clarke LJ agreed, held that the arbitrator had not breached the duty of fairness under section 33 of the Arbitration Act 1996.

2. The arbitrator was entitled to use the 1989 rent-review figures when deciding the appropriate deduction for the absence of retail use. Although he deployed those figures differently from the tenant's surveyor, the relevance of retail use, the 1989 differentials and the need to adjust the selected comparable had all been put into the arena. The landlord's surveyor had himself recognised the significance of user restrictions and had chosen to dismiss the 1989 figures as irrelevant. Fairness did not require the arbitrator to invite another round of representations before undertaking his own analysis of that material.

3. The agreed procedure concerning exchanged reports supplied no independent ground of complaint. If the landlord considered that it needed an opportunity to answer new matters in the tenant's supplementary report, it should have raised that objection before the award rather than after the arbitration had proceeded on the four reports.

4. Assuming that an irregularity had occurred, the substantial-injustice requirement was not established. Applying the approach in Checkpoint v Strathclyde Pension Fund [2003] 14 EG 124, the court should not speculate about the award it would itself have made. It should assess how the applicant would have conducted its case without the irregularity and whether denial of a fair hearing caused substantial injustice. The proposed further case was insufficiently different, and the court was not satisfied that the outcome would have been materially different.

5. Section 68 is a long-stop safeguard for extreme cases. It supports the arbitral process and does not provide a means for routine judicial interference. Consistently with section 1(a), courts should accord arbitrators a reasonably generous margin of appreciation in discharging their functions. This case was plainly not one in which the arbitrator's conduct had gone so far wrong that justice required correction.

• Court of Appeal (Civil Division): The court dismissed the landlord's appeal and upheld the refusal of its section 68 application. The appellant was ordered to pay the respondent's summarily assessed costs.
• High Court, Chancery Division: Lawrence Collins J dismissed the landlord's application to remit the award for serious irregularity, but granted permission to appeal. No citation for that decision is stated.
• Arbitration: The arbitrator fixed the reviewed annual rent at £27,900. The landlord sought remittal of the award for reconsideration.