Checkpoint Ltd. v Strathclyde Pension Fund

An expert arbitrator may use knowledge which a person possessing the contractually required expertise and local experience could reasonably be expected to have acquired. The arbitrator may use that knowledge to evaluate evidence and resolve issues already raised. If the arbitrator instead introduces material outside that field, particularly material capable of producing a result contrary to the evidence, fairness requires disclosure and an opportunity to respond.

For section 68(2)(d) of the Arbitration Act 1996, an arbitral tribunal must decide the disputes and subsidiary issues critical to its conclusion. It need not address every evidential point or argument. Section 68 is a longstop for extreme procedural failures causing substantial injustice, rather than an alternative route for challenging findings of fact or a failed application for permission to appeal.

A tenant challenged an award fixing the reviewed annual rent of industrial premises at £440,000. The arbitration was conducted on written representations by surveyors, without an oral hearing. The tenant alleged that the expert arbitrator had relied on personal experience of lettings and market demand without inviting comment, and had failed to address evidence of excess supply and weak demand in the immediate locality.

Park J dismissed the tenant’s application under section 68 of the Arbitration Act 1996, but permitted a limited appeal. The questions were whether the arbitrator’s use of personal experience, or his treatment of the evidence about supply and demand, constituted a serious irregularity and, if so, whether it caused substantial injustice.

1. The appeal was dismissed unanimously. Ward LJ delivered the judgment, with which Mummery and Jonathan Parker LJJ agreed. The arbitrator committed no serious irregularity and the award remained effective.

2. An expert arbitrator may use information of a kind, and within the range of knowledge, which a person possessing the expertise and local experience required by the parties’ agreement could reasonably be expected to have acquired. The relevant distinction is between using such knowledge to evaluate the evidence and introducing new evidence outside the issues or expected field of expertise. If an arbitrator forms a material view outside that field which may produce a result contrary to the evidence, fairness ordinarily requires disclosure and an opportunity for the parties to respond.

3. The parties had directly disputed whether properties at Winnersh Triangle and Bracknell occupied a comparable market and attracted similar demand. The arbitrator used his expected market knowledge to evaluate that dispute and explain why he preferred the landlord’s evidence. He did not introduce a new or peripheral issue. His use of personal experience therefore caused no unfairness and did not infringe sections 33 or 68(2)(a) of the Arbitration Act 1996.

4. The arbitrator did not exercise inquisitorial powers. Such powers involve opening issues not raised by the parties or independently seeking evidence. The arbitrator remained within the issues and evidence presented and made no external inquiry. His use of knowledge already acquired through professional experience consequently did not breach the agreed procedure for notifying the parties of inquisitorial findings under section 68(2)(c).

5. The word “issues” in section 68(2)(d) must be construed purposively. It covers the disputes the tribunal must resolve and any subsidiary questions critical to its decision, rather than every argument or evidential point. The critical question here was whether the identified transactions were proper comparables. The alleged excess supply and weak demand were subordinate evidential matters supporting the tenant’s preferred comparable, not separate issues requiring express determination.

6. Although unnecessary to the result, the court explained that substantial injustice depends on the effect of the procedural failure on the fairness and conduct of the hearing, not on a judicial estimate of what award might otherwise have been made. Section 68 is a longstop reserved for extreme departures from the reasonably expected arbitral process. It is not a substitute for an unsuccessful challenge on a question of law.

1. Court of Appeal (Civil Division): In [2003] EWCA Civ 84, the court unanimously dismissed the tenant’s appeal and upheld the rejection of its challenge to the arbitral award.
2. High Court, Chancery Division: Park J dismissed the application under section 68 of the Arbitration Act 1996. He granted permission to appeal on the limited questions concerning the arbitrator’s personal experience and his treatment of the evidence about local supply and demand. No citation for that decision is stated.
3. Arbitration: The arbitrator fixed the reviewed annual rent at £440,000. The tenant’s attempted challenge on questions of law did not proceed following the refusal of permission.