Shuttari v Solicitors' Indemnity Fund

A challenge under section 68 of the Arbitration Act 1996 requires both a serious irregularity and substantial injustice. The tribunal’s duty to act fairly and give a reasonable opportunity to present a case does not require limitless indulgence, particularly where an adjournment is sought at the end of an arbitration and the proposed evidence is unknown. Substantial injustice requires more than a possibility that new evidence might affect the result. The court must assess whether the evidence has a realistic chance of changing the award. Section 68 is a remedy of last resort, consistent with the finality of arbitration.

The claimant, a solicitor, sought under section 68 of the Arbitration Act 1996 to remit or set aside an arbitral award denying indemnity under the Solicitors’ Indemnity Rules. The arbitrator had found that she acted dishonestly by signing a report on title without investigating the title or complying with the lender’s instructions.

During the arbitration, after her cross-examination and shortly before the hearing resumed, she sought an adjournment to obtain psychiatric evidence concerning her mental state in 1991. The arbitrator refused the application. The central questions were whether that refusal breached the tribunal’s duty under section 33 and, if so, whether it caused or would cause substantial injustice.

1. The challenge was dismissed. The court held that section 68 involves two stages: first, an irregularity affecting the tribunal, proceedings or award; and secondly, substantial injustice caused or likely to be caused by that irregularity.
2. The arbitrator had complied with section 33. The claimant had received extensive indulgence and a reasonable opportunity to present her case. The application came after cross-examination, near the end of the hearing, and supplied no indication of the proposed expert evidence’s substance or likely effect. Fairness did not require the arbitrator to delay the proceedings indefinitely or open a new area of inquiry without adequate evidential foundation.
3. Alternatively, even assuming an irregularity, substantial injustice was not established. The correct threshold was whether the proposed evidence had a realistic chance of causing the arbitrator to reverse the finding of dishonesty. The court was not required to be certain that the result would have changed, but it had to form its own view on the strength and likely impact of the new evidence.
4. The psychiatric material stated only that, in a depressed state, the claimant might not have appreciated that she was doing wrong. It did not provide sufficiently credible evidence that her mental impairment caused her to regard the signing of the report as honest. The court therefore found no realistic prospect of a different award.
5. The court treated section 68 as a last-resort jurisdiction supporting finality in arbitral proceedings. The Human Rights Act point added nothing because the fairness required by article 6 was reflected in section 33.