Westland Helicopters Ltd v Al-Hejailan

A monetary arbitration reference ordinarily includes a claim for interest, but an express withdrawal of interest narrows the reference. Reinstatement requires the opposing party’s consent or permission from the tribunal. A clearly reinstated claim, left unchallenged despite an opportunity to object, may be determined only within the period claimed. A party cannot evade issue estoppel or statutory time limits by attacking an earlier, unchallenged jurisdictional determination through a later challenge. Under the Arbitration Act 1996, section 68 does not revive pre-1996 standards of serious irregularity. A party given a fair opportunity to address an issue cannot ordinarily complain of serious irregularity after failing to do so. Interest awarded outside the scope of the reference is jurisdictionally invalid.

Westland applied under sections 67 and, alternatively, 68 of the Arbitration Act 1996 to set aside or vary part of a second interim arbitration award. An earlier arbitrator had rejected the defendant’s success-fee claim but preserved a possible quantum meruit claim. The replacement arbitrator valued that claim by reference to an annual retainer and awarded interest, including for a period before January 1995.

Westland argued that the arbitrator lacked jurisdiction to award interest and, alternatively, that the proceedings involved serious irregularity. The central issues were whether the earlier award had confined the permissible valuation method, whether an interest claim had been reinstated within the reference, and whether interest could be awarded for a period earlier than that claimed.

Disposition

1. The section 67 application succeeded only to the extent that interest had been awarded for the period before January 1995. The arbitrator had jurisdiction to award interest from January 1995. The section 68 application provided no additional relief.
2. The unchallenged determination in the Second Award that the arbitrator had jurisdiction to value the quantum meruit claim by an annual retainer was binding. The court applied the issue-estoppel principle stated in Fidelitas Shipping Ltd v. V/o Exportchleb [1966] QB 630: an interim award determining an issue within the reference cannot subsequently be reargued in that arbitration. Westland could not challenge the interest award by disputing the capital jurisdiction which it had not challenged within the statutory period.
3. The court further held that a jurisdictional ground known to a party must be raised before the arbitrator and included in a timely section 67 application. The finality principle described in JSC Zestafoni G Nikoladze Ferroalloy Plant v. Ronly Holdings Ltd [2004] EWHC 245 (Comm) supported that conclusion. A new ground could not be introduced after the 28-day period in section 70(3).
4. A monetary reference ordinarily includes interest on the sum claimed. When the defendant expressly abandoned interest at the first arbitration, the scope of the reference was narrowed. Reinstatement required consent or permission from the arbitrator, subject to fairness to the opposing party. The defendant’s letter of 22 January 2001 and counsel’s closing submissions clearly advanced an independent interest claim. Westland did not object despite being invited to raise procedural complaints, so the arbitrator was entitled to treat the claim as reinstated from January 1995 only.
5. The statutory discretion under section 49 to award interest remained confined by the scope of the reference. The arbitrator therefore had no jurisdiction to award interest for the earlier period.
6. There was no serious irregularity under section 68 in relation to interest from January 1995. Westland had repeated opportunities to challenge the reinstatement of the claim or address the exercise of discretion. Treating the circumstances as a serious irregularity would revive the pre-1996 approach exemplified by King v. Thomas Mckenna Ltd [1991] 2 QB 480, which section 68 was designed to replace.

not stated in the judgment.