Cameroon Airlines v Transnet Ltd.

Section 68 of the Arbitration Act 1996 is a long-stop safeguard for the arbitral process. It does not permit correction of errors of fact, law or evidential assessment. Where a tribunal adopts an unheralded legal or factual approach which the parties have not had a fair opportunity to address, the failure may constitute serious irregularity. The applicant must also show substantial injustice. This does not require proof that the result would necessarily or probably have been different, but there must be a realistic possibility of a significantly different outcome. An award may therefore be remitted for reconsideration on the affected issue.

Cameroon Airlines applied under section 68 of the Arbitration Act 1996 to challenge a final ICC arbitral award arising from aircraft maintenance contracts with Transnet. The contracts were procedurally governed by English law and substantively governed by South African law. The tribunal found bribery and corruption but assessed the value of the maintenance services by reference to Transnet’s commercial price after deducting commission. It also fixed the commission figure by reference to document R1. The central issues were whether the tribunal had adopted an unargued basis for valuing the services and whether its treatment of the commission evidence denied Cameroon Airlines a fair opportunity to present its case.

The application succeeded in part. The award was remitted for reconsideration of the quantification of the value of the maintenance services. The tribunal’s determination of the commission figure was not set aside.

1. Scope of section 68. The court was concerned with serious procedural irregularity causing substantial injustice, not with the correctness of the tribunal’s findings of fact, South African law or evidential assessment. Section 68 is a long-stop remedy reserved for an extreme case where intervention is required to support the arbitral process.
2. Fair hearing. The tribunal’s duty under section 33 of the Arbitration Act 1996 required it to act fairly and give each party a reasonable opportunity to present its case. The principles in Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14 and Interbulk Ltd v Aidan Shipping Co Ltd, The “Vimeira” [1984] 2 Lloyd’s Rep 60 required a tribunal which was considering an unraised point or unexplored approach to invite submissions before deciding the case on that basis.
3. Application to value. Both parties had conducted the evidence and submissions principally on a cost-based approach. Although Transnet referred in closing submissions to value to Cameroon Airlines on a commercial basis, that submission was made in support of striking out the claim and on the footing that the issue had not been properly ventilated. The majority nevertheless adopted that approach without warning and used the contract price less commission as the value of the services. That departure was fundamentally unfair and amounted to serious irregularity under section 68(2)(a). The reasoning in Warborough Investments v S. Robinson & Sons [2003] EWCA Civ 751 supported the conclusion that there was a real risk of substantial injustice.
4. Commission. The tribunal had left the parties to reconcile the competing figures based on R1 and had provided ample opportunity to produce further evidence or submissions. Cameroon Airlines did not do so. Applying Kalmneft v Glencore [2002] 1 Lloyd’s Rep 128, it had not shown substantial injustice. The tribunal was entitled to decide what evidence to accept.
5. The award was accordingly remitted under section 68(3)(a) for reconsideration of the value of the services. No final costs order was made in the judgment.

This was a first-instance application under section 68 of the Arbitration Act 1996 challenging a final arbitral award. No earlier court decision is stated in the judgment.