Claire & Co. Ltd. v Thames Water Utilities Ltd.

A court reviewing an arbitral award must distinguish jurisdictional challenges and serious-irregularity challenges from an impermissible appeal on the facts. An evidential concession does not remove an issue from the arbitrator’s jurisdiction unless the parties agreed that it should be resolved outside the reference. The assessment of evidential weight is for the arbitrator. Sections 33 and 68 of the Arbitration Act 1996 cannot be used to challenge an arbitrator’s factual assessment. New statutory grounds raised out of time should not be permitted where they are unsubstantiated and have no prospect of success.

Claire & Co. Limited claimed compensation under Schedule 12 to the Water Industry Act 1991 after works undertaken by Thames Water Utilities Limited disrupted and ultimately destroyed a new estate agency business. An arbitrator awarded £108,000, including £78,390 for loss of profits calculated using a 22 per cent margin.

The claimant challenged the award under sections 67 and 68 of the Arbitration Act 1996, alleging that an expert’s evidence had fixed the applicable profit margin and that the arbitrator had acted unfairly. It also sought to amend its claim to raise further challenges under sections 67, 68 and 69 after the statutory time limit.

1. The challenges to the original claim failed. Even assuming that the defendant’s expert had admitted that a 75 per cent margin applied above £100,000 turnover, that admission did not deprive the arbitrator of jurisdiction. The parties had not agreed to remove the issue from the reference or resolve it by bilateral agreement.
2. The arbitrator was entitled under section 34 of the Arbitration Act 1996 to determine the weight of the evidence and to use his expert knowledge and experience in assessing the appropriate profit margin. The material before the court disclosed no basis for criticising the adoption of a 22 per cent margin.
3. Even an error in assessing the evidence would not amount to a breach of section 33 or a serious irregularity under section 68. Those provisions cannot be used as a device to appeal an arbitrator’s decision on a question of fact.
4. The proposed additional claims under sections 67(1)(b), 68(2)(e), 68(2)(g) and 69 were unsubstantiated and incapable of being substantiated. The court refused an extension of time under section 80(5) and refused permission to amend out of time, applying the reasoning in Aoot Kalmeft v Glencore International AG [2002] 1 Lloyds Law Reports 128 at paragraphs 73–74.
5. All applications were dismissed and the claim was dismissed.