Protech Projects Construction (Pty) Ltd. v Mohammed Abdulmohsin Al-Kharafi & Sons for General Trading, General Contracting and Industrial Structures WLL

Challenges under section 68 of the Arbitration Act 1996 are confined to serious irregularities causing substantial injustice. The provision is not a route for reviewing the correctness of an arbitral decision or for advancing what is in substance an appeal on a question of law.

Inadvertent non-disclosure is not contrary to public policy unless it involves conduct that is unconscionable or reprehensible, and substantial injustice must be demonstrated. A tribunal’s failure to determine an argument is not a serious irregularity where the tribunal concluded that the argument could not affect the result; any error ordinarily belongs under section 69.

Protech obtained permission to enforce five ICC arbitration awards against Kharafi. Kharafi sought to set aside charging orders and challenge the awards under section 68 of the Arbitration Act 1996.

The first challenge concerned Protech’s inadvertent failure to disclose a cession of the proceeds of its claims before an award determining locus standi. The second concerned the arbitrator’s treatment of conditional fee agreements when assessing the costs award. Kharafi alleged public-policy irregularity, failure to deal with an issue, and substantial injustice. The court also considered an extension of time for challenges to earlier awards.

1. Challenges dismissed. The challenges to the awards failed. The withdrawn challenge concerning interest was to bear costs payable by Kharafi.
2. Section 68 of the Arbitration Act 1996 is reserved for extreme cases. It is concerned with serious irregularity causing substantial injustice, not whether the arbitrator reached the correct result. A challenge which is in substance an appeal on law cannot be recast as a section 68 application.
3. Inadvertent non-disclosure of the proceeds cession did not make the award contrary to public policy. Conduct must involve more than inadvertence and, save perhaps in exceptional cases, must be unconscionable or reprehensible. Kharafi had shown no prejudice. Any possible effect on the arbitrator’s discretion concerning standing would have been pointless because Protech could pursue the later arbitration request.
4. The arbitrator’s approach to standing could not be challenged under section 68 merely because his legal analysis might have been wrong. The court considered, without needing to decide the issue, that a general discretion may exist to permit proceedings to continue despite an initial want of standing where no incurable or significant prejudice is shown.
5. The costs challenge also failed. The arbitrator had determined the issue placed before him, namely who should pay the arbitration costs. His conclusion that the ICC Rules governed and that enforceability of the conditional fee agreements was moot was, at most, an error of law. The court further found no substantial injustice because the award excluded success-fee uplifts and awarded only reasonably charged costs.
6. The court noted that the enforceability of the agreements was arguable in the particular commercial arbitration, having regard to Sharrat v London Bus Co Ltd [2003] EWCA CIV 718 and Spencer v Wood [2004] EWCA CIV 352, but did not decide the point.

First-instance decision. The judgment records earlier enforcement and charging orders made by Cooke J, but no appellate decision is stated.