Persaud v Beynon

Challenges under sections 67 and 68 of the Arbitration Act 1996 concern jurisdiction and serious procedural irregularity, not correction of an alleged error of legal or valuation analysis. An arbitration clause ordinarily defines substantive jurisdiction; procedural directions and experts’ methodology do not necessarily limit it. Section 68 is a long-stop remedy requiring serious irregularity causing, or likely to cause, substantial injustice. A party alleging denial of a fair opportunity must show how it would have presented its case and how that could have affected the result.

The claimant challenged an arbitration award under sections 67 and 68 of the Arbitration Act 1996. The award assessed damages payable under a 1996 agreement after the claimant admitted liability and the arbitrator determined the highest open market value of a medical-services business.

The claimant argued that the arbitrator had exceeded his substantive and procedural powers by taking account of a net asset deficiency caused by withdrawals from the business and by finding a breach of the contractual duty of good faith without a sufficient opportunity to respond. The central issues were whether those matters went to jurisdiction or agreed procedure, and whether any irregularity caused substantial injustice.

1. The claims under sections 67 and 68 failed. The arbitrator’s substantive jurisdiction arose from the arbitration clause in the 1996 Agreement. The directions, interim award and experts’ disagreement did not confer or confine that jurisdiction. The valuation formula originated in the agreement and the arbitrator remained concerned with assessing damages for breach of contract.

2. An arbitrator may be confined to disagreements between experts in an appropriate case, but this was not such a case. A party’s pleading or expert report may limit the case advanced without limiting the tribunal’s substantive jurisdiction. Whether a procedural step is fair is a distinct question. In any event, the claimant had not taken the jurisdictional objection during the arbitration and section 73 applied.

3. For section 68, the question was not whether the arbitrator reached the correct conclusion, but whether there was a serious irregularity causing substantial injustice. The court adopted the analysis in St George’s Investment Company v Gemini Consulting Limited [2004] EWHC, including the principles drawn from Checkpoint Limited v Strathclyde Pension Fund [2003] EWCA civ. 84 and Warborough Investments Limited v S Robinson and Sons Holdings Limited [2003] EWCA civ. 751.

4. There was no obvious unfairness or entirely new point. The good-faith issue had been raised and argued, and the arbitrator considered whether it was fair to decide it despite the claimant’s failure to give evidence. The complaint that the valuation analysis was wrong was, at most, a matter for an appeal on a point of law.

5. The claimant failed to show substantial injustice. He provided no evidence of what he would have said about the payments or the good-faith allegations. The award therefore stood.

First-instance applications in the Commercial Court. The judgment records no prior appellate decision in the dispute.