Van Der Giessen-De-Noord Shipbuiilding Division BV v Imtech Marine & Offshore BV

Under section 68 of the Arbitration Act 1996, the court intervenes sparingly. A tribunal need not address every argument or explain every step in its reasoning. It must, however, determine every essential issue put to it and act fairly by giving the parties a reasonable opportunity to address any basis on which it may decide the dispute.

A failure to determine an essential issue may amount to serious irregularity where it causes substantial injustice. The court need not decide what result the tribunal would have reached absent the irregularity if the tribunal might well have reached a different view. An award may be remitted or set aside in part, with an umpire attending the reconsideration where the arbitration agreement and section 21 so require.

Imtech claimed payment for additional work, extensions of time and delay-related losses arising from the construction of a passenger vessel. GN counterclaimed. A two-member arbitral tribunal issued a Third Partial Award on 20 March 2008.

GN challenged the award under section 68 of the Arbitration Act 1996, alleging that the tribunal had failed to deal with essential issues and had acted unfairly. The challenges concerned interest, waiver or estoppel, the contractual variations procedure, the scope of work, HVAC cabling, I/O points and alleged double counting. GN also sought permission to appeal on a question of law.

The central issues were whether the tribunal’s omissions caused serious irregularity and substantial injustice, and whether the challenged parts of the award should be remitted or set aside.

1. Outcome. The court held that serious irregularity affected four matters: the award of interest, the waiver or estoppel defence, the contractual variations procedure and double-counted additional works. Those matters caused substantial injustice to GN.
2. The tribunal acted unfairly by awarding interest at 10 per cent without explaining the choice of rate or giving the parties an opportunity to address a rate higher than any rate claimed. The parties had proceeded on the basis of the Dutch Civil Code rates. On reconsideration, the tribunal would need to explain any different rate.
3. The tribunal failed altogether to address GN’s defence that Imtech had waived, or was estopped from asserting, entitlement to payment for HVAC revisions 5 to 23. This was an issue, not merely an argument or line of reasoning, because it could have eliminated a substantial part of the claim.
4. The tribunal also failed to address the agreed procedure for variation orders. Whether that procedure applied, whether it had been followed or waived, and what consequence followed were material issues affecting substantial claims.
5. The challenges concerning the contractual scope of work, HVAC cabling and I/O points failed. The tribunal had addressed those issues, and section 68 was not a means of correcting alleged errors of fact, law or reasoning.
6. The parties had agreed that there was to be an umpire within section 21 of the Arbitration Act 1996, although the umpire’s power to replace the arbitrators was contingent on disagreement. The default position required the umpire to attend the proceedings and receive the same materials.
7. The court proposed setting aside specified parts of the award, including the HVAC variation award, the additional-work award and the interest award, together with other paragraphs potentially affected by the variations-procedure issue. Reconsideration was to proceed before the existing arbitrators with an umpire attending, subject to GN giving an appropriate undertaking concerning the points and evidence to be raised.

First-instance challenge to an arbitral award under section 68 of the Arbitration Act 1996. The judgment does not state a prior court decision.