Double K Oil Products 1996 Ltd v Neste Oil Oyj

An application under Arbitration Act 1996, section 68, is not an appeal on the merits. The applicant must establish a serious irregularity within the statutory categories and substantial injustice. A challenge based on fraud in evidence requires cogent proof of reprehensible conduct by the successful party, or by another person to whose fraud that party was privy. New evidence must have been unavailable at the arbitration and have had an important influence on the result. Decisions about witness attendance, adverse inferences and evaluation of evidence ordinarily concern the merits. Documents voluntarily produced despite a claim to privilege may be considered by the tribunal. The application was dismissed.

Double K sought to set aside an LCIA arbitration award made in favour of Neste under section 68 of the Arbitration Act 1996. The underlying dispute concerned the supply of stable gas condensate and alleged contractual, tortious and conspiratorial liability arising from Neste’s direct contracts with companies in the Gazprom group.

Double K alleged fraudulent evidence, unfairness in the tribunal’s refusal to require two witnesses to attend for cross-examination, unfair reliance on correspondence said to be privileged, and failure to deal with an issue concerning practical export restrictions. The central questions were whether any serious irregularity had occurred and, if so, whether it had caused substantial injustice.

1. Application dismissed. Section 68 does not permit the court to revisit an arbitral tribunal’s conclusions of fact or law. It imposes a high threshold and requires a serious irregularity within the closed statutory list which has caused or will cause substantial injustice.
2. Under section 68(2)(g), inadvertent, careless or innocent production of incorrect evidence is insufficient. Fraud must be established by cogent evidence. The fraud must be attributable to the successful party or to another person whose fraud that party knew of or adopted. The court followed the reasoning in Elektrim SA v Vivendi Universal SA [2007] All ER (Comm) 365.
3. Although the later evidence was sufficiently shown to have been unavailable at the arbitration, it did not prove that Gazprom’s evidence had been fraudulently produced, or that Neste knew it was false. In any event, Double K could not show substantial injustice because the tribunal had found independently that Neste lacked the necessary knowledge and had not caused Gazprom’s breach. The application therefore failed on both fraud and causation.
4. The tribunal’s refusal to require Neste to produce witnesses for cross-examination was not unfair. Such an order would have been unusual. The tribunal’s decision whether to draw adverse inferences was an assessment of the evidence and formed part of the merits, not a serious irregularity under section 68(2)(a). The court applied the reasoning in Jaffray & Others v Society of Lloyd’s [2002] EWCA Civ 1101.
5. Double K voluntarily produced the settlement correspondence. It could not both disclose the documents and maintain privilege. The tribunal was entitled to consider the correspondence and the parties’ submissions about it. No procedural unfairness or substantial injustice resulted.
6. The tribunal had understood and addressed Double K’s case that practical export restrictions existed despite the absence of legal restrictions. Its rejection of that case was a decision on the issue, not a failure to deal with it under section 68(2)(d).