Soeximex SAS v Agrocorp International PTE Ltd

Under Arbitration Act 1996, a tribunal’s failure to address a distinct and important issue submitted for determination may constitute a serious irregularity under section 68(2)(d). The court must distinguish that failure from reasons which are merely brief or insufficiently detailed. Substantial injustice is established where the omission deprives a party of the opportunity to have an arguable case determined, including on a possible section 69 appeal. In such circumstances, remission to the tribunal is appropriate.

The Buyers sought remission of a GAFTA Board of Appeal award under section 68 of the Arbitration Act 1996. The Board had found that United States and European Union regulations applied but rejected the Buyers’ illegality defence.

The Buyers contended that the Board had failed to address two separate issues: whether reimbursement through a New York bank involved prohibited financial services to Burma, and whether Article 14 protected a party acting in good faith, even if mistaken. The issue was whether those omissions engaged section 68(2)(d) and caused substantial injustice.

1. The award was remitted to the GAFTA Board of Appeal on both omitted points.
2. Section 68(2)(d) applies where an arbitral tribunal fails to deal with an issue put to it and that failure amounts to a serious irregularity causing substantial injustice. This differs from a complaint that the tribunal gave insufficient reasons for an issue it had addressed.
3. The United States regulations raised a discrete issue concerning whether a New York bank’s reimbursement of a letter of credit would constitute an indirect supply of financial services to Burma. The identity of particular beneficiaries was irrelevant to that issue. The Board had not addressed the argument or explained why the unchallenged expert evidence was rejected or treated as irrelevant.
4. Article 14 raised a separate defence from Article 11. It was reasonably arguable that it could protect a contracting party which, in good faith, refused to open a letter of credit because it believed that doing so would breach the regulation, even if no breach would in fact have occurred. The court expressed no view on the merits, but the Board had failed to consider the argument or make any finding on good faith.
5. The omissions caused substantial injustice because the Buyers were deprived of the opportunity to have important arguments determined and potentially pursued on a section 69 appeal. A section 70(4) order for fuller reasons was inappropriate where the issues had not been addressed at all.

First-instance application under section 68 of the Arbitration Act 1996 concerning a GAFTA Board of Appeal award. The award was remitted to the Board of Appeal.