Latvian Shipping Company v The Russian People's Insurance Company (Rosno) Open Ended Joint Stock Company

Section 68 of the Arbitration Act 1996 is a high-threshold, longstop remedy. The court does not intervene merely because it might have assessed the evidence differently, given fuller reasons, or reached another conclusion. An arbitral tribunal need deal only with issues essential to its award, provided the parties had a fair opportunity to present their cases. Where an assured advances an all-or-nothing claim, and the tribunal finds that insured and uninsured causes contributed to the loss but the insured component cannot reliably be quantified, the claim may fail. The tribunal is not required to adopt a broad-brush apportionment or invent an alternative claim. A court may revoke permission to appeal under CPR 3.1(7), including where the order was based on misleading information or a fundamental change of circumstances.

Latvian Shipping Company challenged an arbitral award concerning damage to the propeller of the vessel Ojars Vacietis. The claim was made under a marine insurance policy after the vessel grounded at Wilmington and later navigated through ice-affected waters near Quebec.

The arbitration tribunal found that some minor damage probably occurred during the insured grounding, but that the catastrophic damage discovered later could not be attributed wholly to the grounding and could not be reliably quantified. It dismissed the claim because the assured had advanced no alternative claim for partial recovery.

LSC brought applications under sections 68 and 69 of the Arbitration Act 1996, and ROSNO applied to set aside the order granting permission to appeal. The central questions concerned the scope of section 68, partial recovery under the Marine Insurance Act 1906, and the tribunal’s treatment of an unquantifiable insured component of the loss.

1. Applications dismissed. The tribunal committed no serious irregularity under section 68 and made no appealable error of law. Its award and costs order were confirmed.
2. Section 68 imposes a high hurdle. Following ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1, The “Magdalena Oldendorff” [2008] 1 Lloyd’s Rep 7, and Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, intervention is reserved for conduct far removed from what could reasonably be expected of the arbitral process. A court must not use section 68 as a side door for an appeal on fact or law.
3. The tribunal was entitled to find that the catastrophic propeller damage was not all sustained at Wilmington, that some damage probably occurred there, and that the Wilmington component could not be quantified. LSC had chosen to advance an all-or-nothing claim and had not pleaded or argued an alternative claim for partial recovery. The tribunal was not required to take a broad-brush approach or seek further submissions.
4. The tribunal had dealt sufficiently with the essential issues. Failure to address every submission, including an alleged inconsistency in ROSNO’s case, was not a serious irregularity where the issue was not essential to the award and could not realistically have changed the result. This followed the approach in Vee Networks Ltd v Econet Wireless International Ltd [2005] 1 Lloyd’s Rep 192.
5. The tribunal was entitled to consider points raised in closing submissions about errors in an expert spreadsheet. The opposing expert was present, the point was identified, and LSC had an opportunity to respond but did not do so. The tribunal’s resulting assessment was a finding of fact.
6. Sections 55(4) and 69(1) of the Marine Insurance Act 1906 did not require recovery where the insured part of the loss could not be identified and quantified on the evidence. The answer depended on the circumstances, the parties’ procedural choices, and the findings available to the tribunal.
7. The court had jurisdiction under CPR 3.1(7), and alternatively under its inherent jurisdiction, to set aside permission to appeal where the original order had been obtained by misleading information or a fundamental change of circumstances. Permission concerning an alleged admission of actual damage was not determined because the tribunal’s additional award established that ROSNO had admitted only the possibility of damage.

This was a first-instance decision on applications under sections 68 and 69 of the Arbitration Act 1996 concerning an arbitral award dated 20 May 2011. Burton J had granted permission to appeal on 23 September 2011. The Commercial Court dismissed the section 68 challenges, declined to determine the question founded on an admission of actual damage, and confirmed the award on the remaining section 69 questions.