Petrochemical Industries Company (KSC) v The Dow Chemical Company

Section 68 of the Arbitration Act 1996 provides a limited supervisory jurisdiction. A tribunal fails to deal with an issue only where it has not determined a question requiring determination. It need not answer every argument, evidential point or step in a party’s reasoning. An issue may be dealt with expressly, by composite reasoning, or by deciding an anterior matter which makes it unnecessary to address it separately. The award must be read in a reasonable and commercial way. A failure to refer to particular evidence does not itself establish a breach of the tribunal’s general duty under section 33. The application failed because the tribunal had addressed the assumption-of-responsibility issue and no serious irregularity was established.

Petrochemical Industries Company (K.S.C.) applied under section 68 of the Arbitration Act 1996 to remit parts of an ICC partial award concerning its failure to complete a joint venture transaction with The Dow Chemical Company. The tribunal had found PIC liable for consequential or loss-of-opportunity damages arising from Dow’s need to obtain replacement funding for its acquisition of Rohm & Haas.

PIC alleged that the tribunal failed to deal with an assumption-of-responsibility issue, namely whether assurances by Dow that the acquisition was independently funded excluded responsibility for the claimed losses. It also alleged failure to comply with the general duty under section 33, because the tribunal had overlooked evidence and misunderstood the basis on which PIC negotiated a price reduction. The central questions were whether a serious irregularity had occurred and whether it had caused substantial injustice.

1. Application refused. The court declined to remit the challenged paragraphs of the partial award.
2. The assumption-of-responsibility question was an “issue” within section 68(2)(d). It was distinct from foreseeability and could substantially determine Dow’s consequential-loss claim. The statutory concept of an issue cannot be fixed by the parties’ lists of issues, since parties cannot modify the mandatory scope of section 68 by the way they formulate their case.
3. The issue had been “put to” the tribunal in PIC’s memorials. PIC’s later presentation of it as closely connected with the second limb of Hadley v Baxendale did not withdraw or qualify it.
4. The tribunal had dealt with the issue. Its conclusion that PIC should reasonably have expected liability for costs associated with its failure to close was an answer to the objective assumption-of-responsibility question. A tribunal need not set out every step of its reasoning, answer every question qualifying as an issue, or address each point made by a party. It may dispose of issues compositely or by deciding a logically anterior point. The award must be read in a reasonable and commercial way.
5. PIC’s complaint that the award did not mention particular assurances concerned the tribunal’s reasoning or evaluation of evidence, rather than a failure to deal with an issue. Had the issue been wholly ignored, substantial injustice would have followed; but the tribunal’s conclusion had effectively determined it.
6. The alternative complaint under section 68(2)(a) failed. The general duty in section 33 concerns fair and impartial conduct of the arbitral proceedings. It does not ordinarily convert an alleged failure to evaluate evidence, or an adverse factual conclusion, into a serious irregularity. The court could not infer that the tribunal had overlooked the assurances.
7. The court therefore refused PIC’s application.

This was a first-instance application under section 68 of the Arbitration Act 1996 challenging an ICC partial award dated 21 May 2012. The application was refused.