Cadogan Maritime Inc v Turner Shipping Inc

Under section 57(3)(b) of the Arbitration Act 1996, an arbitral tribunal may make an additional award for a claim presented to it but omitted from the award. No particular formality is required: the claim may be identified from the arbitration as a whole, including pleadings, submissions and the relief sought. A claim is dealt with only when it has been finally determined. The dispositive terms must be read with the reasons forming part of the award, but an issue is not treated as determined by implication where that construction would produce an inconsistent or commercially irrational result. A challenge under section 68 requires substantial injustice, but the court need not decide that issue where the tribunal had power to act.

The parties’ dispute arose from the sale of a vessel under a memorandum of agreement. Turner commenced arbitration after Cadogan made a demand under a refund guarantee for the first instalment and accrued interest. The tribunal’s First Final Award rejected Cadogan’s claims, awarded Turner damages of US$6 million, and provided for the remaining escrow balance to be paid to Cadogan.

Turner then applied under section 57 of the Arbitration Act 1996, contending that the accrued interest had been claimed but overlooked. The tribunal made an Additional Award directing payment of that interest to Turner. Cadogan sought a declaration under section 68(3)(c), permission to appeal under section 69, and, if permission were granted, an order under section 69(7)(d) setting aside the Additional Award. The central issues were whether the accrued-interest claim had been presented to the tribunal and whether it had already been dealt with in the First Award.

1. Cadogan’s applications under sections 68 and 69 of the Arbitration Act 1996 were dismissed. The tribunal had power under section 57(3)(b) to make the Additional Award.

2. A claim is “presented to the tribunal” if it is before the tribunal and could reasonably be expected to be determined. No particular procedural form is required. The claim need not appear in formal pleadings or be expressed in a specific formulation.

3. Turner’s claim was sufficiently presented. Its case challenged the wrongful demand under the refund guarantee, which covered both the principal sum and accrued interest. Its closing submissions sought a declaration concerning “all sums” in the escrow account. Cadogan’s own submissions also addressed entitlement to accrued interest, including a claim for a pro-rata share. The entitlement to that interest was therefore plainly an issue before the tribunal.

4. A claim is “dealt with” only if it has been finally determined. The whole award must be considered, including its reasons where they form part of the award, although the dispositive provisions are ordinarily most important.

5. The First Award determined Turner’s claim to retain the US$7.7 million instalment and awarded damages, interest and later-determined costs. It did not expressly determine entitlement to the accrued interest. Reading the reference to the escrow “balance” as awarding that interest to Cadogan would be inconsistent with the tribunal’s finding that Cadogan had no entitlement to it and was not claiming the whole of it. The accrued-interest claim was consequently overlooked rather than dealt with.

6. The court considered, but did not need to decide, whether the absence of tribunal power would have caused substantial injustice under section 68(2). The requirement is intended to exclude technical and unmeritorious challenges, as explained in Lesotho Highlands v Impregilo SpA [2005] UKHL 43. However, if the First Award had already determined the issue, setting aside the Additional Award might have left Cadogan able to enforce the First Award. The proper course in that situation could have been remission or setting aside of the First Award for admitted mistake, reflecting the jurisdiction illustrated by The Montan [1985] 1 Lloyd’s Rep. 189.

The judgment concerned an arbitration claim arising from a First Final Arbitration Award and a subsequent Additional Award. No appellate history is stated in the judgment.