Transition Feeds LLP v Itochu Europe Plc

Section 68 of the Arbitration Act 1996 concerns due process, not whether an arbitral tribunal reached the correct answer. Under section 68(2)(d), the court asks whether the matter was an issue, whether it was put to the tribunal, whether the tribunal failed to deal with it, and whether that failure caused substantial injustice. An award must be read reasonably and commercially. A distinct issue cannot be treated as addressed merely because related arguments were rejected. Substantial injustice may arise where the omitted argument was reasonably arguable and might have affected the result. For costs, separate appeals and cross-appeals constitute separate events.

Transition Feeds LLP challenged three FOSFA Board of Appeal awards arising from disputes concerning palm oil and palm fatty acid distillate contracts. The first application, under section 68(2)(d) of the Arbitration Act 1996, alleged that the Board had failed to determine two issues: whether the Buyers were entitled to a price allowance if the goods would not have been of good merchantable quality on arrival, and whether Rotterdam resale prices were applicable in assessing damages.

The second set of applications comprised two section 69 appeals concerning costs orders in the Chemstar Yazoo and Oak Galaxy arbitrations. The central questions were whether the Board had dealt with the two substantive issues and whether it had applied the statutory costs principle correctly.

1. Section 68(2)(d). The court adopted the approach in Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Company Ltd [2013] EWHC 3066 (Comm). An applicant must establish a serious irregularity within the statutory categories and substantial injustice. The provision concerns due process, not the correctness of the tribunal’s decision. Under section 68(2)(d), the court asks whether the matter was an issue, whether it was put to the tribunal, whether the tribunal failed to deal with it, and whether the failure caused substantial injustice.
2. The award must be read in a reasonable and commercial manner. The tribunal need not answer every argument or set out every step in its reasoning. It may dispose of an issue by deciding a logically anterior point. However, the award must make it apparent that an issue crucial to the decision has been determined.
3. The price-allowance question was a distinct issue. The Board’s references to load-port samples, arsenic, the precautionary principle and non-arrival did not determine the Buyers’ case based on the hypothetical arrival of the goods at Liverpool. The Board had therefore failed to deal with the issue. The argument, including the construction of clause 2 of FOSFA 80, was reasonably arguable, so the omission caused substantial injustice. The Award was remitted for that issue.
4. The challenge concerning Rotterdam resale prices also succeeded. That was a distinct issue, separate from the Sellers’ claim for increased damages, and the Award did not address it. The Award was set aside insofar as it determined damages, including costs, and remitted for determination of both omitted issues.
5. Section 69 appeals. Under section 61(2) of the Arbitration Act 1996, costs generally follow the event unless inappropriate. In the two arbitrations the Board wrongly treated the Buyers’ appeals as the only relevant events. The Sellers’ cross-appeals were separate events. Both costs orders were set aside and remitted on the basis that the Board must determine the appropriate allocation between the two appellants.

First-instance arbitration claim and section 69 appeals. No prior court decision is stated in the judgment.