Pulis v Crystal Palace

A challenge under section 68 of the Arbitration Act 1996 is a long-stop remedy available only for serious irregularity causing substantial injustice. An arbitral award should be read reasonably and commercially. Arbitrators need not list every item of evidence or explain why each witness was rejected, provided that the material issue and evidence were considered and the reasons identify the evidence accepted. A failure to mention a submission does not justify intervention where it could not have affected the result or caused substantial injustice. A defendant may recover its out-of-pocket loss caused by fraud, including tax and National Insurance paid to HMRC on the claimant’s behalf.

The claimant challenged a partial final award and final award made by a Premier League Managers’ Arbitration Tribunal. The awards required him to pay damages for deceit arising from the early payment of an employment bonus, liquidated damages for repudiation, interest and costs.

The claimant relied on section 68 of the Arbitration Act 1996. He alleged that the tribunal failed to consider evidence about the date of a meeting and failed to address tax submissions concerning the defendant’s loss, mitigation and corporation tax. The defendant resisted the challenge and sought enforcement of the awards.

1. The section 68 challenge was dismissed. The court enforced the partial final award and final award, including £1.5 million liquidated damages for repudiation, £2.276 million damages for deceit, interest and costs.
2. Section 68 is an exceptional, long-stop remedy. The applicant must establish a serious irregularity of a kind specified in section 68(2), together with substantial injustice. The court applied the approach in Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14: an award should be read reasonably and commercially, rather than as a statute.
3. The tribunal had fully considered the issue concerning the date of the Heated Players’ Meeting and had taken account of the evidence of Messrs O’Keefe and Price. It was unnecessary for the tribunal to explain why it preferred other evidence, provided that it identified the compelling evidence and had considered the evidence relied upon. There was in any event no substantial injustice because the unchallenged finding concerning the false land transaction independently supported the fraud conclusion.
4. The tribunal had dealt adequately with the tax element of the loss. The defendant’s payment of tax and National Insurance to HMRC was an out-of-pocket loss directly caused by the deceit. The fact that payment was made to HMRC rather than directly to the claimant did not prevent recovery, since the payment discharged the claimant’s liability. There was no failure to mitigate while the claimant continued to deny wrongdoing and entitlement to the bonus.
5. The corporation tax point had not been investigated or pursued in the arbitration. Its omission from the award did not constitute a section 68 failure and caused no substantial injustice. The defendant’s undertaking to assist with reasonable efforts to recover tax and to repay any sum recovered where retention would cause double recovery also removed any possible injustice.

The judgment describes an arbitration award dated 10 March 2016 and a final award dated 27 April 2016. The Commercial Court dismissed the section 68 challenge and enforced both awards.