P v D & Ors

For the purposes of Arbitration Act 1996, s.68(2)(d), a tribunal fails to deal with an issue where it dismisses a claim without consciously considering it. The court must distinguish that failure from an allegedly erroneous decision on the merits, which is subject to the narrower statutory framework for challenges on a point of law. A failure to address a live issue will constitute a serious irregularity only where it has caused, or will cause, substantial injustice. Where written submissions create ambiguity about whether a claim has been abandoned, the tribunal should clarify the position before determining the matter. Remission may be limited to the dispositive part of the award affected by the failure.

The claimant applied under s.68 of the Arbitration Act 1996 to remit an LCIA Phase 2 award. The underlying arbitration concerned share-sale arrangements, warranty liability and the quantification of damages. The claimant had pleaded a contingent contribution claim against the second defendant if the first defendant pursued damages against the claimant alone.

The tribunal recorded the contribution claim but did not identify it among the issues requiring determination. It awarded the first defendant US$11 million against the claimant and dismissed all other claims and counterclaims. The claimant contended that the award thereby finally dismissed the contribution claim without considering it, causing substantial injustice.

1. The application succeeded. The tribunal’s award of US$11 million against the claimant was unaffected, but the dismissal of all other claims and counterclaims was remitted so that the contribution claim could receive proper consideration.
2. Objectively construed, the Phase 2 Award dismissed the claimant’s live contribution claim. The tribunal had recorded that claim in its summary of the relief sought and the parties’ positions, but omitted it from the list of issues requiring determination and gave it no reasoned consideration.
3. This was not an attempted challenge to the soundness of a decision reached on the merits. It was a failure to appreciate that a live claim required determination. Such a failure fell within s.68(2)(d) of the Arbitration Act 1996. The court nevertheless had to find substantial injustice. That requirement was satisfied because a potentially valuable contribution right had been defeated without proper consideration of its merits.
4. The claimant’s omission of detailed submissions on contribution did not clearly amount to abandonment or withdrawal. In the circumstances, including the documentary procedure and change of representation, the position was at least ambiguous. Following the guidance in The Vimeira [1984] 2 Lloyds Rep 66, the tribunal should have clarified whether the claim remained pursued.
5. Article 27.1 of the LCIA Rules did not permit correction because the problem was not a clerical or similar drafting error. Article 27.3 did not provide a remedy because the dispositive award had in fact disposed of the claim. The proper remedy was remission to the tribunal under s.68, with the further process left to its discretion.