Grindrod Shipping PTE Ltd v Hyundai Merchant Marine Co Ltd

Section 68 of the Arbitration Act 1996 requires proof of a breach of the tribunal’s duty, a serious irregularity and substantial injustice. The threshold for court intervention is deliberately high.

A tribunal may decide an arbitration on reasoning which differs from the parties’ headings or formulations, provided the essential building blocks of its reasoning were fairly in play or in the arena. Parties are entitled to address a genuinely new issue, but need not be invited to comment on the tribunal’s analysis of evidence and arguments already available to them.

Whether a fair opportunity existed is a fact-sensitive question. The requirement of substantial injustice is separate and requires showing that the tribunal might well have reached a significantly different outcome.

The claimant challenged under section 68 of the Arbitration Act 1996 a partial final award dismissing its maritime arbitration claim for inordinate and inexcusable delay under section 41(3).

The tribunal rejected alleged prejudice arising from deterioration of evidence but found serious financial prejudice caused by the claimant’s delayed pursuit of the arbitration and the defendant’s need to maintain security. The claimant argued that the tribunal had relied on matters not advanced under the statutory serious-prejudice ground and had denied it a fair opportunity to respond.

The central issue was whether the relevant matters were fairly in play or in the arena, and whether any procedural irregularity caused substantial injustice.

1. Applicable principles. Under section 68(2)(a) of the Arbitration Act 1996, the applicant must establish a breach of section 33, a serious irregularity and substantial injustice. The threshold is high because the Act seeks to minimise judicial intervention in arbitration.
2. Section 33 requires a tribunal to act fairly and impartially, giving each party a reasonable opportunity to present its case and deal with its opponent’s case. A tribunal must give notice of a genuinely new point on which it intends to decide the dispute. It need not refer its analysis or findings back to the parties where the essential building blocks of its conclusion were already available for argument.
3. The parties’ headings and formulations do not create separate silos. The question is whether, viewed fairly and in context, the essential issues and material facts were in play or in the arena. That is a fact-sensitive question of fact and degree. The principles in ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1 and Reliance Industries Ltd and another v The Union of India [2018] EWHC 822 (Comm) supported that approach.
4. The requirement of substantial injustice is additional. The applicant need not show that the result would necessarily or probably have been different, but must show that, had it had the opportunity to address the point, the tribunal might well have reached a different view and produced a significantly different outcome.
5. The defendant had raised prejudice concerning the security bond in its application and submissions, although under the heading of discretion rather than serious prejudice. The claimant had the opportunity to address the underlying facts and consequences. The tribunal was therefore entitled to rely on those matters without further reference to the parties. There was no breach of section 33 and, in any event, no substantial injustice.
6. The section 68 challenge was dismissed. The court stated that, had the challenge succeeded, the appropriate course would have been remission rather than setting aside the award.