Fleetwood Wanderers Ltd (t/a Fleetwood Town Football Club) v AFC Fylde Ltd

A challenge under section 68 of the Arbitration Act 1996 requires proof of both an irregularity and substantial injustice. An arbitrator breaches the duty of fairness by obtaining information or conducting material research on an issue without notifying the parties and allowing them a reasonable opportunity to respond. Substantial injustice is established where, had the parties been heard, it is realistically possible that the arbitrator might have reached a different conclusion on a reasonably arguable issue. The court should ordinarily remit an award where the irregularity concerns a discrete issue and can be cured by directions, rather than setting the award aside.

The claimant football club challenged an arbitral award arising from the termination of a professional footballer’s contract. The arbitrator rejected the defendant club’s common-law claim but awarded compensation under article 17 of FIFA’s Regulations on the Status and Transfer of Players, holding that the article 17 principle had been incorporated into the Football Association Rules.

After the award, emails showed that the arbitrator had sought information from the Football Association about incorporation of the regulations without notifying the parties. The central issues were whether this breached the arbitrator’s duties under section 33 of the Arbitration Act 1996, whether substantial injustice resulted, and what remedy should follow.

1. The claimant succeeded under section 68(2)(a) of the Arbitration Act 1996. The arbitrator had breached section 33(1) by making inquiries of the Football Association, receiving information and conducting extrinsic research without disclosing the material to the parties or giving them an opportunity to make representations.

2. The section 68 test has two stages. The applicant must establish an irregularity and substantial injustice. The court need not rehear the arbitration or determine precisely what result would otherwise have been reached. It is enough that proper participation might realistically have led to the opposite conclusion on an argument that was better than hopeless.

3. Substantial injustice was established. The claimant would probably have made representations and might have produced evidence that the Football Association had considered, but had not incorporated, article 17. There was a real prospect that the arbitrator would then have concluded that article 17 did not apply. That conclusion was reasonably arguable in law because the relevant provisions were principles for national associations to consider, rather than free-standing rules binding clubs and players.

4. The alternative challenges under sections 67 and 68(2)(b) were misconceived. Alleged errors of law concerning incorporation, registration, liability or the effect of rule K14 did not establish lack of substantive jurisdiction or excess of powers. In any event, the claimant had lost the right to rely on those grounds by failing to object in accordance with section 73.

5. The award was remitted under section 68(3) for reconsideration of whether article 17 applied and whether the claim under it succeeded. The remission was limited to that discrete issue, with directions to address the undisclosed communications and any necessary further evidence. The court would hear further submissions on the terms of remission and costs.