A v B

A challenge under section 68 of the Arbitration Act 1996 requires more than a harsh procedural ruling. The applicant must show an irregularity in the arbitral process which falls within section 68 and has caused, or will cause, substantial injustice. The court adopts a strongly non-interventionist approach and allows arbitral tribunals a wide discretion in managing evidence and procedure. A refusal to admit evidence is not an irregularity where the tribunal acts within its procedural directions, gives the parties a fair opportunity to address admissibility, and makes a permissible balancing decision. Substantial injustice requires a realistically arguable prospect that the result might have been more favourable without the irregularity. A later change in the law will not be considered where it is unnecessary to determine the challenge.

A, an airline, challenged parts of an ICC arbitral award made in a dispute with B, an independent technical services provider. The challenge arose after the tribunal excluded oral evidence from A’s witness because it went beyond his witness statement and was not covered by the procedural order limiting examination-in-chief to new facts or developments. A alleged serious irregularity under section 68 of the Arbitration Act 1996, contending that the exclusion affected its defence to invoice claims and its counterclaims. The issues were whether there was an irregularity, whether it caused substantial injustice, and, if so, what remedy followed.

The application was dismissed. The court answered the agreed issues as follows: no irregularity; substantial injustice did not arise and, in any event, was not established; and no remedy therefore arose.

1. Non-intervention. Section 68 is a longstop remedy for extreme cases. The court must respect the wide latitude given to experienced arbitral tribunals in procedural and evidential case management. A decision is not reviewable merely because it is harsh. It must fall outside the bounds of a proper exercise of discretion, applying the principles in Lesotho Highlands Development Authority v Impregilo SpA [2006] AC 221 and Bandwidth Sipping Corporation v Intaari (a firm) [2008] Bus LR 702.
2. The tribunal had allowed both parties a full opportunity to make submissions on admissibility. Its reference to fairness and due process demonstrated a permissible balancing exercise. It was not legally required to use the words prejudice or balance, nor was an arbitral tribunal invariably required to articulate a separate consideration of prejudice.
3. The procedural order was properly construed as preventing a party from introducing evidence which should have appeared in a witness statement. A had provided no explanation for failing to serve a further statement with its Reply to Defence to Counterclaim. The exclusion was therefore within the tribunal’s discretion and did not breach section 33 or the agreed procedure.
4. The substantial-injustice test is fact- and context-dependent. It is satisfied only where it is reasonably arguable that, absent the irregularity, the applicant might have obtained a more favourable outcome. The court applied the approach in Vee Networks Ltd v Econet Wireless Special Ltd [2004] EWHC 2909 and London Underground Ltd v Citylink Telecommunications Ltd [2007] EWHC 1749 (TCC).
5. In any event, the excluded evidence did not concern the invoice claims. It did not establish that the missing clamp had been requested or that the shop visits had been wrongly classified. The opposite conclusions were not reasonably arguable, so substantial injustice could not be shown.

The court expressed no view on the effect of the subsequent Supreme Court decision in the MWB Business case, or on the possible remedies under section 68(3), because those matters did not arise.