Orascom Tmt Investments SARL v Veon Ltd

A challenge under section 68(2)(d) of the Arbitration Act 1996 requires more than proof that the tribunal did not address a disputed proposition. The alleged matter must be an “issue” of the kind capable of amounting to a procedural irregularity targeted by section 68, viewed in the context of the way the case was advanced and decided. An issue is sufficiently dealt with if the award addresses its only material relevance, even without a separate finding on every evidential component. In any event, the challenge fails unless the irregularity caused or would cause substantial injustice. The court dismissed the challenge because the alleged Italian-law issue was either not a relevant section 68(2)(d) issue or had been sufficiently dealt with, and no substantial injustice was shown.

Orascom brought a claim under section 68(2)(d) of the Arbitration Act 1996 challenging an LCIA arbitration award dated 30 September 2017. The arbitration arose from a share sale agreement under which Orascom had agreed to indemnify Veon for specified losses. Veon had obtained an award of nearly €140 million concerning three Italian tax audits.

The challenge concerned one audit and alleged that the tribunal had failed to deal with whether the settlement with the Italian tax authorities was unlawful under Italian law. Orascom relied on that issue in relation to the objective reasonableness of the settlement and mitigation. The central questions were whether the alleged matter was a relevant “issue”, whether it had been put to and dealt with by the tribunal, and whether any irregularity caused substantial injustice.

1. Challenge dismissed. The award did not justify intervention under section 68 of the Arbitration Act 1996. The enforcement orders were brought up to date and the stay was declared ended.
2. Section 68(2)(d) must be read with the requirement that the failure constitute a serious irregularity causing or likely to cause substantial injustice. Not every proposition disputed in an arbitration is an “issue” for this purpose. The concept takes its colour from the statutory purpose and from the significance of the matter to the way the case was advanced and determined. The court referred to Petrochemical Industries v Dow Chemical [2012] 2 Lloyd's Rep 691, Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC) and A v B [2017] 2 Lloyd's Rep 1.
3. The alleged question whether the Italian authorities had privately abandoned or lost confidence in the tax-evasion analysis was not an issue which fairness required the arbitrators to address expressly or separately. Orascom had not advanced a case that Veon knew, or ought to have known, of any such abandonment. Private doubts held by the tax authorities were therefore not shown to bear on the objective reasonableness of the settlement or mitigation.
4. In any event, the award dealt with the asserted issue. The tribunal found that the tax authorities’ threat to pursue the tax-evasion theory was genuine and that the evidence did not suggest abandonment. Its footnote identifying Orascom’s submissions resolved any doubt that the relevant evidence had been considered. A separate ruling on whether the settlement was unlawful under Italian law was unnecessary because that question had no independent relevance once the tribunal rejected the abandonment case.
5. Even if there had been an irregularity, Orascom could not establish substantial injustice. The tribunal had found that the tax-evasion case had substantial objective merit and that Veon acted in good faith and reasonably in settling.
6. On publication, the court applied the approach in Symbion Power LLC v Venco Imtiaz Construction Co [2017] EWHC 348 (TCC). The judgment was published without anonymisation.