Islamic Republic of Pakistan & Anor v Broadsheet LLC

A challenge under section 68 of the Arbitration Act 1996 is concerned with due process, not whether an arbitral tribunal reached the correct factual or legal result. The tribunal must give reasons for its decisions on essential issues, but need not explain every evidential step or refer to every submission or piece of evidence. Allegedly inadequate reasons do not, without more, constitute a serious irregularity under section 68(2)(c) or (h). The court must avoid reviewing the tribunal’s evaluation of evidence. Further reasons may be sought under section 70(4) in conjunction with a qualifying application, but that provision does not create a freestanding appeal. Any serious irregularity must also cause substantial injustice, requiring a real possibility that the tribunal might have reached a significantly different outcome.

The State of Pakistan and the National Accountability Bureau challenged part of an arbitral quantum award under section 68 of the Arbitration Act 1996. The award granted Broadsheet LLC damages for breach and repudiation of an asset recovery agreement, including US$19 million relating to the Sharif family’s other assets.

The challenge alleged that the tribunal had failed to conduct the proceedings in accordance with the agreed procedure and had failed to comply with the requirements as to the form of the award because it had not sufficiently explained its valuation and loss-of-chance assessment. The central questions were whether inadequate reasons could found a challenge under section 68(2)(c) or (h), whether the reasons were adequate, and whether any deficiency caused substantial injustice.

1. The claimants’ application was dismissed. Section 68 imposes a high threshold and the court’s supervisory role is deliberately limited. The court is concerned with due process, rather than whether the tribunal made the right finding of fact or law. This reflected Lesotho Highlands Development Authority [2006] 1 AC 221, The Ojars Vacietis [2012] EWHC 1412 (Comm) and UMS Holding Ltd v Great Station Properties SA [2017] EWHC 2398 (Comm).

2. A tribunal must give reasons for its decisions on essential issues. It need not deal with every point made by a party, refer to all relevant evidence, or explain each step in evaluating evidence. The assessment of evidence belongs to the tribunal, which the parties selected as the decision-maker.

3. The court declined to follow Compton Beauchamp Estates Ltd v Spence [2013] EWHC 1101 (Ch) insofar as it treated inadequate reasoning as capable of constituting a serious irregularity under section 68(2)(h). The judge preferred the approach in UMS Holding Ltd v Great Station Properties SA and the earlier Commercial Court authorities, including Margulead v Exide Technologies [2005] 1 Lloyd’s Rep 324 and ABB AG v Hochtief Airport GmbH [2006] 2 Lloyd’s Rep 1.

4. The award, read together with the section 57 ruling forming part of it, explained why the Sharif family assets were assessed by an overall valuation rather than by the approach used for other targets. The requirement for sufficient reasons did not require a further explanation of how the evidence was weighed.

5. Even if the alleged deficiency amounted to a serious irregularity, it caused no substantial injustice. The tribunal had expressly stated that no further discount was necessary or appropriate, so there was no basis to conclude that it might well have reached a significantly different outcome. The court therefore neither required further reasons under section 70(4) nor remitted the award.

The judgment concerned a first-instance challenge to an arbitral quantum award under section 68 of the Arbitration Act 1996. The award followed an earlier liability award and a subsequent ruling under section 57 of the Act.