K v S

An application under section 68 of the Arbitration Act 1996 is concerned with serious irregularity and due process, not an appeal on the correctness of a tribunal’s procedural or evidential decision. A tribunal may exclude expert evidence which advances a new or inadequately pleaded case, particularly where the opposing party has insufficient opportunity to respond. Section 68 requires a serious irregularity falling within the statutory grounds and causing, or likely to cause, substantial injustice. A procedural order is not an award capable of challenge merely because it affects the conduct of the arbitration.

K applied under section 68 of the Arbitration Act 1996 to challenge a three-person arbitral tribunal’s Procedural Order 5. The tribunal had excluded a forensic accountant’s report which advanced a substantial business-collapse and lost-profits claim said to have been inadequately pleaded. K contended that the exclusion breached the tribunal’s general duties under section 33 and improperly excluded material evidence. The application sought setting aside or remission, together with directions concerning admission of the report. The central issues were whether the tribunal had made a serious irregularity, whether the decision was an award capable of challenge, and whether substantial injustice had resulted.

The application was dismissed. The court held that the tribunal’s decision was a procedural and evidential decision within section 34 of the Arbitration Act 1996. It had concluded, after considering written and oral submissions, that the expert report introduced a new claim based on facts which had not previously been pleaded or sufficiently particularised.

1. Section 68 provides an exhaustive regime. A challenge requires a serious irregularity, falling within one of the grounds in section 68(2), which has caused or will cause substantial injustice. It is not a route of appeal on fact, law, expert evidence, or case management.
2. There was no breach of section 33. K had been given a reasonable opportunity to present its case on admission of the report. Disagreement with the tribunal’s conclusion did not amount to procedural unfairness.
3. The exclusion of new evidence shortly before the hearing was within the tribunal’s case-management powers. The court could not review whether that procedural decision was right or wrong where due process had been followed.
4. The size of the claim was irrelevant to admissibility as such, but relevant to the degree of particularity required in pleading it. The tribunal was entitled to take quantum into account in assessing whether the pleading gave adequate notice.
5. Procedural Order 5 was not an award capable of challenge under section 68. It made no final determination on the merits of the alleged moral damages or business-collapse claim, and the tribunal was not functus officio in relation to it. In any event, no serious irregularity or substantial injustice had been shown.