Obrascon Huarte Lain SA (t/a OHL Internacional) & Anor v Qatar Foundation for Education, Science & Community Development

A challenge under section 68(2)(a) of the Arbitration Act 1996 succeeds only where a tribunal has breached its duty of fairness and thereby caused substantial injustice. The provision is a high-threshold safeguard for extreme cases, not a means of appealing the merits.

A tribunal must give the parties a fair opportunity to address a new or materially different basis for decision. It need not put every nuance, inference or reasoning step to them. An award should be read reasonably and commercially, without minute textual analysis. No irregularity arises where the tribunal rejects a party’s construction on the basis of evidence and arguments canvassed at the hearing, even if its reasoning is compressed or lacks perfect clarity.

The claimants challenged a Fourth Partial ICC Award under section 68(2)(a) of the Arbitration Act 1996. The arbitral tribunal had decided that the defendant validly terminated a contract for the design and construction of a hospital complex in Doha. The contract was governed by Qatari law.

The claimants alleged that the tribunal rejected their construction of article 184 of the Qatari Civil Code on a legal basis which had not been fairly explored with the parties. They also complained that the tribunal had speculated about a possible mistranslation of a Qatari Court of Cassation judgment without inviting submissions.

The central question was whether the tribunal had decided the termination issue on an unheralded basis, in breach of its duty under section 33 of the 1996 Act, and thereby caused substantial injustice.

1. The challenge was dismissed. Section 68(2)(a) of the Arbitration Act 1996 imposes a high threshold. The court does not use it to decide whether the tribunal’s legal or factual conclusions were correct. Intervention requires a breach of the section 33 duty which caused or will cause substantial injustice.

2. The tribunal had not rejected the existence of the condition in article 184(1) of the Qatari Civil Code concerning automatic termination. It rejected the claimants’ particular construction of that condition: namely, that a contractual requirement to serve notice necessarily prevented termination without a court or arbitral order. The tribunal found that termination by notice could satisfy article 184 where the contractual requirements were met.

3. That issue had been squarely explored through the experts’ reports and oral evidence, the parties’ submissions and interventions by members of the tribunal. The defendant’s expert consistently maintained that the contractual termination mechanism satisfied both parts of article 184. The tribunal was entitled to prefer his evidence. Its composite treatment of articles 184(1) and 184(2) reflected their overlap and was not a new basis of decision.

4. The tribunal’s observations that the claimants’ construction produced an irrational distinction and conflicted with their expert’s evidence arose from matters canvassed during the arbitration. The claimants had a sufficient opportunity to address them. Any lack of clarity in the relevant paragraph of the award fell well below the standard required by section 68.

5. The tribunal’s speculation about a possible mistranslation in the Qatari Court of Cassation decision was not material to its conclusion. It made no finding that the translation was wrong and expressly proceeded without resolving the point. There was therefore no compounding procedural irregularity.

6. Because no breach of section 33 was established, substantial injustice did not arise for decision. Had a breach been shown, the claimants’ argument could not simply have been dismissed as hopeless. Ordinarily, the court should not retry or speculate about the result of a remitted issue when assessing substantial injustice.

• High Court (Commercial Court): The challenge to the Fourth Partial ICC Award under section 68(2)(a) of the Arbitration Act 1996 was dismissed: [2019] EWHC 2539 (Comm).
• ICC arbitral tribunal: By a Fourth Partial Award dated 21 November 2018, the tribunal found that the defendant had lawfully terminated the contract for default and had been entitled to call the performance and advance-payment guarantees.