P v Q

An application under Arbitration Act s 68 requires proof of a qualifying serious irregularity and substantial injustice. A court will not intervene merely to correct an obiter comment in an arbitral award, particularly where the comment does not prevent the applicant from advancing its proposed case. Substantial injustice requires a realistic prospect that the alleged irregularity might lead to a significantly different outcome. An imprecise observation about when an argument was first advanced does not cause substantial injustice where its proper meaning is clear and the opposing party confirms that it will not rely on the observation more broadly.

P applied under s 68 of the Arbitration Act to challenge part of a partial award in a contractual dispute concerning diluted pomegranate juice. The arbitrator had confined preliminary issues to pleaded contractual breaches and stated that the facts relied on for alleged deliberate dilution had been known for more than seven years before the claimant first suggested that they amounted to deliberate deceit.

The claimant contended that this was an erroneous finding, engaged the arbitrator’s duty under s 33, constituted a serious irregularity under s 68(2), and might prejudice a future application to amend the claim to plead deceit. The central issue was whether the impugned sentence caused a qualifying irregularity and substantial injustice.

1. The application under s 68 of the Arbitration Act was dismissed. The claimant had not established a breach of the arbitrator’s duty under s 33 or a serious irregularity under s 68(2)(a) or (i).

2. The impugned part of paragraph 79 of the award was, properly understood, a comment on the absence before the arbitrator of a pleaded separate contractual term against deliberate deceit. It was obiter, rather than a necessary finding determining the pleaded contractual claims.

3. The sentence was perhaps imperfectly phrased, especially in light of corrections made elsewhere in the award. Its context was nevertheless clear. The claimant remained able to argue that its earlier pleadings alleged deliberate dilution, that the proposed claim was not statute-barred, and that amendment should be permitted.

4. Applying the approach described by Langley J in Cameroon Airlines v Transnet Ltd [2004] EWHC 1829 (Comm), the claimant had to show a realistic prospect that the alleged irregularity might lead to a significantly different outcome. It had not done so. The respondent’s open letter further confirmed that it would not rely on the sentence as a finding relevant to limitation or the proposed amendment.

5. The court would not intervene merely to tinker with an obiter part of an award. Any possible prejudice had been avoided, and the application was dismissed.