ASA v TL & Anor

A challenge to an arbitral award under section 68 of the Arbitration Act 1996 requires more than disagreement with the tribunal’s factual findings or evidential assessments. Procedural unfairness arises where the tribunal decides the case on a point which a party had no fair opportunity to address. The court must also be satisfied that the irregularity caused, or will cause, substantial injustice. A point may be sufficiently in play even if it was not precisely pleaded or argued, particularly where it emerged from evidence and material introduced by the challenging party. The court will not use section 68 to conduct an appeal on the merits.

ASA, the charterer of a vessel, challenged an award under section 68 of the Arbitration Act 1996. It alleged that the sole arbitrator had acted unfairly in deciding the market rate of hire by reference to the vessel’s ability to carry marine gas oil and in relying on evidence concerning the funding of dry-docking costs. ASA contended that these matters had not been properly raised and that it had not had a fair opportunity to respond. The central issues were whether the alleged procedural departures amounted to serious irregularity under section 68(2)(a), and whether they caused substantial injustice.

The application was dismissed. The alleged irregularities did not satisfy section 68(2)(a) of the Arbitration Act 1996.

1. Market rate and vessel classification. The arbitrator was entitled to conclude that the vessel’s ability lawfully to carry marine gas oil was a valuable feature in the West African market. The issue of class notation had been raised through the charterer’s expert evidence, the charterer had adduced the relevant classification guide, and the point had been addressed in closing submissions. The arbitrator drew an evidential inference; she did not decide the case on an entirely new point. Her assessment of the expert’s expertise was not reviewable under section 68.
2. The reference to the charterer having failed to show that the vessel was not in class did not reverse the burden of proof. The arbitrator’s conclusion rested on the vessel’s actual lawful use and market value. Further evidence would not realistically have produced a different result, so substantial injustice was not established.
3. Dry-docking costs and dishonesty. The charterer had ample opportunity to challenge the evidence concerning a shareholders’ loan and the payment of the dry-docking costs. It cross-examined the witness, relied on the accounts, and addressed the issue in closing submissions. The arbitrator’s acceptance of that evidence and her conclusion that the arrangements were not dishonest were factual and evaluative findings within her province.
4. Section 68 is not a means of challenging an arbitrator’s findings of fact or evaluation of evidence by recasting the complaint as procedural unfairness. The application therefore failed.