Daewoo Shipbuilding And Marine Engineering Company Ltd v Songa Offshore Equinox Ltd & Anor

Permission to appeal an arbitral award under section 69 of the Arbitration Act 1996 requires an identified question of law and satisfaction of the statutory threshold. The court will not treat a difficult or arguable construction point as obviously wrong merely because the tribunal was divided.

Abuse of process may arise at a later stage of the same arbitration or litigation, including on an application to amend, where a party could and should have raised the matter earlier. The assessment is broad and merits-based. It considers finality, economy, reliance, prejudice and all the circumstances.

The claimant sought permission under section 69 of the Arbitration Act 1996 to appeal two majority arbitral awards, and challenged them under section 68. The awards refused permission to amend claims and defences after the tribunal had decided preliminary issues against the claimant concerning responsibility for defects in front-end engineering design documentation.

The proposed amendments recast the case as claims that the defendants had failed to co-operate in correcting defects and had caused delay. The tribunal held that the amendments were abusive, inconsistent with the parties’ agreement concerning the preliminary issues, and outside the claims preserved by Addendum No. 2. The central questions were whether the tribunal had erred in law and whether it had committed serious irregularity.

1. Section 69. Permission was refused. An appeal under section 69 concerns the ascertainment of law, including the identification and interpretation of applicable contractual provisions, rather than fact-finding or the application of law to established facts. The statutory test of obvious error is a high threshold. The presence of a dissenting tribunal member showed that the construction issue was arguable, not that the majority was obviously wrong (paras [7]-[11], [64]).
2. Addendum No. 2. The tribunal had construed the Addendum objectively. Clause 5 preserved the FEED claims described in the original case. It did not preserve new claims based on alleged failures to co-operate in remedying defects, nor could those claims be deployed as defences to the counterclaim. The tribunal’s reference to Article VII.2 supplied context for the reservation and did not establish an impermissible subjective intention. No obvious error of law arose (paras [63]-[85]).
3. Binding agreement. The correspondence showed that the claimant repeatedly represented that an adverse decision on the preliminary issue would end its claims and avoid the technical issues. The majority was entitled to find that, in the unusual circumstances, the parties had entered into a binding agreement and that the claimant could not introduce materially different claims after losing the preliminary issue (paras [88]-[97]).
4. Abuse of process. The Henderson principle, as explained in Johnson v Gore Wood & Co. [2002] 2 AC 1, may apply between stages of the same proceedings and to amendments. The question is whether, in all the circumstances, the proposed case is an abuse. The claimant’s repeated representations, failure to investigate and raise the alternative case, and the resulting prejudice to the defendants justified the tribunal’s conclusion. The tribunal applied a broad merits-based assessment (paras [100]-[140]).
5. Section 68. The application was dismissed. The proposed defence amendments were plainly in issue, were identified in the claimant’s submissions, and had been addressed in argument. There was no failure to give a reasonable opportunity to present the case and no serious irregularity (paras [141]-[148]).

The judgment itself records an earlier unsuccessful application for permission to appeal out of time from the preliminary arbitral awards: [2018] EWHC 538 (Comm) . The present applications for permission to appeal and for relief under section 68 were refused or dismissed.