A & Anor v C & Ors

A challenge under section 68 of the Arbitration Act 1996 requires a serious procedural irregularity causing substantial injustice. Section 68 does not permit an appeal on fact or law. A party that had a fair opportunity to address an issue, but failed to recognise or use it, cannot ordinarily establish a breach of the tribunal’s duty under section 33. An erroneous exercise of a power is not an excess of power for section 68(2)(b). In assessing costs, the relevance of supporting documents depends on whether the dispute concerns genuineness or reasonableness. A tribunal may assess recoverable costs without requiring all underlying documents where those documents would not affect the reasonableness assessment.

The claimants challenged an LCIA tribunal’s final costs award under section 68 of the Arbitration Act 1996. They alleged that the tribunal had denied them a reasonable opportunity to present their case and had exceeded its powers by assessing costs on the indemnity basis without requiring production of original supporting documents.

The defendants argued that the tribunal had acted within its powers and that the claimants had lost the right to object under section 73. The central issues were whether there was a procedural irregularity, whether it caused substantial injustice, and whether the claimants were precluded from objecting.

1. The claim was dismissed. The claimants had not established a serious procedural irregularity or an excess of power.
2. For a challenge under section 68(2)(a), the applicant must establish a breach of section 33, a serious irregularity and substantial injustice. The threshold is deliberately high. Intervention is reserved for an extreme case. There is an important distinction between having no opportunity to address a point and failing to recognise or use an opportunity that existed.
3. The tribunal’s directions, read as a whole, made clear that it intended to determine both liability for and the amount of recoverable costs on the written submissions and schedules then required. The claimants could have sought disclosure, reserved their position or stated that their submissions could not fairly be completed without underlying documents. Their failure to do so was not a denial of a reasonable opportunity.
4. The tribunal’s description of the indemnity basis was not entirely precise when read in isolation. Nevertheless, the award as a whole showed that the tribunal had applied the principles advanced by the defendants, including those derived from Home Office v Lownds [2002] EWCA Civ 365. Even if the tribunal had erred, the claimants had already addressed the indemnity-basis issue in detail.
5. The challenge under section 68(2)(b) could not succeed. Section 68(2)(b) concerns an exercise of power that the tribunal did not possess, not an erroneous exercise of a power it possessed. The tribunal was entitled under article 28(3) of the LCIA Rules 2014 to determine legal costs on such reasonable basis as it considered appropriate. Underlying documents went principally to whether costs had been incurred or were payable, rather than to their reasonableness.
6. The claimants had lost the right to object under section 73(1)(b) in relation to the section 68(2)(a) challenge. The section 73 issue did not arise in the same way for the section 68(2)(b) challenge, since the terms of the award were not known until publication, but that issue was academic.

First-instance decision. No prior appellate decision is stated in the judgment.