Andrei Mikhailovich Ovsyankin v Angophora Holdings Limited

An arbitral tribunal may decide a case on a basis not expressly pleaded where the issue was sufficiently in play and the parties had a fair opportunity to address it. A tribunal may seek focused further evidence without thereby assuming the role of an advocate, provided the parties can respond and make any necessary applications. Under section 68(2)(d) of the Arbitration Act 1996, the complaint concerns failure to deal with an essential or crucial substantive issue, not every argument or line of reasoning. Apparent bias is assessed objectively, by asking whether a fair-minded and informed observer would conclude that there was a real possibility of bias. The same general approach applies to applications to remove arbitrators where the tribunal has previously decided overlapping issues in related arbitrations.

The applications arose from three LCIA arbitrations concerning a shareholders agreement, a deed of guarantee and a non-compete agreement. In the first arbitration, the tribunal awarded Angophora substantial damages against Mr Ovsyankin and another guarantor.

Mr Ovsyankin challenged the award under sections 68(2)(a), (c) and (d) of the Arbitration Act 1996, alleging procedural unfairness, failure to follow the LCIA Rules and failure to deal with issues. He and Retemmy also sought removal of the arbitrators under section 24, alleging apparent bias and failure properly to conduct the proceedings. The central questions were whether the tribunal had unfairly introduced and determined a residual-value damages case, and whether its findings in one arbitration gave rise to justifiable doubts about its impartiality in the others.

1. Applications dismissed. The court found no serious irregularity affecting the tribunal, the proceedings or the award, and refused all applications for removal under section 24 of the Arbitration Act 1996.
2. A tribunal can decide a case on a basis not strictly pleaded if the issue was sufficiently “in play” or “in the arena” and the parties had a fair opportunity to deal with it. Angophora’s pleaded claim for diminution in the value of its shareholding was broad enough to include residual value, and in any event the issue had been addressed in the pleadings, expert evidence, factual evidence and submissions. The tribunal’s focused request for evidence about a distressed sale did not improperly restrict the parties’ arguments.
3. The tribunal did not act unfairly by seeking supplementary expert evidence. If Mr Ovsyankin considered that further factual evidence, disclosure or cross-examination was necessary, he had to apply for it. He made no specific application and declined the opportunity to cross-examine the experts further. The tribunal was also entitled to take the initiative in ascertaining facts under section 34(2)(g).
4. Section 68(2)(d) is directed to an essential or crucial substantive issue on which resolution of the dispute depends. It is not directed to arguments, submissions or lines of reasoning. A tribunal deals with an issue by deciding it, including by deciding a logically anterior point which makes another issue unnecessary. The tribunal dealt with the valuation issue and with the evidence concerning Nika-Petrotech.
5. Apparent bias is determined by asking whether a fair-minded and informed observer, considering both indicative and counter-indicative matters, would conclude that there was a real possibility of bias. The tribunal’s adoption of a damages approach after seeking assistance did not demonstrate a prematurely closed mind.
6. The parties had agreed to use the same arbitrators in related references, knowing that overlapping issues would arise. Previous adverse findings in one arbitration did not, without more, establish apparent bias or justify removal in the others. The applications under section 24 were therefore refused.