Cakebread & Anor v Fitzwilliam

A challenge under section 68 of the Arbitration Act 1996 requires both a serious irregularity and substantial injustice. The statutory threshold is deliberately high because court intervention in arbitration is intended to be exceptional.

An arbitral tribunal must give parties a reasonable opportunity to address an essential building block of its decision. It need not invite submissions on every legal inference drawn from facts and issues already argued. A party who fails to recognise or use an available opportunity cannot ordinarily establish a breach of the tribunal’s duty of fairness.

The claimants, barristers, challenged under section 68 of the Arbitration Act 1996 an interim arbitral award concerning fees allegedly lost after they were induced by deceit to enter a damages-based agreement. The arbitrator found deceit but rejected compensatory damages because the claimants had not pleaded or proved the loss of alternative paid work. He awarded exemplary damages.

The claimants alleged that the arbitrator had decided the case on unargued restitutionary and consequential-loss bases without giving them a fair opportunity to respond. The issue was whether that conduct constituted a serious irregularity causing substantial injustice.

1. The application was dismissed. The claimants did not pass the high threshold under section 68 of the Arbitration Act 1996, and there was no basis for court intervention.

2. Section 68 is a long-stop remedy available only in extreme cases. The applicant must establish a qualifying serious irregularity and substantial injustice. The court need not decide what result would probably have followed absent the irregularity; it is sufficient to show that the tribunal might well have reached a significantly different outcome.

3. The arbitrator’s essential reasoning was that damages had to be assessed on a tortious, rather than contractual, basis; the fee notes did not measure the claimants’ loss; the relevant loss was the opportunity to undertake other paid work; and the claimants had neither pleaded nor proved that loss. Those matters had been raised in the defendant’s submissions and were essential building blocks of the award.

4. The arbitrator’s reference to a restitutionary award in paragraph 81 was not an essential building block. It could be removed without affecting the reasoning and therefore did not require further submissions. The court did not need to decide whether restitution had been raised in the arbitration.

5. Paragraphs 82–88 did not introduce a new case. The defendant had argued that the claimants had to prove financial loss and had suggested evidence of alternative earnings as a possible means of doing so. The claimants had chosen not to advance that case, even after the point was made in closing submissions. Their failure to use an available opportunity was not a breach of section 33.

First-instance decision. The judgment itself records that a separate section 69 application concerning a question of law was awaiting the outcome of this case.