Quaid-e-Azam Thermal Power (Private) Ltd v Sui Northern Gas Pipelines Limited

A challenge under section 68 of the Arbitration Act 1996 requires a serious irregularity meeting a high threshold. A tribunal does not breach its duty of fairness merely because a party later characterises the opponent’s pleaded case differently. The court determines the objective effect of the pleadings as a whole, together with the written and oral submissions.

For section 68(2)(d), the court asks what the issue was, whether it was put to the tribunal, and whether the tribunal failed to deal with it. A tribunal deals with an issue if it determines it directly or if its factual or legal conclusions mean that the issue does not arise. A hypercritical reading of the award is inappropriate.

Quaid-e-Azam Thermal Power (Private) Ltd challenged a final arbitral award under section 68 of the Arbitration Act 1996. The arbitration concerned unpaid take-or-pay invoices under a gas supply agreement.

The claimant alleged that the tribunal had decided the dispute on an unpleaded contractual entitlement case, contrary to section 33 of the Act, and had failed to determine whether late invoices were contractually enforceable, contrary to section 68(2)(d). The central questions were whether the pleaded case had materially changed and whether the tribunal had failed to deal with an essential issue.

1. The challenge was dismissed. There was no breach of section 33 and no serious irregularity under section 68(2)(a) of the Arbitration Act 1996.

2. The pleaded case was objectively a claim for payment of take-or-pay amounts under section 3.6(a) of the gas supply agreement, reduced by sums attributable to diverted gas under section 3.6(b). It was not a claim for damages for breach of contract or for loss caused by failure to take gas. References to loss and evidence quantifying the tariff differential responded to the penalty and diversion issues and did not alter the contractual basis of the claim.

3. The tribunal was entitled to proceed on that basis. The pleadings, read as a whole, made the case clear, and the claimant had a reasonable opportunity to address it. The objective question was what case the claimant reasonably understood it was facing. There was no ambush and no need to permit further evidence.

4. Under section 68(2)(d), the court applied the three questions identified in RAV Bahamas Ltd v Therapy Beach Club Inc: what is an issue, whether it was put to the tribunal, and whether the tribunal failed to deal with it. The timing of the invoices was pleaded and argued in the context of estoppel, rather than as a separate contractual time-bar issue.

5. The tribunal dealt with the estoppel issue. It found that reliance and detriment had not been established. On a fair, commercial and commonsense reading of the award, no separate determination of the invoicing deadline was required. The section 68(2)(d) challenge was therefore dismissed.