MHA Advisory Ltd v Shiran Wynter

An application under section 68 of the Arbitration Act 1996 is a remedy of last resort. A party must first exhaust any available recourse under section 57. Section 68 is concerned with serious procedural irregularity causing substantial injustice, not with challenging the weight given to evidence or the correctness of an arbitrator’s decision. A tribunal deals with an issue if it reaches a determination on it, even briefly. Section 68(2)(d) concerns failure to decide an essential issue, not inadequate reasoning or failure to address every argument. A conclusion that the evidence does not establish a proposition is not, without more, a refusal to adjudicate on conflicting evidence.

The claimant sought to set aside a final arbitration award under sections 68(2)(a) and 68(2)(d) of the Arbitration Act 1996. The arbitration concerned whether two-year restrictive covenants in an LLP members’ agreement were enforceable. The arbitrator concluded that the two-year restrictions were unreasonable and dismissed the claim.

The claimant argued that the arbitrator had declined to resolve conflicts in the evidence concerning client relationships, audit cycles and staff restrictions, and had therefore failed to comply with section 33 or deal with all the issues. The defendant argued that the arbitrator had determined the issue, though his reasoning was concise. The court also considered whether the claimant had failed to exhaust the available section 57 recourse.

1. Section 57 recourse. The claimant could have applied under section 57(3)(a) of the Arbitration Act 1996 for clarification or further reasons. An award containing inadequate rationale or incomplete reasons is likely to be ambiguous or require clarification. The claimant therefore had available recourse which it had not exhausted. Under section 70(2), the section 68 application could not be brought.
2. Section 68(2)(a). The statutory threshold is deliberately high. Intervention is justified only in an extreme case where the tribunal’s conduct is so far removed from what could reasonably be expected of the arbitral process that justice calls for correction. The arbitrator had given both parties a reasonable opportunity to present their cases. His conclusion that the claimant had not established the reasonableness of the two-year period was an evaluative determination, not a refusal to decide the evidential conflict.
3. The arbitrator’s statement that he was unable to decide that the restrictions were reasonable meant that he was unpersuaded by the claimant’s evidence, viewed against contrary evidence and the burden of proof. His observation that he could not distinguish the claimant from the defendant’s new firm rejected a building block of the claimant’s justification for a two-year restriction.
4. Section 68(2)(d). The arbitrator had considered the evidence and submissions and had determined the essential issue: whether the two-year restrictions were reasonable. The provision does not require an arbitrator to deal with every argument or provide extensive reasons for rejecting each one. A deficiency in reasoning is distinct from failure to decide an essential issue.
5. Even if the arbitrator had adopted an erroneous approach to the burden or weight of evidence, that would be a possible error of law or fact, potentially within section 69, rather than a serious irregularity under section 68. The application was dismissed and described as an unjustified use of a last-resort remedy.

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