Eagle Bulk PTE Ltd v Traxys North America LLC

An application under Arbitration Act 1996, s 68, is subject to a high threshold and requires substantial injustice. Section 68 is not a route for appealing factual findings or the merits of an award. A tribunal may interpret documents in a way that differs from the parties’ submissions, provided the procedure remains fair. Under s 68(2)(d), the applicant must identify an essential issue put to the tribunal which the tribunal failed to determine and which caused substantial injustice. The tribunal need not address every argument or subsidiary question if, on its findings, the question does not arise. The award must be read fairly, commercially and with common sense.

The claimant challenged an arbitration award under ss 68(2)(a) and 68(2)(d) of the Arbitration Act 1996. The underlying dispute concerned water found in cargo holds after a voyage charter and a claimed cargo shortage.

The tribunal found that water had entered through defective bilge-system valves and held the claimant liable for the shortage claim. The claimant argued that the tribunal had adopted an interpretation of a defect list which had not been advanced by either party, and had failed to determine several arguments concerning whether the shortage represented water rather than cargo and whether any loss had been suffered. The central questions were whether either complaint constituted serious irregularity causing substantial injustice.

1. Application dismissed. The claimant’s challenges under ss 68(2)(a) and 68(2)(d) of the Arbitration Act 1996 failed.
2. Section 68 imposes a high threshold. The applicant must establish serious irregularity and substantial injustice. It is not a permissible means of appealing factual findings or inviting the court to re-evaluate the tribunal’s evidence.
3. As to s 68(2)(a), the tribunal was entitled to interpret the 3 February defect list in the light of the totality of the evidence, even though its construction did not exactly accord with the parties’ contentions. The document was not an essential building block of the reasoning. The parties had opportunities to address both the source of the water and the condition of the relevant valves. The tribunal was not required to notify the parties in advance of the precise interpretation it would adopt.
4. In any event, the claimant had not shown substantial injustice. The tribunal’s conclusion rested on extensive contemporaneous evidence, including maintenance records, communications, vessel soundings, the saline nature of the water and other voyage evidence. The same conclusion would have been reached even if the tribunal had invited further submissions on the defect list.
5. Under s 68(2)(d), the applicant must show: an issue; that it was put to the tribunal; that the tribunal failed to deal with it; and substantial injustice. An issue is distinct from an argument, point or line of reasoning. The tribunal deals with an issue if it determines it in any way, and s 68(2)(d) does not permit review of whether the determination was good, bad or insufficiently reasoned.
6. The tribunal had dealt with the shortage issue by finding an unexplained difference between loading and discharge weights which the claimant could not establish was attributable only to extracted water. The further arguments did not arise on the tribunal’s factual and evidential findings. No serious irregularity was established.

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