Indus Powertech Inc v Echjay Industries Private Limited

A challenge under section 68(2)(d) of the Arbitration Act 1996 requires the court to identify an essential issue, determine whether it was put to the tribunal, and ask whether the tribunal failed to deal with it and thereby caused substantial injustice.

An issue may be a substantive sub-issue within a wider question of quantum or causation. The award must be read fairly, commercially and sensibly, but the parties must be able to ascertain that the issue was determined. A court should not infer determination merely from a summary of submissions or a consequential damages calculation. Failure to decide a reasonably arguable issue capable of affecting the result constitutes serious irregularity.

Indus challenged an ICC arbitral award under section 68(2)(d) of the Arbitration Act 1996. The Tribunal had found Indus in breach of a non-compete and non-solicitation obligation and awarded Echjay damages for lost profits arising from diverted orders.

Indus alleged that the Tribunal failed to determine two causation and quantum issues: whether Echjay had capacity to manufacture Shafts 1 and 2, and whether the design, validation and production process for four gear rings and pinions could have been completed within the relevant two-year period.

1. Application allowed. The two disputed matters were issues for the purposes of section 68(2)(d), and each had been put to the Tribunal.
2. The capacity question was a freestanding sub-issue within the broader quantum or causation issue. It was capable of determining whether Echjay could have earned the claimed profits. Its absence from the pleadings and lists of issues was not decisive because it had emerged in expert evidence and had been advanced in closing submissions.
3. The Tribunal dealt expressly with the proposed six-day working week and with Shaft 3, but its Award contained no determination of capacity for Shafts 1 and 2. The references to Echjay’s alleged acknowledgment and the subsequent calculations did not establish that the Tribunal had decided the issue. A fair and commercial reading of the Award revealed a gap in the decision-making process.
4. The lead-time question for the gear rings and pinions was likewise an issue. The Tribunal had to decide when commercial production could begin before assessing lost profits within the relevant damages horizon. Adoption of calculations incorporating a seven-month lead time did not, without more, show that the Tribunal had consciously resolved the dispute between the experts. The Award contained no analysis of lead time, validation, whether the parts were new or re-sourced, or the related evidential issues.
5. The court was not reviewing the merits or the weight given to evidence. It was identifying whether the Tribunal had dealt with the issues at all. Both failures caused substantial injustice because each issue was reasonably arguable and could materially undermine the relevant damages claims.
6. The issues concerning capacity for Shafts 1 and 2 and lead time for the gear rings and pinions were remitted to the Tribunal, together with consequential matters such as interest and costs.

First-instance decision on a challenge to an arbitral award. No prior appellate decision is stated in the judgment.