Commercial Court Shrinks Scope to Challenge Arbitrations The Issue In the internationally competitive market for arbitrations, there is much talk about which Courts are most “arbitration-friendly”. In a recent judgment Teare J, in the Commercial Court, has crushed speculation that the English Courts might be increasingly sympathetic to challenges to factual findings. The Case In UMS & Ors v Great Station & Ors [2017] EWHC 2398 (Comm), the loser before the arbitration tribunal (made up of two retired Commercial Court Judges and a well-known lawyer/diplomat) contended that the tribunal had gone so wrong with the facts that it constituted a serious irregularity pursuant to s.68 of the Arbitration Act 1996 which is defined as “(a) failure by the tribunal to comply with section 33 (general duty of the tribunal);...(d) failure by the tribunal to deal with all the issues that were put to it”. The question thus became, what was the correct approach for the Court where a party complained the tribunal had not dealt with the evidence properly? There had been a series of cases where Commercial Court Judges had been unsympathetic to such complaint, but held out the possibility that in an exceptional case “if, for example, an arbitrator genuinely overlooked evidence that really mattered, or got the wrong end of the stick in misunderstanding it” there might be a basis to interfere.1 Having considered this long line of authorities, Teare J summarised the position (at para 28) by saying “A contention that the tribunal has ignored or failed to have regard to evidence relied upon by one of the parties cannot be the subject matter of an allegation of a serious irregularity within section 68(2)(a) or (d), for several reasons”. This is because it was not necessary for a tribunal to deal with all the evidence, its role was to assess and evaluate the evidence and “the court has no role in that regard”. The reason why a tribunal might not have specifically referred to a piece of evidence is not for the Court to inquire into. Overall, “by choosing to resolve disputes by arbitration the parties clothe the tribunal with jurisdiction to make a "wrong" finding of fact.” As to an exception for exceptional cases, although the Judge recognised that nothing should be ruled-out, the Court could not receive complaints which involved it assessing the evidence before the tribunal in order to decide whether it had been overlooked. Only if the tribunal itself admitted overlooking the evidence might there be a serious irregularity. The Court has thus reaffirmed the approach of the English Courts to upholding arbitration awards generally such that the mere fact that a tribunal’s reasoning is “manifestly illogical or cannot rationally be sustained” is not sufficient to successfully challenge it, unless it shows there was a failure to address an issue. The Judge contrasted the approach with that of the Courts where a judge is obliged to deal with substantial issues on evidence and is subject to appellate scrutiny.

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Per Toulson J in Arduina v Celtic Resources [2006] EWHC 2155, and see also Schwebel v Schwebel [2011] 2 All ER 1048 (Akenhead J), Petrochemical Industries v Dow Chemical [2012] 2 Lloyds Rep 691 (Andrew Smith J), Sonotrach v Statoil [2014] 2 Lloyds Red 252 (Flaux J), Brockton Capital v Atlantic-Pacific [2014] EWHC 1459 (Field J), New Age v Range Energy [2014] EWHC 4358 (Cooke J), where the Judges showed varying degrees of support for this approach.

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Comment What does this mean for practitioners? If parties are intent on an arbitration, London remains an excellent seat since the factual findings are almost impossible to challenge. If a party wants a second bite at the cherry and an appellate Court with a supervisory role, better to go to Court (or agree a framework which supports closer Court scrutiny). As to the conduct of the arbitration itself, make sure it is properly resourced and that the Tribunal is left in no doubt as to what you consider are the key evidential issues. Although the Tribunal cannot be forced to address them, most tribunals are anxious to maintain the esteem and respect of the lawyers involved and if they know that they are reasonably expected to deal with particular points they normally will. In the UMS case it seems the parties declined to take up an opportunity for a further oral hearing; whether that would have made a difference is unknown, but it may be someone now regrets that choice. Imran Benson 12 October 2017 Hailsham Chambers 4 Paper Buildings, Temple [email protected] 020 7643 5000

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