Delay in Award Does not Justify Setting Aside

In BV Scheepswerf Damen Gorinchen v The Marine Institute [2015] the Court decided that delay on the part of a tribunal in issuing its award cannot, of itself, justify setting aside the award under s.68 of the Arbitration Act 1996.

Delay might well amount to a breach of the tribunal’s section 33 duty and, therefore, qualify as a “serious irregularity” for the purposes of s.68(2)(a). The Court did not consider that delay was a failure to conduct the proceedings in accordance with the procedure agreed by the parties, for the purposes of s.68(2)(c) even though the relevant institutional rules (LMAA) included that the Award should: “normally be available within not more than six weeks from the close of the proceedings”. To hold otherwise would be a distortion of language.

The Court’s main reasoning was that delay would not generally affect the outcome of the dispute, such that there could be no substantial injustice that would justify setting aside. In order to satisfy that test of substantial injustice, it has to be shown that, but for the inordinate delay (which on this hypothesis amounts to the relevant “serious irregularity”), the tribunal might well have reached a different conclusion more favourable to the challenger. It is impossible to satisfy that test unless it can be shown that there has in fact been a failure to deal with all the issues within s.68(2)(d). If the Award is otherwise unimpeachable and has dealt with all the issues, it makes no difference whether it was produced a month or twelve months (as it was) after the hearing, since however long the Award has taken to produce, the applicant cannot show that it has caused or will cause substantial injustice. That is why delay on its own does not amount to serious irregularity.

The Court then followed Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] and Secretary of State for the Home Department v Raytheon Systems Ltd [2014] (the former holding that “…Once it is recognised that [the tribunal] has dealt with the issue, there is no scope for the application of section 68(2)(d). …, the sub-section does not involve some qualitative assessment of how the tribunal dealt with it. Provided the tribunal has dealt with it, it does not matter whether it has done so well, badly or indifferently.”)

The Court held that the “issues” complained of were at best sub-issues or sub-sub-issues in any event. It is but another example of the Court determining issues at a high level so as to maintain a “high threshold” that has been said to be required for establishing a serious irregularity.

One interesting reflection is whether the appropriate remedy in this instance would have been a challenge under s.24 rather than s.68. The former provides that a party may apply to the court to remove an arbitrator on the grounds that he has refused or failed to use all reasonable despatch in making an award, and that substantial injustice has been or will be caused to the applicant. Before applying to the Court an aggrieved party must exhaust his remedy for removal under institutional rules. A Court is unlikely to second guess the institutional assessment and, furthermore, there remains the issue of establishing substantial injustice which the Court is likely to be fairly difficult to persuade on the reasoning of this case. A s.24 challenge would, in all probability, have suffered the same fate.

 

 

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