F LTD V M LTD

[2009] EWHC 275 (TCC), Queen’s Bench Division, Technology and Construction Court, Mr Justice Coulson, 11 February 2009

The Arbitration – Serious irregularity – Claimant asserting that arbitrators had reached conclusions on grounds not argued by the parties – Effect of dissenting opinion – Award of costs where arbitration award remitted – Arbitration Act 1996, section 68(2)(a), (b) and (d)

F appealed against an arbitration award, alleging serious irregularity, contrary to section 68(2)(a), (b) and (d) of the Arbitration Act 1996 in that the arbitrators had, by a majority, relied on arguments not put to them in limiting the damages awarded to F to £754,726.93, some 40 per cent of the sum claimed. Coulson J held as follows. (1) The existence of a dissenting award was irrelevant to a section 68 application, although if the dissenting option indicated that an important point had been decided by the arbitrators without reference to the parties then weight was to be attached to it. (2) The arbitrators had not been guilty of serious irregularity in rejecting a claim for damages under a specific clause of the contact between the parties even though the defendant had not raised a defence under that clause: it was for the claimant to prove that the clause was applicable, and it had not done so. (3) The arbitrators had not been guilty of serious irregularity by failing to recognise that F might have had a claim under a separate clause: it was not for them to suggest to the claimant how the claim might be put. (4) The arbitrators had been guilty of serious irregularity in deducting the sum of £973,344 from amount awarded to F on the basis of an admission by F that the sum was owing. M had not suggested that there had been an admission of that type, and F had not been given a chance to rebut the conclusion which the arbitrators had reached. The award would be remitted on that basis, and the arbitrators’ costs award would also be remitted so that it could be adjusted to reflect the outcome of the remission. (5) F was entitled to the full costs of the appeal hearing, because F had been successful in having the award remitted even though some of F’s arguments had been rejected.