Speak Now or Forever Hold Your Peace: s68 Challenge for Lack of Opportunity to Make Full Submissions Fails

It is well-known that applicants seeking to challenge an award under section 68 of the Arbitration Act 1996 (the "Act") must overcome a high threshold in (i) establishing a serious irregularity and (ii) demonstrating that this serious irregularity has caused substantial injustice. In the Terna Bahrain case ([2012] E.W.H.C. 3283 (Comm.)), the court was asked to consider a s.68 challenge on the basis of a breach of s.33. The applicant submitted that the tribunal had failed to act fairly and impartially between the parties, giving each a reasonable opportunity of putting his case and dealing with that of his opponent, adopting procedures so as to provide a fair means for the resolution of the matters falling to be determined.

In dismissing the application, the Court distinguished between a party who has not had such an opportunity and a party which has not used the opportunity. Although the tribunal had placed greater emphasis on a point in its award than the respondent had done in its submissions, there was no serious irregularity.

The case demonstrates that it is essential to be on top of all the issues that have been raised during the proceedings. However briefly they may have been raised, whether in written or oral submissions, they are legitimately on the tribunal's radar and the tribunal is at liberty to base its decision on any of the issues so raised, as long as each side was given an opportunity to put forth arguments in relation to them. Whether such opportunity was used or not has no impact on the procedural validity of the award. Conversely, it may be in a party's interest to allude to certain issues only briefly in order give the tribunal a broader range of options under which to form its award and to allow itself the flexibility to develop these issues further at a later stage.

The applicant having missed the deadline for bringing an application under s.68, the case also gives a helpful indication of the factors that may be taken into account in the context of an application for an extension of time under the Act.

The applicant alleged that the tribunal had based its ruling upon a point which had never been put forward by the respondent, thereby depriving the applicant of the opportunity to address this point.

Popplewell J., in reviewing the existing case law, restated the established principles:

• The test under s.68 involves a high threshold.
• The balance between the need for the finality of the award and protection of the parties against unfair conduct of the arbitration would justify the court's intervention only in an "extreme case".
• There will generally be a breach of s.33 where the tribunal decides a case on the basis of a point which one party has not had a fair opportunity to deal with.
• But, there is a difference between not having such opportunity and not using that opportunity.
• The applicant must establish both that there has been a serious irregularity and that this has led to substantial injustice.
• In establishing substantial injustice, the court need not decide what would have happened but for the irregularity; similarly, the applicant need not show that the result would necessarily or even probably have been different; the applicant must demonstrate that, if it had an opportunity to address the point, the tribunal "might well have reached a different view and produced a significantly different outcome".

Serious irregularity

On the facts, the particular point in question had been raised by the respondent, albeit only briefly. The applicant, therefore, had the opportunity to address this point, but, of its own volition, failed to do so. The fact that the tribunal chose to put greater emphasis on a particular point than one or both of the parties does not amount to a serious irregularity under s.68 of the Act.

Substantial injustice

Given that no serious irregularity had been established, it was not strictly necessary to deal with the question of whether the second limb was satisfied. Popplewell J. nevertheless made it clear that this limb would equally not have been satisfied. The applicant argued that, in addressing the point in question, it would have put forth a number of arguments and that those arguments would have satisfied the test of substantial injustice as the court might well have reached a different view.

Popplewell J. dismissed those hypothetical arguments on the basis that they were not substantiated by factual or legal evidence and that, therefore, they would not have made a discernible difference.

Extension of time

The applicant had missed the 28 day deadline imposed by s.70 (3) of the Act for bringing a challenge under s.68 and had applied for an extension of time. Popplewell J. provided a helpful list of factors to be taken into account:

1. the length of the delay;
2. whether the party who permitted the time limit to expire and subsequently delayed was acting reasonably in the circumstances in doing so;
3. whether the respondent to the application or the arbitrator caused or contributed to the delay;
4. whether the respondent to the application would by reason of the delay suffer irremediable prejudice in addition to the mere loss of time if the application were permitted to proceed;
5. whether the arbitration has continued during the period of delay and, if so, what impact on the progress of the arbitration, or the costs incurred in respect of the arbitration, the determination of the application by the court might now have;
6. the strength of the application;
7. whether in the broadest sense it would be unfair to the applicant for him to be denied the opportunity of having the application determined.

The first three are the primary factors.

With regard to 1, the 28 day deadline was to be taken as yardstick, with the result that an extension of days is already "significant" and one of weeks or months is "substantial".

With regard to 2, lack of evidence that the delay arose from laxity, incompetence or honest mistake can legitimately give rise to the inference that it arose from a deliberate and informed choice, which would count against the granting of the application. There is a public interest in speedy finality of arbitral proceedings and in treating the court's procedural rules as norms to be complied with, rather than to be deliberately ignored for perceived personal advantage.

The court will not, normally, engage in a substantial investigation of the merits of the application. If, however, the case is "intrinsically weak" or "apparently strong", then this may well be taken into account.

Comment

Section 68

The high threshold facing s.68 applicants and the recent restatement in Terna Bahrain mean that there must have been an actual deprivation of the opportunity to argue on an issue. In practice, this will be difficult to establish. Should this first limb of the test nevertheless be satisfied, it is of utmost importance to present the arguments showing the substantial injustice – the second limb of the test – backed up with the necessary evidence. Otherwise, the court will not be in a position to judge the extent to which the tribunal's decision would have been affected and the default position will be that no substantial injustice has occurred and the application will be dismissed.

Time limit

Obviously the ideal position is constantly to remain aware of any procedural issues such as time limits. Effort spent on this may, at times, be underestimated as it evidences itself only in the absence of bad consequences, viz. the difficulties encountered once a time limit is missed, and it is, therefore, not immediately obvious.

In the unfortunate position of having missed a deadline, it is imperative to keep the delay to an absolute minimum and to act, as well be seen to be so acting, in a reasonable manner and to avoid the possibility of having one's actions interpreted as unreasonable in the circumstances.

When applying for an extension, whether before or after the deadline, the merits of the case are usually not taken into account by the court, unless, on the face of it, the case appears particularly strong or weak.