Successful Section 68 challenge to arbitral award – twice in a blue moon?

In Republic of Kazakhstan v World Wide Minerals Ltd and others [2025] EWHC 452 (Comm) (28 February 2025), the English Commercial Court allowed a challenge to an arbitral award under section 68(2)(d) of the Arbitration Act 1996 (Act). The Court found that the tribunal had committed a serious irregularity by failing to address a core argument put forward by Kazakhstan—namely, that WWM’s investment would have failed regardless of the export licence breach (the “Counterfactual Case”).

The Court held that this omission amounted to a failure to deal with an essential issue, causing substantial injustice. It rejected WWM’s argument that Kazakhstan should have sought clarification from the tribunal under Article 35 of the UNCITRAL Rules 1976, finding that the failure was not a mere ambiguity which could be clarified but a wholesale omission. The Court therefore held that the section 68 challenge succeeds and reserved the decision of appropriate relief until further submissions before the court.

This decision is the second in these arbitral proceedings, with a 2019 award being remitted to the tribunal on the grounds of serious irregularity under section 68(2)(a) of the Act. The latest decision also follows closely on the heels of Mare Nova Incorporated v Zhangjiagang Jiushun Ship Engineering Co., Ltd [2025] EWHC 223 (Comm), another example of a successful section 68 challenge in the Commercial Court. The back-to-back rulings reinforce the court’s willingness to intervene where procedural fairness is compromised, particularly where an arbitral tribunal overlooks key arguments or fails to provide adequate reasoning on critical points.

Background

The dispute arose from a long-running investor-state arbitration between the Republic of Kazakhstan and World Wide Minerals Ltd (WWM) and its CEO, Paul Carroll, under the 1989 Canada-USSR Bilateral Investment Treaty (BIT). It concerned WWM’s investment in a uranium processing facility in Kazakhstan, governed by a management agreement (Management Agreement). WWM alleged that Kazakhstan had breached the BIT, causing the failure of its investment.

In an initial award rendered in 2019, the tribunal rejected most of WWM’s claims but found Kazakhstan liable for two breaches: (i) failing to grant WWM an export licence for uranium sales, and (ii) failing to ensure WWM was properly notified of the bankruptcy of its investment vehicle. The tribunal awarded $13.7 million in damages, calculated based on WWM’s sunk costs, despite neither party having argued for that approach.

Kazakhstan successfully challenged the 2019 award under section 68(2)(a) of the Act, arguing it had been denied the opportunity to address how damages should be assessed. The Commercial Court set aside the damages award and remitted the issue of causation and loss to the tribunal for reconsideration (Republic of Kazakhstan v World Wide Minerals Ltd [2020] EWHC 3068 (Comm)).

Following extensive written submissions and a five-day oral hearing, the remitted tribunal issued a new award in March 2024.

The section 68(2)(d) challenge

Kazakhstan challenged the remitted award under section 68(2)(d) of the Act. It claimed that the tribunal had failed to engage with its “Counterfactual Case”—that WWM’s investment would have failed even if an export licence had been granted- which it argued was central to its causation analysis and provided a complete defence to WWM's claim for damages.  Accordingly, Kazakhstan contended that the tribunal’s failure to address this core causation argument amounted to a serious irregularity that caused substantial injustice. In response, WWM submitted that the Tribunal did, at least implicitly, deal with Kazakhstan's Counterfactual Case. Furthermore, WWM countered that Kazakhstan’s challenge was precluded because it could have sought clarification under Article 35 of the UNCITRAL Rules 1976. Kazakhstan rejected this, maintaining that the tribunal’s failure to deal with the issue did not constitute an ambiguity.

The Court's Decision

Applicable legal principles

Section 68 of the Act provides as follows:

(1) A party to arbitral proceedings may apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—

…

(d) Failure by the tribunal to deal with all the issues that were put to it.

In reviewing the jurisprudence, the court underscored the high threshold for intervention and emphasized due process over the correctness of the decision. The court noted that determining whether there is a serious irregularity under s68(2)(d) involves addressing three specific questions as elaborated in Petrochemical Industries Co (KSC) v Dow Chemical Co [2012] EWHC 2739 (Comm), further analysed by the Privy Council in RAV Bahamas Ltd v Therapy Beach Club [2021] UKPC 8:

• Is there an "issue" within the meaning of the subsection? A failure to handle an "issue" arises if its determination is essential to the decision reached in the award.
• Was it "put to" the tribunal? An issue is "put to" the tribunal when its attention has been sufficiently drawn to that issue as something requiring resolution.
• Did the tribunal fail to "deal with" it? Section 68(2)(d) is inapplicable if the tribunal addresses the issue in any way, regardless of the quality of the resolution provided, and determining this question involves a fair, commercial and commonsense reading of the award.

Considering substantial injustice, the court acknowledged that certain irregularities inherently lead to substantial injustice, suggesting that serious irregularity may be inferred from the nature of such irregularities, including scenarios where a tribunal has entirely overlooked essential issues. The court also examined the purpose of Article 35 of the UNCITRAL Rules 1976, adopting the view taken by the Court in Czech Republic v Diag Human SE [2024] EWHC 503 (Comm) that the interpretation mechanism is not applicable in situations where there is no ambiguity in the arbitral award, and was therefore not engaged where a tribunal had failed to address an issue in its award.

Application

WWM made a number of concessions prior to the hearing, including that Kazakhstan's Counterfactual Case was indeed an "issue" which was "put to" the Tribunal within the meaning of s68(2)(d). The Court accordingly dealt briefly with these two points, with the focus of the judgment being the third question – namely, did the tribunal fail to "deal with" that case? It is worth noting that the court's approach was not to view the three questions in isolation – what was "put to" the tribunal informs also whether there was an "issue" and whether the tribunal had failed to "deal with" it. Here, what was "put to" the tribunal was extensive submissions supporting the single central issue of Kazakhstan's Counterfactual Case, and this both overlapped with the reasons that the Counterfactual Case was indeed an "issue" and was a key factor that led the court to conclude that the "issue" was not dealt with.

Accordingly, the court rejected WWM's suggestion that the Tribunal had either expressly or implicitly addressed the Counterfactual Case, finding that a fair and commercial reading of the award demonstrated that this key issue had been overlooked. The court noted that it was "quite remarkable" that in a 427 paragraph award, the question of causation and loss was addressed in only one paragraph. The court was satisfied that the Tribunal did not address the Counterfactual Case, or its core arguments, anywhere in the award. This was despite the fact that the Tribunal had set out a "Route Map" for its decision-making which required it to decide and deal with the Counterfactual Case.

On substantial injustice, the court found that failing to address the Counterfactual Case might have changed the outcome—as a finding in Kazakhstan’s favour would have meant WWM suffered no loss. Given the seriousness of the omission, the court was satisfied that the irregularity had caused Kazakhstan substantial injustice within the meaning of section 68.

The court also dismissed WWM’s argument that Kazakhstan should have sought clarification under Article 35 of the UNCITRAL Rules 1976, holding that this was not a case of ambiguity or interpretation, but a wholesale failure to address a central issue.

Accordingly, the court allowed Kazakhstan’s challenge under section 68(2)(d).

Comment

This decision reaffirms the high bar for challenges under section 68(2)(d) of the Act, while making clear that tribunals must expressly deal with essential issues. The court held that Kazakhstan’s Counterfactual Case was central to causation and loss, and the tribunal’s failure to address it amounted to a serious irregularity.

The ruling also confirms that Article 35 of the UNCITRAL Rules 1976 does not apply where a tribunal has entirely failed to address an issue, reinforcing that a post-award interpretation mechanism cannot cure such an omission.

For tribunals, this serves as a reminder that, while they have discretion in structuring awards, they must explicitly engage with all key issues. Whilst causation and loss are often dealt with briefly, and even summarily, by tribunals in awards, the ruling also underlines that causation and loss are issues which are critical to an award of damages and should be analysed and decided properly and clearly by the tribunal. For parties, it highlights the importance of framing critical arguments clearly and ensuring they are properly addressed, as failure to do so can justify court intervention under section 68 of the Act.

The authors would like to thank Zhou Yang for his contribution to this post.