Serious Irregularity - Section 68, ―Arbitration Act 1996 Geoffrey Beresford Hartwell 17 February 2002

We were privileged to have Geoffrey Beresford Hartwell return to speak to the SE Branch on the subject of 'serious irregularity', covered under section 68 of the Arbitration Act 1996 (The Act).

An accomplished speaker, Geoffrey opened his presentation by referring to an article in the Times, published in January 2002, concerning a laudatory remark made by Sir Michael Davies, a distinguished former High Court Judge, on the late George Carman QC. Sir Michael's proposition is quoted as follows:

Carman made more contribution to the miscarriage of justice by his skill than any other barrister in the last 50 years. That 's not a criticism, that 's praise. He tended to win cases that he should have lost .....

Geoffrey made clear that this criticism, albeit praising the ability of George Carman, illustrates the conceptual divide between the process of litigation and the reality of a given situation. Indeed, it could be considered that this in itself is a justification for the arbitral and ADR process in order to create an alternative to litigation and its sometimes apparently unjust, but legally correct, outcome. As for arbitration, the fundamental tenet of the Act is fairness and even-handedness.

Serious irregularity is a new term under the Act, replacing the term "misconduct", following years of complaint from arbitration practitioners. Its inclusion under section 68 addresses three issues: procedural errors, arbitrator bias (whether inadvertent or otherwise), and arbitrator dishonesty. It enables the Court to deal with the failure of a tribunal to comply with the general duties stipulated under section 33 and states the conditions under which it may apply. It also makes clear that there is to have been a "substantial injustice" to the applicant for this section to apply, and therefore irregularity alone is insufficient. Section 68 also gives a clear presumption that the remedy lies within the arbitration itself, remission being the first recourse, followed by the Court's setting aside or declaration of no effect of the arbitrator's award.

Geoffrey drew attention to the instances of serious irregularity specified in section 68(2). He pointed out that section 68(2)(i) covered a serious irregularity admitted by the tribunal or other persons vested by the parties with powers in relation to the proceedings or award: this was a useful way for the tribunal, if it saw fit, to draw to the court's attention a mistake that was too serious to be remedied under section 57; he went so far as to say that section 68 is not so much a mechanism to control rogue arbitrators as one to allow arbitrators to deal with themselves!

The latter half of Geoffrey's presentation covered some choice case history and examples to illustrate the three issues covered under section 68, to which readers are ―commended to refer:

§ CMA Maltin Engineering v J Donne Holdings Ltd (QBD) [1981] 15 BLR 61

§ Gbangbola v Smith and Sherriff Ltd (QBD(TCC)) [1998] 3 AllER 730

§ Egmatra v Marco Trading Corporation (QBD (Comm.Ct)) [1999] 1 Lloyd's Rep 862

§ Rustal Trading Ltd v Gill & Duffus SA (QBD (Comm. Ct)) [2000] 1 Lloyd's Rep 14

§ Pacol Ltd v Joint Stock Company ―Rossakhar (QBD (Comm.Ct)) [2000] 1 Lloyd's Rep 109

§ Sanghi Polyesters (1ndia) Ltd v International Investor (KCFC) (Kuwait) (QBD (Comm. Ct)) [2000] 1 Lloyd's Rep 480

§ Hussman (Europe) Ltd v al Ameen ―Development and Trade Co (QBD (Comm. Ct)) [2000] 2 Lloyd's Rep 83

§ Weldon Plant Ltd v Commission for the New Towns (QBD(TCC)) [2001] 1 AllER (Comm) 264

§ Apis v Fantazia Kereskedelmi (QBD (Comm. Ct)) [2001] 1 AllER (Comm) 348 and WL 239706

§ Cuflet Chartering v Carousel Shipping Co Ltd (QBD (Comm.Ct)) [200l] 1 Lloyd's Rep 707

§ RC Pillar & Sons v Edwards (QBD(TCC)) (26 January 2001) ―Unreported

§ Petroships Pte Ltd of Singapore v Petec Trading and Investment Corp of ―Vietnam (QBD (Comm. Ct)) [2001] 2 Lloyd's Rep 348

§ Brandeis Brokers Ltd v Black (QBD (Comm.Ct)) [2001] 2 Lloyd's Rep 359

§ Kalmneft JSC v Glencore International AG (QBD (Comm.Ct)) [2002] 1 AllER 76; [2001] 2 AllER (Comm) 577

Geoffrey concluded by reiterating that section 68 of the Act provides a remedy for procedural unfairness, where that unfairness has created substantial injustice. It does not provide a direct remedy for inequality of arms which remains a problem that only the judgement of the tribunal can resolve.

A transcript of Geoffrey's presentation is available from the editorial team, which summarises the issues raised in the above cases.

Reported by Richard Swan