LAW COMMENTARY

Mohan Lal Mirpuri v Amrit Singh Jass

This unreported case (ORB 1996) demonstrates that arbitrators have to be reminded of one of the fundamental principles which guide them. The plaintiff sought an order that part of an arbitrator’s award should be remitted to him under Section 22(i) of the 1950 Act or set aside under Section 23(i) on the grounds of misconduct.

The judge found that there was an irregularity in the conduct of the arbitration by the arbitrator in that he proceeded to make his award when he knew that one party did not have any knowledge of documents relied on by the other to establish his claim. There was undoubtedly a procedural mishap which compromised the fairness of the arbitration and the award was remitted to the arbitrator.

In his judgment the judge quoted Mr Justice Bingham in Zermat v Nu-Life (1985): ". . the rules of natural justice do require, even if an arbitration is conducted by an expert, that matters which are likely to form the subject of his decision, insofar as they are specific matters, should be exposed for the comments and the submissions of the parties. If an arbitrator is impressed by a point which has never been raised by either side then it is his duty to put it to them so that they have an opportunity to comment. It is not right that a decision should be based on specific matters which the parties have never had the chance to deal with, nor is it right that a party should learn first of adverse points in the decision against him. That is contrary both to the substance of justice and to its appearance."

Of course, we all know this. However, the arbitrator concerned was not a tyro.

Cliffe Holdings v Parkman Buck (BLISS 9: 1996)

Cliffe were contractors under the JCT 81 Design & Build contract for a business park for a firm of developers. Parkman were engaged by Cliffe for engineering and architectural services, and they sub-let the architectural services to Joyce. The developer complained about the ingress of water and a defective floor screed, and withheld money from Cliffe. Cliffe commenced arbitration proceedings which they later abandoned, and paid the developer’s costs. They sought to recover their costs and money withheld from the engineer and the architect. The engineer relied on the ACE Conditions of Engagement, arguing that they were not liable for the design work that had been sub-let to the architect, which the judge rejected, stating that such a contention would be an unusual result which could not have been intended by a standard form produced by a reputable professional organisation.

The judge held that the architect could be liable to the contractor under the Hedley Byrne principles. There had been reliance by one party on another who had voluntarily assumed responsibility, there being no contract between the contractor and the architect. However, the judge found that neither engineer nor architect was liable.

Abbey National Mortgages v Key Surveyors 80BLR54

The Court of Appeal endorsed the judge’s novel approach to the use of expert evidence and gave general encouragement to boldness and novelty in trial management:

"Exhortations to trial judges to be interventionist and managerial would be futile if every managerial initiative by a trial judge were to be condemned as an unwarranted departure from orthodoxy".

Presumably such encouragement will extend to arbitrators taking a robust line in accordance with Section 34 of the 1996 Arbitration Act.

Misconduct

The plaintiff sought to remove the arbitrator for alleged misconduct of the proceedings, in failing to address a particular argument on the issue of "quantities". Miller maintained that the arbitrator had assessed the cost of additional resources by reference to the job as executed, not the job as tendered for, an argument which had been put to him several times.

Held, dismissing the motion:

"It is, in my experience, a totally unprecedented suggestion that a failure by an arbitrator to address an argument placed before him can be said to be capable of amounting to misconduct ... It seems to be clear as a matter of principle under the Arbitration Acts 1950 to 1979, while an arbitrator is under a duty to ensure that each party has a reasonable opportunity of putting his case and dealing with that of his opponent, and while a failure to do so may amount to a misconduct, it does not in general constitute misconduct for an arbitrator not to address arguments placed before him."

Miller Civil Engineering Ltd v. National Rivers Authority: QBD July 1997 (Bliss CMAU)

Expert Determination

The parties entered into an agreement, under which the defendant agreed to bottle and package soft drinks produced by the plaintiff.

Clause 14 headed "Arbitration" stated:

"Any dispute or difference arising from the construction or performance of the agreement shall be referred to the decision of a person to be appointed by the Director General of the British Soft Drinks Association. The person chosen or appointed shall be an independent consultant and shall act as an expert and not as an arbiter, and his decision shall be final and binding on the parties." Both parties alleged that there had been a breach of Contract, and the defendant wrote to the Director General, invoking the arbitration procedure.

An expert was appointed who had much experience in the soft drinks industry, but who had had no experience of arbitration or dispute resolution. The plaintiff maintained that the Association was not an appropriate forum for the claim, and issued proceedings against the defendant claiming damages. The defendant sought to stay the action on the ground that the parties had agreed to refer the matter to expert determination. The plaintiff argued that clause 14 was ambiguous as to whether arbitration or expert determination was contemplated, and, therefore, it would be inappropriate to grant a stay. Held:

1. The heading of a clause was a catchword or form of identification inserted as a convenience for reference, and could not prevail over the express wording of a clause, or create ambiguity where there was none. In the present case, clause 14 was clear and unambiguous. Therefore, despite the heading "Arbitration", the only proper construction of the clause was that it was not an arbitration clause and that the appointee was to act as an expert and not an arbitrator.

2. The court possessed the inherent jurisdiction to stay an action not only where an agreement contained an arbitration clause, but also where it contained provision for some sort of alternative dispute resolution, including expert determination. The onus was on the person opposing the stay to show grounds for refusing it. In the present case, there were no such grounds since, inter alia, the Association had no arbitration rules, or rules governing any other sort of dispute resolution. The expert had had no experience in this area, and the clause itself neither laid down nor incorporated rules of principles to be followed for the expert to determine the dispute. Therefore, a stay would be refused.

Cott UK Ltd v. F E Barber Ltd: QBD 14 January 1997 (BLISS CLMK)

DS Jerram