Tame made an application under Section 68 of the 1996 Arbitration Act to challenge an arbitrator’s award. More particularly, Tame sought to rely on the reasons published by the arbitrator separately from the award expressly on terms that no use should be made of them in any proceeding relating to it.
The dispute was referred to arbitration with the small claims procedure of the London Maritime Arbitrator’s Association. Neither party request an oral hearing but made substantial written submissions to the sole arbitrator. The arbitrator held that Tame was liable to Easy.
The award did not contain the arbitrator’s reasons. These were published separately in a document that made it clear that they were provided for the information of the parties only and on the understanding “that no use whatsoever is made of them or in connection with any proceedings on or related to the award.” By adopting the LMAA small claims procedure, the parties had expressly agreed to waive all rights for appeal, thereby making reasons redundant as far as questions for law are concerned. The commentary to the proceedings made it clear that the arbitrator would only give brief, privileged reasons for his decision.
Should the court examine the adjudicator’s reasons in order to consider whether there had been a serious irregularity under Section 68 of Arbitration Act 1996?
Under the 1996 Arbitration Act, when an arbitrator publishes a reasoned award there exists a possibility of it appearing on a question of law. However the parties are free to contract out of their right to appeal and where if they have done so, an arbitrator might well publish reasons for that decision in a separate document. Moore-Bick J considered this was the thinking underlying the LMAA small claims procedure.
The authorities established that if by agreement, the arbitrator published his reasons in a separate document on terms that the parties are not to refer to them in connection with any proceedings relating to the award, then the parties are bound by contract to each other and with the arbitrator not to make use of them. However, that agreement cannot preclude the court from accepting reasons in evidence if it considers it right to do so. This, as the judge recognised, could cause problems. It is not appropriate for the court to consider the reasons privately and without hearing submissions from the parties. Under the 1996 Arbitration Act, the court can only remit or satisfy an award if there has been a serious irregularity causing substantial injustice. If such an application is made, the court has no alternative but to examine relevant evidence. Often this will lie in the arbitrator’s reasons. Therefore the court must look at these whether or not they are confidential unless there is evidence from other sources it make it unnecessary to do so. Failure to do so would risk allowing substantial injustice to go un-remedied.
For further information, call Tony Francis or Nicholas Gould on 0207 956 9354.
In this case the agreement not to refer to the reasons in support of an application did not bind the Court. This was one of the cases in which the only evidence with the manner in which the Arbitrator reached his decision was contained in his reasons. If they could not be adduced in evidence the application was bound to fail. On the other hand the court was bound to consider all relevant evidence.
That said, on the facts, the Judge held there had been no serious irregularity in this case and the application was dismissed.