A v B

This is an application under s. 68 Arbitration Act 1996 made by the Claimants, A (“the Buyers”), to challenge a Partial Award of three arbitrators dated 21 June 2016.

This s. 68 challenge was commenced by Claim Form issued on 6 October 2016. That Claim Form also included an application for permission to appeal under s. 69 Arbitration Act 1996. By Order dated 28 December 2016, Knowles J. refused permission to appeal under s. 69 Arbitration Act 1996, and gave certain directions in relation to the hearing of the s. 68 application.

The underlying dispute arises out of a contract dated 2 July 2014 (“the contract”), under which the Defendants, B (“the Sellers”) agreed to sell and the Buyers agreed to buy a quantity of fertiliser.

The contract specified that the Product to be sold and purchased was “Magnesium Sulphate Heptahydrate in bulk (‘Epsomite 98’)”. The quantity was specified as 4,500 mt +/- 5% in Sellers’ option at €135/mt CIF one safe port, one safe berth Varna, Bulgaria or Constanta, Romania, at Buyers’ option.

The contract was specified to be governed by English law. It also contained an arbitration clause in the following terms:

“Any dispute, controversy or claim arising out of or relating to this contract, or the breach, termination or validity thereof shall be referred to arbitration by three persons in London, UK, one to be appointed by the seller, one to be appointed by the buyer and the third by the two so chosen, who shall be the Chairman…”

The Buyers made prepayments amounting to €607,500 before loading. They declared Constanta as the destination. The Sellers shipped 4,666.991 mt of goods at Valencia on board a motor vessel (“the vessel”) under a bill of lading dated 11 July 2014. The vessel arrived at Constanta on 20 July 2014, and discharged the goods into four barges. On 22 July 2014, the Buyers notified the Sellers that compacted cargo had been found in the holds of the vessel. The cargo was discharged from the barges at Svishtov between 31 July and 19 August 2014. On 1 August 2014, the Buyers complained to the Sellers about the quality of the goods and asked the Sellers to take the product back and reimburse them. The Sellers declined.

The resulting dispute was referred to arbitration. The Buyers nominated Mr G.M. Perry as their arbitrator. The Sellers nominated Mr D. O’Meara as theirs. The two nominated arbitrators appointed Mr R.W. Rookes as third arbitrator. The parties made written submissions and served witness statements and experts’ reports. They also agreed that the arbitration should take place on the papers, without an oral hearing.

The three arbitrators produced a Partial Award dated 21 June 2016. It was unanimous. That Partial Award contained, as its concluding section, which was headed “Award”, the following:

“[127] We do hereby find that Buyers lost the right to reject the cargo but have not lost the right to claim damages for breach of specifications.

[128] We further find that the assessment of damages, if any, is held over for further submissions and a further award, if the parties are unable to agree.

[129] The costs and expenses of this arbitration are to be borne equally between the parties.

[130] Each party shall bear the fees and expenses of their expert witnesses.

[131] We reserve the right to issue a further award on legal costs, if the parties are unable to agree.”

On 18 July 2016 the Buyers made an application under s. 57 Arbitration Act 1996 for the correction of certain paragraphs in the Partial Award, and/or for the clarification or removal of ambiguities therein. On or about 12 September 2016 Mr O’Meara and Mr Rookes, together, provided a response to this application, and, by a short correcting Award, made a limited change to the terms of paragraph 112 of the Partial Award. Mr Perry thereafter provided certain comments on Mr O’Meara and Mr Rookes’s response, indicating these to be “the minority view”.

Before considering the specific grounds relied upon by the Buyers, it is helpful to set out the terms of s. 68 Arbitration Act 1996 and to summarise some of the principles which have been held to govern its exercise.

S. 68 Arbitration Act 1996 provides in part:

“(1)

A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. …

(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-

(a)

Failure by the tribunal to comply with section 33 (general duty of tribunal);

(b)

The tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67);

(c)

Failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;

(d)

Failure by the tribunal to deal with all the issues that were put to it;

(e)

Any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;

(f)

Uncertainty or ambiguity as to the effect of the award;

(g)

The award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;

(h)

Failure to comply with the requirements as to the form of the award;

(i)

Any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.

It was common ground before me that:

To these points I would add that, as a matter of general approach, the courts do not look at arbitration awards with a predisposition to find faults in them. The matter was put thus by Bingham J in Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14:

“As a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards, and with the objective of frustrating the process of arbitration. Far from it. The approach is to read an arbitration award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault to find with it.”

Such an approach has been held to be the correct one under the 1996 Arbitration Act: see for example Primera Maritime (Hellas) v Jiangsu Eastern Heavy Industry Co [2013] EWHC 3066 (Comm), [2014] 1 Lloyd’s Rep 255, at [10].

The Buyers contend that there were serious irregularities falling within subsections 68(2)(a), (d), (f) and (i) of Arbitration Act 1996. I will consider each of these in turn.

The Buyers contend that there were serious irregularities within s. 68(2)(a) of Arbitration Act 1996 by reason of the tribunal’s failure to comply with s. 33 of that Act in two respects: one in relation to its treatment of the Buyers’ witnesses of fact, and one in relation to the expert witnesses.

As to the first, the Buyers contend that the tribunal failed to act fairly and impartially between the parties by ignoring what they describe as the ‘undisputed evidence’ of their witnesses of fact, and in particular of Mr X.

Specifically, the Buyers complain about paragraph 99 of the Partial Award, which considered whether it had been made known by the Buyers to the Sellers that the cargo of Magnesium Sulphate Heptahydrate was required for direct spreading on fields, rather than dilution and spraying. As part of that paragraph, the tribunal wrote

“Thirdly, Mr X, in his statement, contended that he had made known to Sellers the requirement that the goods be free-flowing but admitted that he had not noticed the absence of these terms in the Contract. Sellers did not put before us a witness statement commenting on Mr X’s assertions. Their failure to do so undoubtedly weakens their position, but that does not necessarily mean that we have to accept Mr X’s statement. Of the five previous contracts, the one most similar to Epsomite did not state that the goods be free-flowing. Given that Sellers did stress that Epsomite was a different product from Magnolite, and that they denied agreeing that the goods were free-flowing, we consider that there is insufficient evidence to convince us that Buyers had made known to Sellers clearly enough that they wanted the goods to be free-flowing and capable of being spread as a dry product. We do not accept that there is sufficient evidence that these terms were implied in the Contract.”

The Buyers referred to the fact that they had sought clarification of this part of the Partial Award in their s. 57 Application, and that Messrs O’Meara and Rookes had simply repeated what was stated in paragraph 99; while Mr Perry’s “minority” response to the s. 57 Application had stated that there “were insufficient, or indeed, no shortcomings in Mr X’s statement to justify us reaching a conclusion that his evidence should be given little weight”. The Buyers contended that in these circumstances the tribunal had not acted in accordance with s. 33 in not accepting Mr X’s evidence in particular, and that, given that there had been no evidence put in to contradict that evidence, it was “perverse and unfair” of the tribunal to have rejected it.

In considering this case it is necessary to bear in mind that ss. 33 and 34 Arbitration Act 1996 give arbitrators a broad discretion in matters of procedure and evidence. Furthermore, assessments by the tribunal of the evidence before it, and whether to give it what, if any weight, are ones in which the court will seldom, if ever, interfere. I consider that the reasoning and approach of Flaux J in Sonatrach v Statoil Natural Gas LLC [2014] EWHC 875 (Comm), [2014] 2 Lloyd’s Rep 252 is correct, and that I should adopt it. In that case, at paragraphs [12]-[13] Flaux J said this:

“[12] It has been emphasised in a number of cases that the evaluation of the evidence is entirely a matter for the tribunal. A clear statement of the applicable principle can be found in the judgment of Colman J in World Trade Corporation v C Czarnikow Sugar Ltd [2005] 1 Lloyd’s Rep 422 at para. 45, albeit in the context of section 68(2)(d), alleged failure to deal with an issue:

‘On analysis, these criticisms are all directed to asserting that the arbitrators misdirected themselves on the facts or drew from the primary facts unjustified inferences. Those facts are said to be material to an “issue”, namely what were the terms of the oral agreement. However, each stage of the evidential analysis directed to the resolution of that issue was not an ‘issue’ within s. 68(2)(d). It was merely a step in the evaluation of the evidence. That the arbitrators failed to take into account evidence or a document said to be relevant to that issue is not properly to be regarded as a failure to deal with an issue. It is, in truth, a criticism which goes no further than asserting that the arbitrators made mistakes in their findings of primary fact or drew from the primary facts unsustainable inferences.’

[13] In the light of that statement, it might be thought that it should not be open to a party to a section 68 application to contend that the tribunal has disregarded or overlooked a particular piece of evidence since that amounts to an assertion that the arbitrators made mistakes in their findings of primary facts or drew unsustainable inferences from the primary facts which, as Colman J held, is not the basis for a challenge under section 68.

Flaux J then went on to consider an argument that an exception to this principle had been recognised by Toulson J in Arduina Holdings BV v Celtic Resources Holdings plc [2006] EWHC 3155 (Comm) at [46], whereby, in an exceptional case, if an arbitrator had “genuinely overlooked evidence that really mattered, or got the wrong end of the stick in misunderstanding it” that might give rise to a challenge under s. 68. As to this, Flaux J pointed out that what Toulson J had said was obiter, and continued (in [18]):

“Toulson J does not specify what sort of exceptional case he had in mind. I can quite see that in a case, for example, of an agreed or admitted piece of evidence which was ignored or overlooked, it might be possible to say that the tribunal was in breach of its duty under section 33, so that section 68(2)(a) was engaged. However, beyond that, it seems to me that, as the present case demonstrates, the contention that the tribunal has overlooked or misunderstood particular evidence necessarily involves interference with the evaluation of the evidence by the tribunal. Whilst the applicant may contend, as in the present case, that the tribunal has overlooked a critical piece of evidence, the tribunal may not have regarded it as critical and thus may have decided that it was not worth referring to in an award which necessarily cannot set out every piece of evidence in the case. I do not see how the court can determine whether the tribunal has overlooked evidence without an analysis of the tribunal’s evaluation of the evidence, which is not a permissible exercise under section 68: see the passage in the judgment of Colman J cited above and paras 49 and 50 in my own recent judgment in Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2014] 1 Lloyd’s Rep 255 at pages 264 and 265, both cases under section 68(2)(d), but where the prohibition against attacking the findings of fact of the tribunal must apply whichever head of section 68(2) is relied upon.”

Flaux J then said, at [19] that it was not necessary for him, in that case, to decide whether there was any scope for interference under s. 68(2)(a) in an exceptional case, because he did not consider that the case before him was exceptional.

Further assistance in relation to the proper approach in this area is provided by the decision of Cooke J in New Age Alzarooni 2 Ltd v Range Energy Natural Resources Inc. [2014] EWHC 4358 (Comm). In para [14] of his judgment in that case, he said:

“The DAC Report, to which many of the relevant authorities refer, stated that it was ‘only in those cases where it could be said that what had happened was so far removed from what could reasonably be expected of the arbitral process’ that the court would be expected to take action. Section 68 was only to be available in extreme cases where the Tribunal had gone so far wrong in its conduct of the arbitration that justice called for it to be corrected. None of the grounds in section 68 which are relied on by New Age 2 and Black Gold allow for a challenge to an arbitration award on the basis of the Tribunal’s view of the evidence, the weight it accorded to any evidence, its findings of fact or its conclusions of law. Moreover, the assertion that a decision is contrary to the weight of the evidence could not begin to meet the requirements of section 68(2)(a) since that would be no more than a challenge to the Arbitrators’ findings of fact. A failure to refer to any particular piece of evidence in the Award or Reasons is likewise no basis for attacking an award or contending that the evidence in question was not taken into account. Any contention that the Tribunal had overlooked or misunderstood any particular piece of evidence would necessarily involve a review and evaluation of all the evidence considered by the Tribunal which would be an unjustified and unauthorised interference with the function of the Arbitrators and the agreement of the parties to refer their dispute to them for determination.”

Cooke J also considered the ambit of any exception to the general impermissibility of the court’s interfering with the tribunal’s evaluation of evidence which might arise in the case of agreed or admitted evidence. Paragraph 62 of his judgment indicates that he considered that, even in such a case, there would only be grounds for interference if the tribunal admitted that it had overlooked such evidence. Thus he said:

“In the Particulars of Claim, New Age 2 and Black Gold contend that the Tribunal followed an unfair procedure at the arbitration by failing to take into account evidence which was highly relevant and uncontested. It is accepted that a failure to refer to a piece of evidence in an award is not a ground for challenge under section 68 but reliance is placed on a dictum of Flaux J at paragraph 18 of his judgment in Statoil v Sonatrach [2014] EWHC 875 (Comm), where he said that it could be a breach of section 33 of the Act to ignore or overlook an agreed or admitted piece of evidence. He went on to say, however, that the contention that the tribunal has overlooked or misunderstood particular evidence necessarily involves interference with the evaluation of evidence by the tribunal, which is not permissible… If the tribunal admitted that it had overlooked a matter then, depending on its significance, section 68(2)(i) might apply, but here there is no such admission and there is no basis for complaint on a proper reading of the award and appreciation of the situations to which section 68 applies…”

In light of the terms of the Arbitration Act 1996, and of the above guidance, I consider that the challenge to the Partial Award in the present case on the basis that the Tribunal had not acted fairly in its treatment of the Buyers’ factual witness evidence is wholly impermissible. It involves asking the court to interfere with the tribunal’s evaluation of the evidence. Even if it is right that there can be such interference in an “exceptional case”, this is not, in my judgment an exceptional case in any way. The evidence which the Buyers contend should have been accepted by the tribunal was not agreed evidence; it was not overlooked by the tribunal, but assessed by it; and there has been no admission by the tribunal, or at least by the majority of the tribunal, that there was any defect in its treatment of that evidence.

An examination of the material which was put before the tribunal simply illustrates, in my judgment, how inappropriate this challenge is. The particular issue which was relevant, and which was being considered in paragraph 99 of the Partial Award was whether, for the purposes of the implied term in s. 14(3) Sale of Goods Act 1979, the Buyers had, expressly or by implication made known to the Sellers a particular purpose for which the goods were being bought. In relation to this the Sellers had argued that had there been such a communication there would have been a record of it; and further that if there had been a communication that the product was to be used for direct dry spreading, the Sellers would have said that that no assurances could be given. Evidence from a Mr Y was adduced in support of the Sellers’ case in this regard which was exchanged with that of Mr X. The Sellers further contended in their written submissions in the arbitration that Mr X’s evidence was vague and unspecific and that the suggestion of communication of a particular purpose was inconsistent with the written exchanges which there were.

Clearly I do not need to express any view as to the merits of the respective cases on whether there was any and if any what communication of purpose. All that it is necessary for me to say is that this issue, and the assessment of the competing evidence and arguments, were matters for the tribunal, and I did not see any material which suggested that the way in which it conducted that assessment was such as constituted a breach of s. 33 Arbitration Act 1996 or amounted to an irregularity.

I can deal briefly with three further matters which were relied upon by the Buyers in this context.

One was the suggestion that the position in relation to Mr X’s evidence was analogous to that of a witness whose evidence had not been challenged in cross-examination, and that it should have been accepted. I was referred to Phipson on Evidence (18^th ed.) paras. 12-12 and 12-35. I consider, however, that those passages deal only with the position in relation to cross-examination, and even in relation to that the ‘rule’ is flexible, and of decreasing significance. It does not appear to me to be applicable to the circumstances of an arbitration conducted, by the agreement of the parties, on the documents.

The second was reference to Mr Perry’s inclusion of a “minority” comment in the response to the s. 57 Application in so far as it related to paragraph 99 of the Partial Award. I will deal with the position of these comments more generally later in this judgment. In the present context it suffices to say that the Partial Award itself was unanimous; Mr Perry’s comments set out in the response are simply his personal view; and, in any event, those comments confirm that there was indeed a process of assessment of the evidence, including that of Mr X, by the tribunal. The court will not seek to interfere with the result of that assessment.

The third was the suggestion that, if the tribunal was going to adopt the course of not accepting Mr X’s evidence, it should have indicated that to the parties before reaching its conclusion. In my judgment, however, there was nothing unfair or irregular as to the course adopted by the tribunal in the present case. The Buyers were well aware that Mr X’s evidence was being said to be wrong or unpersuasive. They could not have been taken by surprise by the tribunal’s adjudicating on the submissions on the point. Furthermore, as Colman J pointed out in Bulfracht (Cyprus) ltd v Boneset Shipping Co Ltd (The ‘Pamphilos’) [2002] 2 Lloyd’s Rep 681 at 687, it is not usually necessary for arbitrators to refer back to the parties for further submission all inferences of fact which they intend to draw. As he put it:

“In many cases, such as this, the arbitrators have been appointed because of their professional legal, commercial or technical experience and the parties take the risk that, in spite of that expertise, errors of fact may be made or invalid inferences drawn without prior warning. It needs to be emphasized that in such cases there is simply no irregularity, serious or otherwise. What has happened is simply an ordinary incident of the arbitral process based on the arbitrator’s power to make findings of fact relevant to the issues between the parties. ”

The second matter relied upon by the Buyers in their Arbitration Claim Form as founding a challenge under s. 68(2)(a) concerned the tribunal’s treatment of their expert evidence. The way in which it was put in the Skeleton Argument of Ms Hilliard QC, who appeared for the Buyers before me, was that:

“The Tribunal failed to act fairly and impartially between the parties by accepting the evidence of the Sellers’ expert who referred (without any corroborating evidence) to a ‘custom’ of drying a fertiliser sample before analysis and ignored the clear statutory requirement which expressly requires fertiliser samples be analysed without pre-drying.”

The short answer to this complaint, in my view, is that in the Partial Award there is no finding of the type suggested, nor an “acceptance” of the Sellers’ expert evidence that samples should be dried before analysis. Instead, what the tribunal did was to hold that it did not need, for the purposes of its Partial Award, to decide which analysis method should have been used, on the basis that there was a breach of specification on any approach: see paragraph 112 of the Partial Award, and the correcting Award. I do not accept that any substantial injustice can have arisen here as a result of a finding that the tribunal did not make.

Two matters are relied upon as founding challenges under s. 68(2)(d) of Arbitration Act 1996. It is said that the tribunal failed to deal with two issues put before it: firstly in relation to s. 14(2B)(a) of Sale of Goods Act 1979, and secondly as to which analysis report, if any, was final and binding.

Before dealing with these two points in turn, it is helpful to consider the guidance which exists as to the application of s. 68(2)(d) Arbitration Act 1996. This sub-section is engaged only when there is a failure to deal with a “fundamental” issue, which generally means an issue the determination of which is essential to the decision of the claims or specific defences raised: Abuja International Hotels v Meridien [2012] EWHC 87 (Comm), [2012] 1 Lloyd’s Rep 461, at [51]. S. 68(2)(d) does not require a tribunal to set out each step by which it reached its conclusion or to deal with each point made by a party; and there is a distinction between criticism of the reasoning and a failure to deal with an issue: Petroships Ptd Ltd v Petec Trading and Investment Corp (The ‘Petro Ranger’) [2001] 2 Lloyd’s Rep 348, at 351 (9). A tribunal can deal with an issue by making it clear that it does not arise in view of its decisions on the facts or their legal conclusions, and by deciding a logically anterior point in such a way that the issue does not arise: Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] EWHC 3066, [2014] 1 Lloyd’s Rep 255 at [10].

The Buyers contend that the tribunal failed to decide an issue which had been submitted to it, namely as to what were the express and implied terms of the contract. What is said is that the Tribunal required the parties to identify the issues and make closing submissions on them; that the parties agreed a list of issues, one of which was as to what were the express and/or implied terms of the contract; and that the tribunal failed to answer that question. More specifically, it is said that there is a serious irregularity arising from the fact that the tribunal did not resolve the issue of whether, by reason of s. 14(2B)(a) Sale of Goods Act, the goods supplied should have been regarded as of unsatisfactory quality by reason of being unfit for all the purposes for which goods of the kind in question are commonly supplied. The Buyers contended that this failure had caused or might cause substantial injustice because it was their contention that one of the purposes for which goods of this kind are commonly supplied is direct dry spreading.

It is necessary to recall that s. 14(2B)(a) Sale of Goods Act is not, in itself, an implied term. It provides, instead, for a potentially relevant consideration, in an appropriate case, as to whether goods are of satisfactory quality for the purposes of s. 14(2). If raised, a contention that s. 14(2B)(a) is relevant is in most cases likely to be an argument, rather than one of the fundamental issues the non-decision of which, alone, would found a complaint under s. 68(2)(d) Arbitration Act 1996.

Furthermore, and in any event, in the present case, I consider that the applicability of s. 14(2B)(a) was not an issue which was put to the tribunal for decision. I was taken by Mr Raphael QC, who appeared for the Sellers, through the evidence and the arguments deployed before the tribunal which might be regarded as relevant to the point. I accept his submission that, while there were glancing references to s. 14(2B)(a), they were minor and incidental arguments, which the tribunal did not need specifically to refer to. However, the Buyers did not put to the tribunal an argument that the goods were of unsatisfactory quality because they were unfit for all purposes for which Epsomite 98 is commonly supplied, or that Epsomite 98 is commonly supplied for use in dry dispersal; and they did not adduce any evidence to show that that was the case. It may well be that this was because any such argument would have been very difficult, given that there was apparently uncontradicted expert evidence that Epsomite 98 is highly soluble, is intended for foliar application and drip irrigation systems, and is usually applied after being diluted in water; and that direct dry application is not a standard application method for Epsomite 98.

For the reasons set out in the preceding paragraphs, I do not consider that s. 68(2)(d) has any application here. I should add, however, that if, contrary to my view, the Buyers sought to put an issue as to s. 14(2B)(a) Sale of Goods Act to the tribunal, it was done in an entirely unclear way, and it is not surprising that the tribunal did not consider that it needed to be specifically addressed in the Partial Award. This, I consider would, in any event, have precluded a complaint under s. 68(2)(d) Arbitration Act 1996. It would not, in my judgment, be a serious irregularity for a tribunal to fail to deal with a point which was put before them, if at all, only unclearly and indistinctly. A party’s own default in the way in which the case is presented is unlikely to be consistent with a finding of serious irregularity in the award: see New Age Alzarooni 2 Ltd v Range Energy Natural Resources Inc [2014] EWHC 4358 (Comm) at [72].

Furthermore, I am unpersuaded that any substantial injustice has been or may be caused by the tribunal’s failure to deal in its Partial Award with s. 14(2B)(a) specifically. Paragraph 14(d) of the Tribunal’s Response to the s. 57 Application recorded, as I read it, that there was indeed evidence that the product was best used dissolved in water, and that the evidence of Mr Thompson, the Buyers’ expert, did not contradict this, as it was not directed specifically to Epsomite 98, and in any event he did not have experience of this product. Accordingly, I am not persuaded that, had s. 14(2B)(a) been specifically considered in the Partial Award, it would have made any difference to the outcome.

The second way in which the Buyers contend that s. 68(2)(d) Arbitration Act 1996 is applicable is by reason of the fact that the tribunal did not decide which, if any, of the various analysis reports was final and binding.

The Buyers pointed out that there had been significant evidence and argument on this point. They contended, further, that the tribunal’s failure to decide the issue in the Partial Award would cause substantial injustice because, until it was decided which report, if any, was final and binding, it would not be possible to determine the extent to which there was non-compliance with specification, and the extent of damages.

The Buyers pointed to the fact that the tribunal asked the parties “identify the issues” and that on 21 January 2016 the parties submitted an agreed “summary of the main issues”, in which appeared as item C: “Was any inspection report final and if so which?”

The answer to this complaint, in my judgment, is that the tribunal simply concluded, in its Partial Award, that it would not decide, at that stage, which analysis report was final and binding. Its decision not to decide the point in its first Partial Award was a procedural decision within its discretion. It will, however, as accepted by the Sellers before me, be open to the Buyers to raise this issue in the next stage of the arbitration, if, as the Buyers contend, it is relevant to quantum. It will be open to the tribunal to decide the point then. I can see no irregularity or risk of substantial injustice here.

I do not consider that the “summary of the main issues” which was presented to the tribunal was a binding list which the tribunal was obliged to address in full in its first Award. Furthermore, as I have said, its decision not to address all of the issues at the first stage was a procedural decision, which was one which the tribunal was entitled to make.

I should add for completeness, in relation to this issue, that the Buyers also argued, under s. 69 Arbitration Act 1996, that the failure on the part of the tribunal to hold, in the Partial Award, that the SGS report dated 28 July 2014 was the final and binding report was an error of law and obviously wrong. That case was rejected by Knowles J in his Order of 28 December 2016, refusing permission to appeal under s. 69 Arbitration Act 1996.

The Buyers make a further case that there was serious irregularity because of uncertainty or ambiguity as to the effect of the Award, within s. 68(2)(f) Arbitration Act 1996.

Their case in this respect was that the tribunal had used the terms “damages” and “allowance” interchangeably. In paragraph 118 of the Partial Award, the tribunal had invited the parties to “negotiate an agreement on an allowance [by reason of the failure of the cargo to comply with specification]” and, if they could not agree “then we reserve the right to issue a subsequent award on damages”. This, the Buyers argue, has “sent the wrong message to the Sellers, namely that quantum will be assessed as if calculating an allowance (and therefore be insignificant) rather than a sum which places the Buyers in the same position as if the Sellers had supplied what they contracted to supply…” (Buyers’ Skeleton Argument para. 28).

In my judgment there is nothing in this point. There is no ambiguity or uncertainty as to the effect of the Partial Award, which states in paragraph 127 that the Buyers have not lost the right “to claim damages for breach of specifications”, and in paragraph 128 that they are holding over “the assessment of damages, if any” for further submissions and a further award. Those paragraphs indicate clearly that what will take place is an assessment of the quantum of damages.

Furthermore, it was accepted by the Sellers before me that what would be involved at the next stage would indeed be an assessment of damages, which would be “at large”. It would not be confined to an assessment of what, in the course of argument, was described as a ‘Gafta-type allowance’. What would be involved, the Sellers confirmed, was an assessment of whether the Buyers had suffered any and if any what damages by reason of the breach of specifications, and this would depend on the facts and the law in the ordinary way.

The Buyers further rely on s. 68(2)(i) Arbitration Act. They contend that there has been an “admission” of irregularity in the conduct of the proceedings or the Award by Mr Perry, in his “minority” responses to the s. 57 Application, and that Mr Perry is, for these purposes “a person vested by the parties with powers in relation to the proceedings or the Award”.

I consider that this challenge fails for a number of reasons.

In the first place, I do not consider that Mr Perry on his own was “a person vested by the parties with powers in relation to the proceedings or the Award”. The Partial Award itself was unanimous. The Response to the s. 57 Application was answered by a majority with “minority” comments. I consider that in this respect, the tribunal acted by its majority, and that as the minority Mr Perry was not “vested with powers in relation to the proceedings or the Award”. A dissenting arbitrator has no relevant “powers”, though his views may be recorded as a matter of courtesy.

Secondly, I do not consider that what Mr Perry stated can constitute “admissions” as to an irregularity by the tribunal as a whole. In my view, an admission would be made only where the body with the relevant power admits that it itself has committed some irregularity in the Award or the conduct of the proceedings. Here, however, there has clearly been no such ‘admission’ by the majority of the tribunal, and none is contended for.

No case has been cited to me in which it has been suggested that a dissentient arbitrator might qualify as “a person vested by the parties with powers in relation to the proceedings or the award” who can make “admissions” as to the conduct of the tribunal as a whole. I consider that, if it were held that a dissentient arbitrator could be regarded as making such “admissions”, the consequences would be adverse and significant. It would allow a dissentient arbitrator to bring about challenges under s. 68(2)(i) Arbitration Act by stating respects in which he thought the majority had taken a wrong course, even though the majority did not in any way accept that. Such a result would, in my view, not be consistent with the intention of s. 68 Arbitration Act 1996.

For the above reasons, I do not consider that it is open to the Buyers to rely on Mr Perry’s comments as founding a challenge under s. 68(2)(i) Arbitration Act. If I were wrong about that, however, I would in any event reject the case that those comments indicated that there was a serious irregularity which has caused or will cause serious injustice. In particular:

For the reasons given, the s. 68 Arbitration Act application fails and is dismissed.