This is the final hearing of the claimant’s arbitration claim which challenges an arbitration award dated 8^th November 2016 obtained by the defendant in an LCIA arbitration (“the award”) under section 68 of the Arbitration Act 1996 (“the Act”).

The award was made by a panel of three well-known arbitrators, namely Professor Charles Debattista, Dr Colin YC Ong and Professor Julian Lew QC (“the Tribunal”) after a two-day hearing in London on 16^th and 17^th August 2016, the first day consisting of oral openings and cross-examination of the claimant’s two witnesses of fact (Mr A and Mrs B), senior figures connected with the claimant, with day two consisting of oral closings.

The award concerned a dispute under an contract for marine services dated (“the services contract”). The services contract was part of a suite of contracts involving the claimant, the defendant and an entity I will refer to as “P”.

The issue for determination was whether the claimant was liable to the defendant under the services contract and, if so, in what amount. At the heart of that issue was whether the services contract, which had been signed by Mr A on behalf of the claimant and bore all the appearances of a contract, was binding on the claimant and enforceable as against the claimant in accordance with its terms.

In their award the Tribunal concluded and found the claimant was indebted to the defendant pursuant to the services contract and the Tribunal awarded the defendant US $21,104,201.51 as a principal sum, plus interests and costs. In reaching that conclusion, the Tribunal rejected the claimant’s submission that the services contract was a sham or not what it appeared to be, or was not otherwise enforceable based on a variety of other submissions that have been advanced by the claimant with a view to denying the enforceability of the services contract against the claimant.

It is with such aspect of the award that the claimant has mounted a challenge under section 68 of the Arbitration Act 1996 on the grounds of alleged serious irregularity affecting the award that is alleged to have caused serious injustice, namely under section 68(2)(a) an alleged failure by the Tribunal to comply with section 33 of the Act (ie the general duty of the Tribunal to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent) and/or at section 68(2)(d) an alleged failure by the Tribunal to deal with all issues that were put to it.

The claimant issued its arbitration claim form on the 5^th January 2017 supported by the second witness statement of Russell James Harling. The application is opposed in the first witness statement of Matthew Charles Shaw on 7^th March 2017, to which Mr Harling responded in his third statement on 14^th March 2017. There is also before me a further statement from Mr Shaw of 18^th July 2017 that touches upon the issues before me. I have read and considered each of these statements and the attachments thereto.

On 3^rd November 2017 the claimant’s solicitor Campbell Johnston Clark came off the record. The claimant has not been represented in the litigation since they came off the record and the claimant took no steps to list its section 68 challenges. Accordingly, it was the defendant itself that applied for the challenge to be listed and lodged the requisite bundles with the court so that the claimant’s application could be adjudicated upon by the court. I have had the benefit of a written skeleton argument on behalf of the defendant and Mr James Shirley of counsel has addressed me at length on the defendant’s behalf at today’s oral hearing.

The claimant did not serve a skeleton argument for this hearing nor did anyone attend the hearing on the claimant’s behalf. In circumstances where I am satisfied that the claimant was aware of this hearing, but has seemingly chosen not to attend or make any submissions, I proceeded to hear the application. The matter has been fully argued before me and I now give my judgment on the claimant’s application.

The claimant asserts four alleged instances of serious irregularity:

The defendant’s riposte is twofold:

Dealing firstly with the defendant’s preliminary objection, section 68(1) of the Act provides that the right to apply to challenge an award for serious irregularity is subject to the restrictions in section 70(2) and (3) of the Act. Section 70(2) of the Act provides that an application under section 68 may not be brought if the applicant has not first exhausted “(b) any available recourse under section 57 (correction of award or additional award)”.

Section 57(1) and (2) of the Act provide at 57(1)

The present case would appear, at first blush, to be a classic example of a case where the claimant should have applied to the Tribunal under section 57 for clarification or the removal of any ambiguity in the case of arguments 1, 2 and 4, and indeed argument 3 on the facts of this particular case. However, no such application was made to the Tribunal whether within 28 days or at all, with a consequence that no application can be brought under section 68 by virtue of the terms of section 70(2). However, the claimant, at paragraphs 5 and 6 of Mr Harling’s third witness statement, suggests that the provisions of section 57 do not apply on the basis of an argument that Article 27.1 of the LCIA Rules 1998 is an agreement which ousts section 57(3)(a) and provides for a more limited range of review options.

The defendant acknowledges that parties are free to oust the application of section 57, but submits that Article 27.1 of the LCIA Rules 1998 does not have that effect. Article 27.1 of the LCIA Rules 1998 provides:

In Torch Offshore Llc and Cable Shipping Inc [2004] EWHC 787 (Comm); 2004 2 Lloyd’s Rep 446, Mr Justice Cooke considered the power of an Arbitral Tribunal under section 57(3)(b) of the Arbitration Act 1996 to “make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the Tribunal but which was not dealt with in the award”.

At paragraph 27 in his judgment, Mr Justice Cooke said:

Mr Justice Cooke also considered section 57(3)(a) of the Arbitration Act 1996. As already noted, that subsection permits an Arbitral Tribunal to “correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission, or clarify or remove any ambiguity in the award”.

At paragraph 28 of his judgment, Mr Justice Cooke said:

The impact of Article 27.1 of the LCIA Rules upon the application of section 57 was considered by Mr Justice Knowles CBE in Xstrata Coal Queensland Pty Ltd v Benxi Iron Steel Group International Economic and Trading Co Ltd [2017] 1 AR (Comm) 299. He concluded that the absence of an express reference to clarifying the ambiguity in the LCIA Rules 1998 is immaterial and such a facility falls within the letter and spirit of Article 27.1 in any event.

He said as follows at paragraphs 28 to 32 of his judgment:

I agree with the sentiments expressed by Mr Justice Knowles and for the reasons given by him. I too consider that “clarifying or removing ambiguity” would fall within the words “any errors of a similar nature”. I would only add that if that is not right, it does not follow that Article 27 is an agreement on the part of the Tribunal that ousts or excludes the power under section 57(3). I consider that a clearer agreement would be needed to exclude or oust the power under section 57(3) to clarify or remove an ambiguity. Put another way, Article 27 is contractually permissive in terms of the Tribunal’s powers but it is not to be construed as thereby by excluding the powers under section 57(3).

In such circumstances, the claimant should have sought clarification of the award and removal of any ambiguity and, having failed to do so within 28 days, cannot now bring applications under section 68 of the Act in respect of the four matters that it seeks to do and as such the claimant’s application is dismissed.

However, as I said, as I heard full argument on the section 68 applications, I will address them on their merits. As will become apparent, even had the preliminary obstacle been overcome, the four bases of challenge under section 68 are singularly lacking in merit and stand to be dismissed in any event.

Before doing so, I will identify a number of general principles that relate to the operation of section 68.

A successful challenge under section 68 of the Act requires proof of a procedural irregularity falling into one or more of the categories exhaustively listed in section 68(2) which has caused or will cause “substantial injustice” to the challenging party.

A number of general propositions can be made in relation to section 68.

In the present case, and as I have already noted, the defendant’s case is that the claimant’s challenges, as well as being misconceived on the facts, are classic examples of the sorts of complaint that section 68 does not permit. The defendant submits that they seek to re-open the Tribunal’s evaluation of the evidence and findings of the fact and dress up a complaint about the Tribunal’s legal reasoning as a procedural irregularity and seek to read the award in a way which is not merely uncharitable but untenable.

It is well established that a section 68 challenge is never the right vehicle for a challenge on a point law. It is to be borne in mind in the present case that the parties have, by virtue of Article 26.9 of the LCIA Rules 1998, expressly agreed that there should be no appeal on any questions of law. In such circumstances, it is important to analyse the section 68 applications with care to ensure that they are not in fact disguised challenges to legal conclusions reached by the Tribunal.

There is a further general point that applies to the first and second arguments, each of which is centred upon an allegation that the Tribunal failed to take into account certain evidence, which is that an allegation that the Tribunal failed to take into account evidence is an impermissible attack on the Tribunal’s evaluation of the evidence. The position is as described by Teare J following a thorough review of the authorities in UMS Holding Ltd v Great Station Properties [2017] 2 Lloyd’s Rep 421, at paragraph 28:

Turning then to the arguments that are advanced by a claimant, the first allegation is that the Tribunal failed to address paragraph 21 of Mr A’s witness statement, in which Mr A provided an account of a meeting at which he signed the services contract on behalf of the claimant. In that part of his evidence, Mr A says that he was asked to sign the services contract and it was described to him as “a necessary formality to give effect to our involvement as a third party/agent in order to facilitate payment ...”

The claimant characterises Mr A’s account of this meeting as evidence that “there was no intention for the claimant to be bound by the services contract”, and says that the Tribunal overlooked that evidence. In this regard, reference is made to paragraph 90 of the award where it is stated that,

There is no merit in this allegation for at least four reasons. First, it is an attack on the Tribunal’s evaluation of the evidence, which is impermissible for the reasons identified above. Secondly, I do not consider that Mr A was in fact asserting a lack of intention to enter into legal relations in the passage relied upon. Rather, he was acknowledging that the contract had to be entered into in order to facilitate payment, which is different.

Thirdly, and fundamentally, the claimant is wrong to suggest that the Tribunal failed to take into account evidence from Mr A to the effect that the claimant was not intended to be bound by the services contract. The passage in the award relied on by the claimant for the proposition that the Tribunal overlooked evidence “there was no intention for the claimant to be bound by the services contract” in fact referred (when saying that there was “no contemporaneous evidence”) to evidence of “an intention that the claimant would simply act as a financial conduit between P and the defendant”, as is clear from the preceding part of paragraph 90 of the award.

Furthermore, the Tribunal when referring to “contemporaneous evidence” were clearly looking for evidence at the time which would corroborate what was being said by the witness after the event, and there was no such evidence. It is also clear that the Tribunal had well in mind the proposition (that the claimant sought to advance in a number of different ways) that the services contract was not what it appeared to be and as such it should not be bound by it. Thus in paragraph 86 C of the award the Tribunal said that, “They did not find compelling suggestion [the] that Mr A signed the services contract thinking it was something other than what it really was”, whilst at paragraph 86E of the award the Tribunal again acknowledged the claimant’s case that it was not bound by the services contract in suggesting, as Mr A appeared to when giving evidence, that the claimant was not bound by the services contract.

Fourthly, the point also seems to be an attempt to re-open the merits of the Tribunal’s decision on the legal issues arising and in a manner that was not previously argued, and which is inconsistent with the evidence that was heard by the Tribunal.

In this regard, at paragraphs 12 and 13 of Mr Harling’s third statement, the claimant seeks to rely upon an alleged absence of back-to-back (with the services contract) contractual arrangements between the claimant and P. However, Mr A himself gave evidence of back-to-back arrangements during cross-examination (see day 1, page 182, line 22 to page 185, line 7 of the transcript). There would not appear to be any irregularity in this regard.

Accordingly, in relation to the first argument I find that there was no failure by the Tribunal to act in accordance with its general duty, or to deal with all the issues that were put to it.

The second argument is based on an allegation that the Tribunal failed to take account of the evidence given by Mr A during cross-examination (the passages relied upon are at pages 141 to 144 and 186 of the transcript) and that Mr A testified that he had been told by the defendant’s representative that it was impossible for legal reasons for the defendant, a Singaporean company, to receive payments directly from P, an Iranian company, due to a “regulation in Singapore that doesn’t allow us to do that”.

Mr A’s evidence was that the existence of the alleged restrictions on deals between the defendant and P explained the claimant’s involvement with the services contract.

Once again I consider that this is an attack on the Tribunal’s evaluation of the evidence, which is impermissible for the reasons identified above. In any event, I do not consider that there is any basis for the allegation that there was any breach of the Tribunal’s general duty in relation to such evidence. First and foremost, this evidence, even if taken at face value and accepted (which would have been a matter for the Tribunal) at best supplied a reason why the claimant became involved in the services contract, not a reason for treating the services contract as non-binding.

Secondly, this evidence was far from key evidence and did not merit being addressed separately in the award. It had not featured in Mr A’s witness statement. It was unsupported by other evidence and no submissions were made about it by the claimant. It is unsurprising, and not the basis for any legitimate complaint, that it was not addressed separately when the Tribunal addressed the nature of the services contract, not least in circumstances where it did not impact on the legal issues for determination as to the binding nature of the services contract.

I find that there was no failure by the Tribunal to act in accordance with its general duty in relation to the second argument.

The third argument consisted of an allegation that the Tribunal failed to deal with an issue, namely whether the services contract, although designed to appear valid and binding on its face, was in fact not intended to create legal relations between the claimant and the defendant and that this amounted to a contravention of section 68(2)(a) and (d). The proper characterisation of the services contract, and whether it was enforceable against the claimant, was at the very heart of the legal issue for determination and which was expressly dealt with by the Tribunal. This argument is in reality an attack on the Tribunal’s legal conclusions which cannot be the subject matter of a section 68 application, dressed up as a procedural failure in an attempt to bring the point within section 68.

The allegation needs to be placed in context. It is clear from the award, as is confirmed by the evidence before me, that the claimant’s case on the services contract was very much a moving target and, as is clear from the transcript, the Tribunal repeatedly pressed the claimants to articulate what its arguments were in this regard, with only limited success.

At the heart of the claimant’s case was that the services contract was some form of “sham”, although at various times the claimant seemingly accepted that the services contract was a binding contract whilst at other times denying it. In the claim form it is said that the claimant put the issue of whether the services contract was intended to create legal relations between the claimant and the defendant before the Tribunal in paragraph 6 of its statement of defence. But that paragraph, and those following it, did not articulate a defence in those terms. They suggest that the claimant had acted as “an agent/intermediary” but also appear to admit that the claimant was nevertheless a party to the services contract, albeit something of a junior participant.

The vague and changing nature of the claimant’s case (which was hardly a propitious start to the defence as alleged) was expressly recognised at paragraph 76 of the award where the Tribunal recorded that the claimant’s position was “complex and ranged between denying the very existence of a contract between the parties to requests to the Tribunal to deprive [the defendant] of the remedies they claimed on the ground of unconscionability” and at paragraph 80 of the award described the claimant’s position as “somewhat fluid”.

It is clear, however, that the Tribunal was alive to the various ways in which a contract such as the services contract might be said not to be binding. Indeed, it was the Tribunal itself when pressing the claimant on what was meant by a “sham” contract that expressly referred to those words as being a suggestion that a party was “playing around. They had no intention” (page 100 of the transcript). The Tribunal was clearly alive to the many different ways that the claimant sought to avoid making payment to the defendant under the services contract, stating at paragraph 82 of the award in these terms,

It is clear that none of the ways that the claimant sought to put its case found favour with the Tribunal. If there was any error in that regard it would have been an error of law and not amenable to challenge under section 68. However, there would not be appear to be any basis for criticising the Tribunal’s approach in this regard or its conclusions. In particular, the Tribunal found:

I do not consider, having regard to the manner in which the claimant’s argument were advanced, with the Tribunal’s clear understanding of the same, and their potential legal effects, and the Tribunal’s findings in the award, that there was any failure to deal with any issue put to it. I have already noted that it is well established that section 68(2)(d) does not require a Tribunal to set out each step by which they reach their conclusion or to deal with every point made by a party.

I would only add that if it could be said that there was an aspect of the claimant’s case that was not dealt with as fully as it might have been (and I do not regard that to be a valid criticism on the facts) this would have been as a result of a lack of clarity in the way in which the claimant had itself advanced its case. It will not normally be a serious irregularity for a Tribunal not 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 - see A v B [2017] 2 Lloyd’s Rep 1, at paragraph 39 and New Age Alzarooni 2 Ltd v Range Energy Natural Resources Inc [2014] EWHC 4358 (Comm), at paragraph 72.

In the above circumstances, I do not consider that section 62(2)(a) or section 68(2)(d) applies in relation to the subject matter of the third argument.

The fourth argument is based on an allegation that the Tribunal decided the dispute on the basis of a point not argued by either party and on which the claimant was not invited to comment, this being said to be a contravention of section 68(2)(d). This argument is wholly without merit as it is based on a misapprehension that the Tribunal decided the reference on the basis of an observation that they had made at paragraph 86D of the award about two successive determination notices sent by the claimant to the defendant, when it is clear that the Tribunal did not do so. These observations in relation to the termination notices were not part of the ratio and the Tribunal (rightly as a matter of law) had expressly decided that it would not have regard to events that happened more than a year after the services contract was made when considering the validity of the services contract and the amounts due thereunder.

For the reasons identified above, there was no irregularity under section 68(2)(a) or section 68(2)(d). However, had there been any irregularity, it would not have been an irregularity which caused, or will cause, substantial injustice to the claimant. There is nothing to suggest that the Tribunal would have reached a different conclusion on the merits had this been an appropriate case for remission. On the contrary, as is apparent from the award itself, the overwhelming weight of the evidence was to the effect that the services contract was legally binding and the sums claimed were due and owing thereunder.

For the reasons given above, the section 68 application fails and is dismissed with costs.