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Arbitration - challenging |
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It is very difficult to overturn, or to even challenge, an arbitrator’s
award. This was the deliberate intention of Arbitration Act 1996, which set
out to limit the extent to which the English courts could interfere with the
arbitration process. In practice, there are only two possible routes of attack:
- serious irregularity: s68 allows a challenge if there is a ‘serious
irregularity’, but it is important to note that that must also cause
‘a substantial injustice’ to the applicant. Typically, an s68
claim will be based on the arbitrator failing to comply with his general duties
to act fairly and impartially, giving each party a reasonable opportunity
of putting their case and dealing with the opponent’s case, and adopting
fair procedures. Alternatively, an arbitrator might have exceeded his powers,
or failed to deal with the issues put before him. Section 68 could also apply
if there was uncertainty or ambiguity as to the effect of the award, or if
there was an irregularity in the proceedings. The real barrier, of course,
is that there must also be a ‘substantial injustice’. For a recent
illustration of how s68 can be used see St Georges [2004] which involved
the use of a rent arbitration figure for a third-floor office as a comparable
for determining an arbitration of a ground-floor office in the same building.
L argued there should be a 30% discount, whilst T argued for a 65% discount.
The arbitrator fixed on 40%, and then made a further 9% discount due to the
onerous terms of the ground-floor lease – but L successfully used s68
to say that the 9% discount was contrary to the assumptions of the parties
(ie on lease terms). This was held to be a ‘serious irregularity’
resulting in ‘substantial injustice’;
- point of law: it is difficult, but possible, to appeal on a point
of law under s69. The leave of the court is required, and in practice it will
need to be shown that the outcome will ‘substantially affect the rights’
of one or more of the parties. But, even if that is the case, the court must
be satisfied that the decision is either ‘obviously wrong’ or,
more significantly, ‘is one of general public importance’ with
the decision being ‘at least open to serious doubt’. In practice,
it is easy to have situations in which the decision does ‘substantially
affect’ one of the parties, but where it is not considered to be of
‘general public importance’. In that situation, the courts take
the view that the parties have made their bed, by agreeing to resolve the
matter by arbitration, and they must then lie in it. In short, appealing on
a point of law is extremely difficult.
For more on this see [2005] 143 Property Law Journal 18.
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April 2005 |