Clifford Chance
Successful challenge to award for failure by tribunal to allow parties to comment
26 February 2015
As a matter of English law, unless the parties have agreed otherwise, an arbitral award made in London is immediately enforceable – subject only to the parties' right to challenge the award before the English courts. This right of challenge is limited to a number of grounds set out in the Arbitration Act 1996. One such ground is a challenge for serious irregularity affecting the tribunal, the proceedings or the award pursuant to Section 68 of the act. Section 68 defines a 'serious irregularity' as one that falls within a set list of irregularities and – in the court's consideration – causes substantial injustice to the applicant. The list of irregularities contained in the act includes failure by the tribunal to comply with its general duty to act fairly and impartially and to adopt suitable procedures pursuant to Section 33 of the act.
An application to challenge an award for serious irregularity must be made within 28 days of the award or, if the parties have agreed an appeal or review process before the arbitral tribunal, within 28 days of the date on which the applicant was notified of the outcome of that review process. If the applicant shows that there is a serious irregularity, the court may set aside the award, declare it to be of no effect or remit it to the tribunal for reconsideration.
The courts have construed Section 68 narrowly. As a result, challenges under Section 68 – while frequently made – rarely succeed. One such rare instance was the recent High Court decision in Lorand Shipping Limited v Davof Trading (Africa) BV [2014] EWHC 3521 (Comm), where the court set aside an arbitral award in part and remitted the matter to the tribunal for reconsideration.
