An arbitrator knows best – at least on the facts FIDIC Red Book Sub-Clause 2.4 entitles a contractor to request “reasonable evidence” of the employer’s arrangements to pay the contract price. An employer for a new hospital in Tobago was asked for this financial reassurance but, despite “without prejudice” advice from the Ministry of Health that funds were available, it failed to confirm, when asked, that the Cabinet had approved the funds. The contractor suspended work and later terminated the contract. In the ensuing arbitration, the arbitrator ruled that the employer had not provided the required “reasonable evidence” and the contractor was consequently entitled to terminate. The Court of Appeal of Trinidad and Tobago disagreed with the arbitrator’s decision and allowed the employer’s appeal, but could it do that?
No, said the Privy Council. Where parties choose arbitration for disputes, it is well established that the courts should respect their choice and recognise that the arbitrator’s findings of fact, assessments of evidence and formations of judgment should be respected, unless they can be shown to be unsupportable. The fact that a judge takes a different view from the arbitrator is no basis for setting aside or varying the award. Different considerations apply, however, when it comes to issues of law, where courts are often more ready (and in some jurisdictions much more ready) to step in.
On a separate issue, the Privy Council also decided that FIDIC Red Book Sub-Clause 2.5 was effective to shut out any claims (including, but not limited to, set-offs or cross-claims) that had not been properly made under the clause.