In Van Der Giessen-De-Noord Shipbuilding Division BV v Imtech Marine & Offshore BV – Lawtel 4.12.08 the Defendant had agreed with the Claimant to carry out the electrical installation for a Ro-Ro passenger ferry which the Claimant was building for a third party. The Defendant made a claim under the agreement against the Claimant for the value of extra work carried out, an extension of time and for payment in respect of delay, disruption and acceleration, and the Claimant counterclaimed against the Respondent.
The claim was referred to arbitration under the agreement to arbitrate contained in the contract. The arbitrators subsequently issued their award, having stated that as it had been impracticable to address each and every point raised by the parties, they had confined their reasons to the essentials only.
The Claimant challenged the award under s68 Arbitration Act and sought to have it set aside in whole or in part. The Claimant contended that the tribunal had failed to address critical issues and defences and that that omission had caused it substantial injustice. It challenged, amongst other things, the award to the Defendant of simple interest at the rate of 10 per cent on the total sum awarded, the tribunal's failure to deal at all with a defence of waiver or estoppel or both raised and relied upon by the Claimant, findings as to procedure agreed between the parties in relation to variations to the contract, and part of the tribunal's award concerning additional cabling equipment as amounting to "double-counting" contrary to the parties' agreed position.
The Commercial Court held that the power to set aside an arbitration award in whole or in part was to be used sparingly. It was not available simply because the tribunal had made a mistake of fact or law or because the arbitrators had not dealt with all of the points made or arguments advanced or set out each step by which they reached their conclusion. It also held that the arbitrators were not required to forsake brevity in order to avoid a charge of failure of duty. The court would, however, exercise its power if the tribunal had behaved unfairly in a way that had caused substantial injustice. In determining whether there had been a substantial injustice, the court was not required to decide for itself what would have happened in the arbitration had there been no irregularity.
It was likely to be a serious irregularity under s.68 for the tribunal to fail to deal with all essential issues: but it might do so concisely. A failure to deal with an issue was not the same as a failure to set out the reasoning for rejecting a particular argument: such a failure was remediable under s.70 (4). In awarding interest at 10 per cent, the tribunal had not complied with its general duty of fairness as it had not explained why it had chosen 10 per cent as opposed to any other figure. In not addressing the waiver or estoppel issue, the tribunal had failed to deal with all of the issues put to it and had thereby acted in a way which was unfair. It was, further, a serious irregularity on the part of the tribunal and unfair to the Claimant not to have dealt with the issue as to the process concerning variation to the contract. By ignoring the parties' agreed position as to the extent of a claim for additional cabling, the tribunal had awarded the Defendant more than it had asked for, and had thereby caused the Claimant substantial injustice by that "double-counting". The tribunal's award in relation to those four matters had been affected by serious irregularity and the parts of the award relating to those issues would, accordingly, be set aside.
The judge also indicated that an umpire should be appointed for the purposes of any future reconsideration of the issues.