In B v A, the claimant sought to challenge an arbitration award on the basis that the majority of the tribunal had failed to decide the dispute in accordance with Spanish law, being the substantive law chosen by the parties. The application was made to the High Court under sections 67 (lack of substantive jurisdiction) and 68 (serious irregularity) of the Arbitration Act 1996 (the Act). Tomlinson J determined, as a preliminary issue, that the claimant had failed to disclose a case with a realistic prospect of success, and therefore dismissed the application.

This decision is noteworthy for confirming a number of points in relation to challenges under the Act. The applicant alleged that the tribunal, deciding by a majority of two out of three, had exceeded either its substantive jurisdiction or its powers by failing to decide the dispute in accordance with Spanish law (as required by section 46 of the Act). The challenge appears to have arisen largely because of the commentary of the dissenting arbitrator, to the effect that the majority had ignored the parties' agreement as to the substantive applicability of Spanish law and that the award was illegal as a matter of Spanish public order (for granting excessive damages which were effectively punitive).

In relation to the dissenting opinion, Tomlinson J considered that a dissent may be pertinent evidence of procedural matters, such as where it is alleged that the procedure disadvantaged a party, or may be of relevance to a decision in relation to an appeal on a point of English law under section 69 of the Act. However, he did not consider that a dissenting opinion forms part of the arbitral award, and, in circumstances where the opinion expressed determinations in respect of Spanish law which went beyond any argument or evidence asserted by the parties, he refused to have regard to it. In relation to his findings regarding the dissenting opinion, he referred to the 1988 ICC Commission Report on Dissenting Opinions.

The judge went on to hold that a breach of section 46 of the Act, if established, could only give rise to grounds for a challenge as an excess of powers under section 68(2)(b) and not as an excess of jurisdiction under section 67. Moreover, and contrary to the applicant's argument that where an error in the application of the law is so serious as to amount to a departure from the chosen law it may also amount to a breach of section 46, he held that a breach of section 46 must involve a conscious disregard of the provisions of the law. Since an allegation to that effect was not sustainable in the present case, the section 68 challenge could not succeed either.

Tomlinson J referred to the landmark House of Lords decision in Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, where it was held that an error as to the application of the governing law cannot amount to an excess of powers under section 68(2)(b). He considered that this decision remained true regardless of whether the allegation relates to a misapplication of English or of foreign law. Indeed, any other conclusion would allow parties to an arbitration with a foreign substantive law, to use a form of appeal which is only available under a non-mandatory provision of the Act.

B v A [2010] EWHC 1696 (Comm)