[2009] EWHC 275 (TCC)

Here, F challenged an arbitration award on the basis that the Tribunal decided various points against it on grounds of its own devising, without giving F the opportunity to make any submissions on these matters. F said that this was unfair in accordance with Section 68(2)(a) of the 1996 Arbitration Act, which refers to challenging proceedings on the grounds of "serious irregularity". Unusually, one of the three members of the Tribunal disagreed with the majority on three points and delivered a detailed dissenting opinion. F relied heavily on that opinion.

Mr Justice Coulson noted that whilst the existence of a dissenting opinion was irrelevant to any application under s68, a comment or observation in a dissenting opinion, to the effect that an important point has been decided by the majority without reference to the parties, would be a factor to which the Court would attach weight in dealing with such an application. However, it was unlikely that on its own it could prove determinative. Alternatively, where any argument raised by the dissenting arbitrator is one which is plainly being considered and rejected by the majority, even if it was an argument that the parties did not themselves raise, it may be difficult to say that there was a substantial injustice to the parties. It is not enough that there was a serious irregularity, that irregularity must have caused a substantial injustice.  

F had made its claim on three items, one of which went to costs. It succeeded on one, which meant that that point as well as the decision on costs, which was parasitic on the level of F's recovery overall in the arbitration, was remitted back to the Tribunal. The Court then had to consider the costs of the application. First of all, the Judge considered F’s degree of success in the hearing. F had been successful, but not entirely. Therefore the Judge indicated that he would have made an Order that M had to pay a percentage of between 50-70% of F's costs. However, pursuant to CPR Part 36, F had made an offer proposing to abandon the point (which ultimately it lost) but seeking agreement from M to remit the other two points (on which it won) to the Tribunal. This offer was reflected in the decision made by the Judge.  

Therefore, the Judge said that in those circumstances, F was entitled to say that it had won entirely because of its Part 36 offer. The offer was designed to avoid the Court hearing. Accordingly, F was entitled to the entirety of its costs on an indemnity basis from the last date upon which the Part 36 offer could have been accepted.