Appeal against an arbitration award on grounds of serious irregularity

Facts

Sonatrach and Statoil had concluded several contracts involving the sale of LNG by Sonatrach to Statoil. Under some of these agreements, Statoil would convert the LNG to NG and sell it back to Sonatrach. This dispute arose from Sonatrach’s failure to sell LNG to Statoil and to purchase NG from Statoil. The matter was referred to arbitration and the tribunal ruled in favour of Statoil. Sonatrach appealed to the court.

Legal arguments

Sonatrach argued that there was a serious irregularity affecting the tribunal, the proceedings and/or the award because:

(i) the tribunal overlooked and/or misconstrued a letter which Sonatrach considered a crucial piece of evidence in favour of its argument that there was no binding contract with Statoil. Sonatrach alleged that the letter shows that no government approval had been obtained for some of the agreements under which Statoil’s claim arose and as such a condition precedent of the agreements had not been fulfilled. Sonatrach stated the letter was overlooked and/or misconstrued by the tribunal as it was not referred to in the award;

(ii) the tribunal mischaracterised witness evidence, which was raised on the basis that it failed to quote, in the award, relevant excepts from the cross-examination of two witnesses; and

(iii) the tribunal inappropriately delegated its authority to an administrative secretary. The basis of this allegation stems from the secretary’s involvement in drafting notes on substantive points for the tribunal which exceeds an administrative role. This was made known to the parties when the secretary’s fee note was reviewed.

Sonatrach also raised other arguments arising from the application allowing the registration of the award as a judgment.

Judgment

The court dismissed Sonatrach’s application to appeal, for the following reasons:

(i) After reviewing the history of the case, the court found that:

a. the letter was not overlooked. It is clear from the conduct of the arbitration that the letter was simply not considered relevant by the tribunal and it was, therefore, not referred to in its award;

b. the witness evidence was not misconstrued; and

c. the tribunal did not improperly delegate its authority to an administrative secretary. Notwithstanding the preparation of substantive notes by the secretary, there was no evidence that the secretary participated in the tribunal’s deliberations.

(ii) As the matters complained of by Sonatrach were unsustainable, there was no need to consider if those matters gave rise to a serious irregularity affecting the tribunal, the proceedings and/or the award.

(iii) Further, an appeal on the basis that there was a seriously irregularity revolves around whether there has been due process, not whether the tribunal ‘got it right’. It is inappropriate to raise an argument of serious irregularity to challenge a finding of fact by the tribunal.

The court’s judgment also dealt with other issues arising from the registration of the judgment as an award. In particular, the court held that, in a case where a tribunal has not ordered interest on an award, the court has the power nonetheless to award interest from the date that the award is entered as a judgment.