Winter 2017 Editor: Melanie Willems IN THIS ISSUE Christmas Precedents: do we desire or need the publication of awards 03 by Robert Blackett 07 11 Believing in Father Christmas: another day, another section 68 challenge by Markus Esly The holler of the Ivey: a new ruling on the test for dishonesty by Ryan Deane THE ARBITER WINTER 2017 2 THE ARBITER WINTER 2017 3 Christmas Precedents: do we desire or need the publicaƟon of awards? by Robert BlackeƩ There are certain dry quesƟons which, to judge from conference speeches and arƟcles, lawyers seem to spend an inordinate amount of Ɵme pondering. One such quesƟon is whether commercial arbitraƟon awards should be rouƟnely published and what their precedent value should be. One source (considered further below) apparently suggests that 64% of “stakeholders” in arbitraƟon favour publishing redacted awards or summaries, and that a substanƟal minority (19%) favour publishing complete awards. What metric should we apply when seeking to decide whether a given reform is desirable? I would suggest that a reform is only desirable if it is very likely to prevent or narrow future disputes, or make arbitraƟons quicker, cheaper or more likely to arrive at a just result. It is hard to see how the systemaƟc publicaƟon of commercial awards could do any of those things. Background InternaƟonal commercial arbitraƟon is arbitraƟon of the kind rouƟnely conducted under the ICC Rules, LCIA Rules and similar. ParƟes (usually businesses) from different countries argue about their private law rights and obligaƟons, arising from the contracts which they have entered into with one another. The LCIA does not publish awards. The ICC publishes anonymised extracts from a small minority of awards, though it is down to editorial discreƟon what is published and what is not. Historically English law allowed appeals to be made to the English courts on the merits of arbitraƟon awards. In the ArbitraƟon Act 1979 parliament gave parƟes the right to contract out of appeals on the merits save in certain limited categories of case. The ArbitraƟon Act 1996 (secƟon 69) abolished the special categories where contracƟng out was not permiƩed. This right to contract out of appeals on the merits also appears in the UNCITRAL Model Law, on which many other states have based their arbitraƟon laws. SecƟon 45 of the ArbitraƟon Act 1996 gives courts the power to determine a preliminary point of law on the applicaƟon of a party. This right may be excluded by agreement. The ICC and LCIA Rules exclude appeals on the merits, but do not exclude the secƟon 45 right. The argument for systemaƟcally publishing awards in treaty arbitraƟons Treaty arbitraƟons concern disputes between states and foreign businesses, where the rights in issue arise not from private contracts but from treaƟes which the state parƟes have entered into. Awards are rouƟnely published. The public interest arguments for publishing treaty-type awards are clear. CiƟzens should know whether their governments have broken laws which those same governments signed up to and propagated. There may be substanƟal sums of public money in issue. If the state loses, its ciƟzens will want to understand why, so as to be able properly to hold its government to account (assuming, of course, that the respondent state is a democracy). A further argument for publicaƟon of such awards is that they have value as precedents. Publishing awards, so the argument goes, will help ensure consistent decision making. The treaƟes are, aŌer all, public documents. They confer rights not just on the claimant in a parƟcular arbitraƟon, but on other, unrelated parƟes. And tribunals oŌen purport to apply principles of transnaƟonal law which (if they exist) should be universal. The same issues may, therefore, come up in future arbitraƟons, and future tribunals faced with the same quesƟons may, so the argument goes, find it helpful to know how their predecessors decided. Whatever one thinks of that argument one would have thought it should have liƩle tracƟon when applied to commercial arbitraƟon. More than ten years ago in Arbitral Precedent: Dream, Necessity or Excuse? ArbitraƟon InternaƟonal, Vol. 23, No. 3 Kauffmann Kohler put it like this: “In commercial arbitraƟon, there is no need for developing consistent rules through arbitral awards because the disputes are most oŌen fact and contract-driven. The outcome revolves around a unique set of facts and upon the interpretaƟon of a unique contract that was negoƟated between private actors to fit their specific needs.” Yet the quesƟon of whether to publish commercial awards perennially resurfaces. Is there really demand for more precedents? Commercial arbitraƟon is popular with businesses. A 2013 report of a survey and interviews of in-house counsel (PWC Corporate Choices in InternaƟonal ArbitraƟon 2013) found that for transnaƟonal disputes, businesses generally prefer arbitraƟon over liƟ- gaƟon, with arbitraƟon being much more commonly used than liƟgaƟon in the energy and construcƟon sectors, and somewhat less commonly used than liƟgaƟon in the financial services sector. On the quesƟon of cost and delay the survey is hard to interpret. The authors wrote that “for respondents who considered arbitraƟon not to be well suited to their industry, costs and delay were cited as the main reasons”. At the same Ɵme, respondents (presumably those from industries like energy, shipping and con- 4 THE ARBITER WINTER 2017 strucƟon which did use arbitraƟon) reportedly complained about ‘judicialisaƟon’ - increased formality of proceedings and similarity to liƟgaƟon, with increased costs and delays. “In-house counsel” say the authors of this report “value the features of the arbitraƟon process that disƟnguish it from liƟgaƟon”. Respondents were not asked whether awards should be published or a doctrine of precedent introduced. None seems to have raised this issue in interview. From this, it would seem that a desire for more precedents is not foremost in the minds of in-house counsel and captains of industry. Some more recent data comes from a 2015 survey (2015 InternaƟonal ArbitraƟon Survey: Improvements and InnovaƟons in InternaƟonal ArbitraƟon). RegreƩably, this was not limited to industry but sought instead the opinions of “stakeholders at all levels in internaƟonal arbitraƟon”. Most of those who contributed were pracƟƟoners, arbitrators, academics, insƟtuƟons, experts and ‘others’ (students?) with only 8% being in-house counsel. One might have thought the only real “stakeholders” in internaƟonal arbitraƟon are the businesses whose disputes it is supposed to resolve, and who ulƟmately pay for all the arbitraƟon pracƟƟoners, arbitrators, insƟtuƟons and experts, but the authors of this report obviously felt differently. 77% of respondents said there should be no appeals on the merits for commercial arbitraƟons. 33% said confidenƟality and privacy - the tradiƟonal jusƟficaƟons which are given for nonpublicaƟons - were one of the “most valuable characterisƟcs of internaƟonal arbitraƟon”. But, at the same Ɵme, 64% of respondents said awards in “internaƟonal arbitraƟon” should be published in a redacted form or as summaries and 19% said full awards in “internaƟonal arbitraƟon” should be published. In this survey, the term “internaƟonal arbitraƟon” was used to mean both investment arbitraƟon and commercial arbitraƟon, so it is impossible to gauge how much support there was for the publicaƟon of commercial awards specifically. There is also no breakdown given of the answers according to the respondent’s background, so it is impossible to say to what extent the publicaƟon of awards is something which in-house counsel are clamouring for as opposed to (say) academics. In a 2016 lecture, enƟtled “Developing commercial law through the courts: rebalancing the relaƟonship between the courts and arbitraƟon” Lord Thomas variously said that: “The effect of the diminishing number of appeals compounds the problem that arises from the diversion of more claims from the courts to arbitraƟon. It reduces the potenƟal for the courts to develop and explain the law.” “ArbitraƟon confidenƟality perpetuates public ignorance of conƟnuing hazards, systemic problems, or public needs.” “Such lack of openness … reduces the degree of certainty in the law that comes through the provision of authoritaƟve decisions of the court.” “… across many sectors of law tradiƟonally developed in London, parƟcularly relaƟng to the construcƟon industry, engineering, shipping, insurance and commodiƟes, there is a real concern which has been expressed to me at the lack of case law on standard form contracts and on changes in commercial pracƟce.” One cannot help but wonder whether it was really contractors, shipowners, insurers and commodiƟes brokers who were expressing this concern to Lord Thomas, or lawyers in independent pracƟce and academics, who are operaƟng at a rather greater remove from the commercial coalface. His Lordship referred to a few means by which this (perceived) deficit of precedent might be addressed: (i) revision of the criteria for appeals; (ii) use of secƟon 45 of the ArbitraƟon Act 1996; and (iii) “greater recourse to the court instead of arbitraƟon”. Tellingly, his Lordship’s focus was on ensuring that these issues come before the courts, and are decided by judges, not arbitrators. He perceived there to be a need for more judicial precedents. He does not menƟon systemaƟcally publishing commercial arbitraƟon awards as a means of obtaining valuable precedents. Presumably because such awards would be considered to have zero precedent value - no court asked to consider a standard form is likely to consider itself bound to follow what arbitrators had decided about that standard form in some previous case. A further piece of evidence on the quesƟon of whether there is really a demand for more precedents is an ICC Report from November 2016. The ICC published a survey of financial insƟtuƟons which concluded (emphasis added): “Apart from in the fields of M&A, asset management and banking advisory services, where confidenƟality is of utmost importance, some financial insƟtuƟons consider the lack of precedent to be a disadvantage of arbitraƟon. Establishing precedents with respect to internaƟonally recognised standard templates such as Loan Market AssociaƟon (LMA) facility agreements or the ISDA Master Agreement is criƟcally important. If the parƟes agree, an award that would otherwise be confidenƟal may be published (with the possibility of redacƟon to avoid disclosure of sensiƟve informaƟon). In the sub-industries where precedent-seƫng is important, an industry-wide standard could be agreed, mandaƟng insƟtuƟons to publish redacted awards with the parƟes’ agreement.” The point that is being made here is that it is not for arbitral insƟtuƟons like the ICC and LCIA to take it upon themselves to systemaƟcally publish awards. ArbitraƟon is ulƟmately a creature of contract and the fact is that, if businesses really want awards to be published, then that is something which it is already within their power to agree. If the industry bodies which draŌ standard form THE ARBITER WINTER 2017 5 contracts were really concerned about this, they could just include a clause mandaƟng that awards are to be published in the next iteraƟon of their standard form. The very fact that, today, a great many business people remain content to have their disputes resolved by way of confidenƟal arbitraƟon is symptomaƟc of the fact that the non-publicaƟon of awards is not considered a big problem. If a given industry was really concerned about this issue it could amend its standard forms to mandate publicaƟon or vote with its feet, shiŌ all its disputes to the courts, and thereby, over the next few years, obtain lots of precedents on the standard forms. The fact that this has not happened suggests that the supposed problem of a lack of precedents on standard forms has been overstated. What is precedent anyway? English law is a system of rules which the courts of England must apply in order to determine the rights and obligaƟons of the liƟ- gants in a case before it. These rules are to be found in statute, enacted by Parliament and in the raƟo decidendi of cases decided by the courts. MacCormick (Why Cases have RaƟones and What These Are in Goldstein (ed) Precedent in Law (1987) offers the following definiƟon: “A raƟo decidendi is a ruling expressly or impliedly given by a judge which is sufficient to seƩle a point of law put in issue by the parƟes’ arguments in a case, being a point on which a ruling was necessary to his jusƟficaƟon … of the decision in the case.” Absent a conflicƟng statute, every court is also bound to follow the raƟo decidendi of any case decided by a court above it in the hierarchy. Appellate courts, other than the Supreme Court, are bound by their own previous raƟo decidendi. This strict rule forms part of the “doctrine of precedent”, but that term also refers to a more nuanced pracƟce, whereby courts look to previous decisions even in the absence of a binding raƟo, and treat them as ‘persuasive’ or ‘suggesƟve’ as to how a court should be decided say where: (a) The raƟo decidendi of a previous decision does not seƩle the point of law in issue in the instant case, but the reasoning is in some sense analogous or suggesƟve of some wider principle which in turn suggests how some other point of law which is in issue in the instant case should be decided. (b) A previous decision stated or suggested some wider rule or principle, but the decision in the earlier case would have been the same whether the wider rule or principle were correct or not (“obiter dicta”). In deciding what weight is to be given to such precedents, a court might take into account the seniority of the court, the age of the case, whether the court had the benefit of all the arguments which are being presented in the present case, and whether other precedents were cited, how similar or how different the previous case was and so on. A court might even look to foreign judgments, or to academic commentary on judgments. Precedent: costs and benefits The doctrine of precedent, and argument from analogy is so ingrained in lawyers from the common law tradiƟon that we tend to see the world through this prism, and rarely reflect upon how anomalous it is to reason in this way. In other fields - science, engineering, business - and in our everyday lives we do not regard the fact that we decided one way in the past as raising some presumpƟon that we should decide the same way in the future. If we consider our past decisions at all, it is only to ask: what worked? What didn’t? What could we do differently next Ɵme? We care only about making the correct decisions, not consistent ones. Consistency is a virtue only insofar as one is consistently right. When it comes to making decisions about other people’s rights and obligaƟons though, being right comes a distant second to being consistent and predictable. It is this which leads to judgments like Cavendish Square Holding BV v El Makdessi and ParkingEye Ltd v Beavis  UKSC 67 where the Supreme Court was asked to consider simply abolishing the common law rule against penalƟes. Lord Neuberger and Lord SumpƟon noted that: “As early as 1801 … Lord Eldon confessed himself, not for the first Ɵme, “much embarrassed in ascertaining the principle on which [the rule was] founded”. Eighty years later … Sir George Jessel MR, not a judge noted for confessing ignorance, observed that “The ground of that doctrine I do not know”. In 1966 Diplock LJ, not a judge given to recognising defeat, declared that he could “make no aƩempt, where so many others have failed, to raƟonalise this common law rule””. Their Lordships said: “We rather doubt that the courts would have invented the rule today if their predecessors had not done so three centuries ago. But this is not the way in which English law develops, and we do not consider that judicial aboliƟon would be a proper course for this court to take”. And so their Lordships conƟnued to apply the rule. The price of precedent, then, is that bad decisions may become ingrained, but this is supposedly outweighed by benefits of precedent. The theory is that consistency and predictability trumps the need to do jusƟce in the instant case because our economies so depend upon consistency and predictability. UlƟmately, the building you’re siƫng in, the computer you’re reading this on (if anyone has made it this far), the pencils on your desk, and the electricity you used to boil the keƩle for your cup of tea are only there because thousands of businesses were prepared to make contracts and to act on the assumpƟon that those contracts were binding on them and on their counterparƟes and had a parƟcular meaning and conduct their affairs accordingly. Without wishing to be too dramaƟc, though, the fact is that all this has been possible without any systemaƟc publicaƟon of com- 6 THE ARBITER WINTER 2017 mercial arbitral awards. ParƟes to arbitraƟon agreements have been able to opt out of appeals on the merits for nearly 30 years, and arbitral awards have never been systemaƟcally published. And yet, in that 30 year period, industry bodies have conƟnued to publish many successive iteraƟons of their standard forms. Businesses have conƟnued to make contracts on those standard forms (or more commonly, if we are completely honest, on bastardised versions of those standard forms). Things have conƟnued to be manufactured, bought and sold. The world sƟll turns. It is noƟceable that, over (say) the past 100 years ever more cases have come before the English courts. This is probably due to some combinaƟon of increased populaƟon, and increasingly complex society and businesses, globalisaƟon, free trade, increased social mobility and entrepreneurship, increased regulaƟon and a richer society with more resources in circulaƟon and so more to argue over. Whatever the reasons, the fact is that there are far more case reports available than ever before and the number increases every day, these being easily searchable and retrievable through comprehensive online databases. This presents something of a paradox. If precedents serve to fill in the gaps in the law and resolve uncertainƟes one might have expected that with an ever increasing pool of precedents there would be liƩle leŌ to argue about, and the law would get clearer and clearer. And yet legal arguments conƟnue unchecked. Could it be that more precedents mean more to argue about, not less? One can infer, from guidance published by the courts, that there is already a problem with too many precedents being cited by parƟes. The Commercial Court Guide says: “AuthoriƟes should only be cited when they contain some principle of law relevant to an issue arising on the applicaƟon and where their substance is not to be found in the decision of a Court of higher authority.” PD 52c says that, for appeals to the Court of Appeal: “(4) The bundle should not– (a) include authoriƟes for proposiƟons not in dispute; or (b) contain more than 10 authoriƟes unless the issues in the appeal jusƟfy more extensive citaƟon.” What precedent value would arbitral awards even have? Arbitral tribunals are not courts. No court is bound to follow an arbitral tribunal’s raƟo decidendi. At most a party might refer to a tribunal’s award on some issue as a persuasive, but the court would not feel bound to follow it. The same would be true of tribunals. Assume a contract requires an arbitral tribunal to apply English law. English law is statute and raƟones decidendi from decisions of the English courts. Decisions of arbitral tribunals are not part of English law, and so arbitral tribunals who are to apply English law are not required to follow the decisions of previous arbitral tribunals. Such awards will be, at most, persuasive but never binding. Publishing an arbitral award is therefore never going to prevent any future arbitral tribunal deciding the same point differently, and it is never going to prevent different parƟes in a future dispute arguing about the same issues. The basic principles of commercial and contract law were seƩled over 100 years ago in cases about horses and repairing water mill components. Commercial and contract law are not ‘feeling their way’ (unlike investment treaty law, which is relaƟvely new). The result is that, in commercial arbitraƟons, it is relaƟvely rare to have a serious disagreement about what the law is on (say) the interpretaƟon of contracts, remoteness of damages, terminaƟon and all the other fundamental rules which come up over and over. The parƟes will oŌen be (broadly) in agreement about what the legal principles are, at least where the lawyers are competent. The real baƩleground will be as to what the facts are, and how the legal principles, which are not themselves in issue, apply to those facts. In pracƟce, then, most commercial awards will be of liƩle value as precedents, because so many of the issues which a tribunal looks at in any given award will be specific to that case and those facts and will never arise again. Eventually, though, similar issues might come up in successive arbitraƟons (parƟcularly where cases concern standard forms). But, since the second tribunal is not bound by the previous decisions, and might well decide differently the result is inconsistent precedents. This problem would be much more acute in commercial arbitraƟon than in court, because in commercial arbitraƟons there are no appeals and there is no hierarchy of tribunals. So all these precedents have the same weight, and no award will ever provide a definiƟve answer. A bad decision will stand forever. So what is the end result of systemaƟcally publishing awards? The answer is simply lots of awards. All of limited precedent value and with many being inconsistent to some degree. How many awards is hard to guess. But at least in some industries more disputes are resolved by arbitraƟon than through the courts. So it could be that the number of awards published each year in those sectors would be similar to or exceed the number of judgments presently being reported. For all these reasons, it seems unlikely that publishing arbitraƟon awards will do much in terms of prevenƟng future disputes, whether about standard forms or anything else. Publishing awards: Cui bono? If the systemaƟc publicaƟon of awards is unlikely to prevent future disputes about the meaning of standard forms, then it is hard to see how systemaƟc publicaƟon would deliver any substanƟal benefit for the businesses that arbitraƟon is supposed to serve. That is not to say, though, that no one will benefit from systemaƟcally publishing commercial arbitraƟon awards. Someone will need to publish the awards, write headnotes and commentaries. THE ARBITER WINTER 2017 7 Law firms, chambers and libraries will need to buy subscripƟons to all this new material. Lawyers will have to spend Ɵme reading and arguing about all these extra cases. Arbitrators may even spend longer wriƟng their awards, knowing they will be published. UlƟ- mately, the addiƟonal costs of all this endeavor by other “arbitraƟon stakeholders” will be borne by businesses which are involved in commercial disputes. Of course, arbitrators, and lawyers who specialise in arbitraƟon might welcome the publicaƟon of awards for other reasons too. The cases they work on will enjoy something of a raised profile. They will see themselves referred to in published awards and will be able to give more detail about their work in their promoƟonal materials in the same way that their colleagues who specialise more in court liƟgaƟon presently do. One reason why lawyers and academics might want to see the publicaƟon of commercial awards is also simply curiosity about the detail of these cases, where very substanƟal sums may be in issue. I would even go so far as to say that it might someƟmes be quite useful to see how an arbitrator has decided a parƟcular point or interpreted a parƟcular clause in a standard form, especially when deciding which arbitrators to appoint, or preparing a case for a given tribunal. But that it not the same as saying that published awards will have a strong precedent value, or be determinaƟve of these issues to the point of prevenƟng or narrowing future disputes. The fact remains, though, that the systemaƟc publicaƟon of commercial awards seems unlikely to prevent or narrow disputes or make arbitraƟon quicker or cheaper and more likely to arrive at a just result. For that reason, such publicaƟon should be resisted. Believing in Father Christmas: another day, another secƟon 68 challenge by Markus Esly ArbitraƟon awards are meant to be final and binding. Under the rules of many of the leading arbitral insƟtuƟons such as the ICC and the LCIA, the parƟes give up any right to appeal the award on the merits. But parƟes do retain a right to challenge an award if there has been a violaƟon of due process. Under English law, a due process challenge is governed by SecƟon 68 of the ArbitraƟon Act 1996, which requires the challenging party to prove that there has been a ‘serious irregularity’. One of the examples of such an irregularity given in the statute is a ‘failure by the tribunal to deal with all the issues put to it’. Unsuccessful parƟes have latched on to this, challenging awards on the basis that the tribunal forgot to discuss or expressly dismiss one of their arguments or simply preferred the other side’s evidence without explaining why. Some challenges have steered close to asking the court to review the tribunal’s reasoning. In UMS Holding Ltd v Great StaƟon ProperƟes SA  EWHC 2398, the Commercial Court has set out very clear limits, which should discourage aƩempts to mount appeals on the merits disguised as SecƟon 68 challenges. A serious irregularity giving rise to substanƟal injusƟce under English law The concept of a serious procedural irregularity was introduced into English law by the ArbitraƟon Act 1996. The 1996 Act brought about a wholesale reform of English arbitraƟon law and was a response to mounƟng criƟcism that the courts had shown too willing to interfere in the arbitral process. Seƫng aside awards is perhaps the most direct example of judicial interference. The Departmental Advisory CommiƩee reported on the new law before it was enacted by Parliament and explained that SecƟon 68 was meant to operate as a “longstop, only available in extreme cases where the tribunal has gone so wrong in its conduct of the arbitraƟon that jusƟce calls out for it to be corrected”. It was only concerned with due process. Ten years aŌer SecƟon 68 was enacted, the House of Lords reminded pracƟƟoners of the “radical nature” of the changes that it had introduced (Lesotho Highlands Development Authority v Impregilo SpA  1 AC 221). SecƟon 68 states an award may be challenged if there has been a serious irregularity affecƟng the tribunal, the proceedings or the award. But that is not sufficient by itself: the serious irregularity must also have caused substanƟal injusƟce. In Lesotho, the House of Lords explained that the requirement of substanƟal injusƟce was “designed to eliminate technical and unmeritorious challenges”. This addiƟonal requirement will be saƟsfied where the party challenging the award can show that the serious irregularity led the tribunal to reach an unfavourable conclusion, and where, had it not been for the irregularity, the tribunal might have come to a different view, provided that such an alternaƟve view was at least reasonably arguable (Vee Networks v Econet Wireless InternaƟonal Limited  EWHC 2909). ‘Failure to deal with an issue put to the tribunal’ SecƟon 68 also sets out an exhausƟve list of categories of what can amount to an irregularity, one of which is a ‘failure by the tribunal to deal with all the issues that were put to it’ in SecƟon 68(2) (d)). At first blush, this may seem to be concerned with a situaƟon where the arbitrators have forgoƩen to decide a parƟcular claim. For example, if the respondent alleges that the claimant’s damages (if any) have to be halved because of the claimant’s contributory negligence, then that would plainly be an ‘issue’. If the tribunal awarded the claimant damages of £100 without deciding the contributory negligence point, it would have failed to deal with an issue that the respondent put to it. Where the tribunal has not dealt with an issue at all, that is likely to cause substanƟal injusƟce, 8 THE ARBITER WINTER 2017 as the Court of Appeal noted in Checkpoint Ltd v Strathclyde Pension Fund  EWCA Civ 84. The quesƟon is, however, whether SecƟon 68(2)(d) was meant to be wider than that. Suppose the arbitrators had turned their mind to the contributory negligence point, overlooked the respondent’s witness statement dealing with this enƟrely, and then dismissed the point staƟng that there was no evidence in support of the respondent’s contenƟon. Have they failed to ‘deal with an issue’? They have decided the issue, that there was no contributory negligence, but they have done so without considering the material that had been ‘put to them’. Does a serious irregularity include a failure to consider certain evidence, or give sufficient weight to it? Another example of a serious irregularity in SecƟon 68(2) is where the tribunal fails to deal with its overriding duty (found in SecƟon 33 of the ArbitraƟon Act 1996) to “act fairly and imparƟally as between the parƟes, giving each party a reasonable opportunity of puƫng his case and dealing with that of his opponent.” Some challenges have sought to draw a link between the duty to act fairly and imparƟally and a requirement to deal with all the issues put to a tribunal: the argument is that if a tribunal simply adopts all the evidence in support of one party’s case, without explaining why or making reference to the other party’s evidence, then the tribunal has not acted fairly or imparƟally. Can the tribunal’s evaluaƟon of the evidence be a ‘failure to deal with an issue’? The scope of SecƟon 68(2)(d) has been considered by the English courts in a series of decisions leading up to UMS Holding. In one of the earlier cases on this issue, World Trade CorporaƟon v Czarnikow Sugar  1 Lloyd's Reports 422, the Court found that how the tribunal perceived a piece of evidence, or what weight they might accord to it (some, or even none at all), was not an “issue” for the purposes of SecƟon 68(2)(d). However, subsequent decisions then leŌ the door open, if only slightly. In Arduina v CelƟc Resources Holdings PLC  EWHC 3155, Toulson J commented that: “The asserƟon that the arbitrator failed to take any or proper account of the evidence could, in an excepƟonal case, give rise to a challenge under secƟon 68, based on the general duty of an arbitrator under secƟon 33 if, for example, an arbitrator genuinely overlooked evidence that really maƩered, or got the wrong end of the sƟck in misunderstanding it. But there is all the difference in the world between such cases and an arbitrator evaluaƟng evidence but reaching factual conclusions on it (as will happen in most arbitraƟons) which one party does not like. That cannot be the basis of a complaint under secƟon 68.” The noƟon that there could be an excepƟonal case where the tribunal’s approach to dealing with the evidence amounted to a serious irregularity was revisited five years later by Akenhead J in Schwebel v Schwebel  2 AER (Comm) 1048. He stressed that arbitrators did not have to address each and every argument or piece of evidence in their awards. In cases that depended on factual findings, tribunals should idenƟfy the ‘primary’ evidence that they found decisive, as this would have to be part of the reasoning. Only in a ‘rare and excepƟonal case’ would the court intervene because an arbitrator had made a wrong finding of fact, should have given greater weight to parƟcular evidence or should have explained why no importance was aƩached to some evidence. The ‘rare and excepƟonal’ case The challenges in Arduina and Schwebel were dismissed. The Court found that the claimants in both cases had been engaged in impermissible aƩacks on the merits. Others were, however, undeterred. The law reports suggest that parƟes who have been unsuccessful in arbitraƟons are fairly quick to assert that theirs is precisely the kind of rare and excepƟonal case that Toulson J and Akenhead J felt they could not rule out. SecƟon 68 challenges take up a significant amount of the Commercial Court’s Ɵme, and all the cases say that the Court should be slow to uphold challenges. The view that a failure to consider evidence could ever be a serious irregularity is not shared by all the judges. Judicial debate conƟnued in the years leading up to UMS Holding. In Petrochemical Industries v Dow Chemical  2 Lloyd’s Reports 691, Andrew Smith J took the view that awards could not be challenged on the basis that the tribunal overlooked some evidence, but ulƟmately felt that he was in the minority, since the two previous decisions had leŌ open the possibility of an excepƟonal set of circumstances that would saƟsfy SecƟon 68(2)(d). Flaux J was next to comment. In Sonatrach v Statoil  2 Lloyd’s Reports 252, he noted that whether there could ever be an excepƟonal case had not, in fact, been decided as previous comments were obiter and thus not binding on him. The Judge’s concern was that the court could not assess whether a tribunal had accorded the ‘correct’ weight to a piece of evidence, or whether it had genuinely overlooked a piece of evidence or instead simply not referred to it because it was thought irrelevant, without reviewing or second-guessing the tribunal’s evaluaƟon of the material before it. That was not permissible under SecƟon 68. Flaux J stated that the prohibiƟon on aƩacking a tribunal’s findings of fact applied under all the subsecƟons of SecƟon 68, but he did add that a tribunal might have breached the general duty of fairness under SecƟon 33 where an agreed or admiƩed piece of evidence was ignored or overlooked. While the door was perhaps slowly closing, SecƟon 68 challenges seeking to rely on a failure to consider all the evidence kept coming. To give just one further example, in Secretary of State for the Home Department v Raytheon Systems Limited  EWHC 4375 (TCC), Akenhead J confirmed that provided the tribunal had ‘dealt with’ an issue, that would be the end of it. It did not maƩer whether the tribunal had dealt with it well, badly or indifferently. But no other decision seƩled whether there could ever be an excepƟonal case of THE ARBITER WINTER 2017 9 a tribunal somehow failing to consider or properly evaluate the evidence that would bring SecƟon 68(2)(d) into play. UMS Holding That was the posiƟon when Teare J had to decide the SecƟon 68 challenge in UMS Holding. By an award of 9 May 2006, an arbitral tribunal had ordered the respondents in the arbitraƟon to pay damages of US$ 305 million, for breach of a joint venture agreement (US$ 55 million) and in relaƟon to a put opƟon (US$ 250 million). The claimants in the arbitraƟon had alleged that the respondents had set up an illicit scheme to divert business and profits away from a Ukrainian business manufacturing gas compressors, which the claimants and respondents had owned through their joint venture agreement. The claimants also argued that they had a right to sell their shares in certain joint venture enƟƟes through a put opƟon, thus requiring the respondents to buy them out at a substanƟal cost. Behind the various companies involved on the opposing sides in the arbitraƟons stood two individuals, Mr. Lukyanenko and Mr. Grigorishin. A two week hearing before a tribunal of three eminent arbitrators took place in September 2015. In the Commercial Court, the solicitors for the respondents noted that there were tens of thousands of pages of documents in the hearing bundles. When the Award came, Mr. Grigorishin’s legal team were evidently dissaƟsfied with it. They commenced Commercial Court proceedings to challenge it less than a month later. The respondents produced over 100 pages of submissions and evidence in support, raising a mulƟtude of irregulariƟes. One key ground on which the award was challenged was that the tribunal had simply made no reference to Mr. Grigorishin’s many witnesses (other than himself), or any of his experts - not even by name, let alone offering any comment on the quality or credibility of any of their witnesses, and did not refer to any of the documentary evidence to which these witnesses (including the experts) had referred or relied. The tribunal had just adopted the claimant’s posiƟon on a wholesale basis. In the Commercial Court, Counsel for the respondent recognised that a mere failure by the tribunal to refer to evidence which was not accepted could not ordinarily amount to a serious irregularity. He submiƩed that this was an excepƟonal case, and that the tribunal’s one-sided acceptance of the claimants’ evidence meant that the arbitrators had failed to act fairly or imparƟally. Teare J took the opportunity to summarise the principles that the Court will have in mind when considering a SecƟon 68 challenge. He emphasised that the tribunal’s duty is to decide the essenƟal issues put to it, and give reasons for the decision. But those reasons do not have to respond to each and every point that the parƟes made, or cite every piece of evidence. The evaluaƟon or assessment of the evidence is enƟrely for the tribunal. The Court cannot speculate or second-guess the arbitrators. There could be many reasons why a parƟcular witness statement or expert report is not referred to in an award. The Court will not speculate in that regard, and will not infer that because the tribunal has not menƟoned certain evidence, it must have overlooked this (allegedly important) item. SecƟon 68 was concerned with due process, not with whether the tribunal’s decision was right or wrong. He added that: “The suggesƟon that it is a serious irregularity to fail to deal with certain evidence ignores that principle. By choosing to resolve disputes by arbitraƟon the parƟes clothe the tribunal with jurisdicƟon to make a “wrong” finding of fact.” It followed that even if the Court were able to conclude that the tribunal had overlooked or misunderstood evidence, that could only lead to the conclusion that the decision was ‘wrong’ on the facts. As the tribunal is free to make any such error, the challenge would fail even if the Court had the power to review the tribunal’s assessment of the evidence. The respondents also raised a number of other points. One concerned the way in which the Court should ‘read’ the award. Even before the ArbitraƟon Act 1996, the English courts had made it clear that arbitraƟon awards were not easily to be overturned. In a well-known passage, Bingham J (as he then was) said that (Zermalt Holdings v Nu-Life Upholstery Repairs (1985)): “… the courts strive to uphold arbitraƟon awards. They do not approach them with a meƟculous legal eye endeavouring to pick holes, inconsistencies and faults in awards and with the objecƟve of upseƫng or frustraƟng the process of arbitraƟon. Far from it. The approach is to read an arbitraƟon award in a reasonable and commercial way, expecƟng, as is usually the case, that there will be no substanƟal fault that can be found with it.” Bingham J had said this in relaƟon to a rent review arbitraƟon relaƟng to a convenience store, which had been conducted by surveyors. The respondents in UMS Holding submiƩed that Teare J should approach the award with less deference. This had been a very complex commercial dispute. Apparently, the parƟes had spent almost £13 million between them on legal fees. The tribunal consisted of three experienced commercial lawyers, including a reƟred Commercial Court judge. Counsel for the respondents submiƩed that the parƟes in this case were enƟtled to expect a beƩer quality of award, and presumably one which ought to explain in more detail why their evidence had not been accepted. Teare J dismissed this suggesƟon, finding that the principles in the ArbitraƟon Act 1996 applied equally to all arbitraƟons subject to it. Bingham J’s famous statement applied to all arbitrators and their awards, whoever they were. There was thus no ‘beƩer quality’ or ‘higher standard’ of award that might only apply in high value cases. The respondent’s second point was that certain findings and conclusions in the award could simply not be allowed to stand, as they were “manifestly illogical and cannot raƟonally be sustained”. 10 THE ARBITER WINTER 2017 This argument was advanced in reliance on Metropolitan Property RealizaƟons Limited v Atmore Investments Limited  EWHC 2925 (Ch), in which the Court set aside an award having concluded that it was obviously flawed as a maƩer of commercial logic. Teare J noted that the real finding in that case was that the arbitrators had in fact failed to decide a crucial issue that needed to be dealt with. Without a determinaƟon of that crucial issue, the award was flawed as a maƩer of logic. That was different, however, from saying that a decision on an issue, which the arbitrators had actually made, was illogical or irraƟonal - which would be another way of criƟcizing the tribunal’s decision because it is wrong. Teare J then considered the lengthy list of maƩers which the respondents relied on as consƟtuƟng serious irregulariƟes. The Judge found that many of these were in fact criƟcisms of findings of law, or of fact, by the tribunal, which were outside of the remit of SecƟon 68. The respondents also alleged that they had not been able to deal with a point that the tribunal found persuasive, but which (the respondents said) had only been taken by the claimants in the last round of wriƩen closing submissions. Teare J held that the respondents were not deprived of an opportunity to deal with the point. During a hearing, the chairman had stated that the parƟes could tell the tribunal if they felt they needed to respond to something said in a supposedly final submission. The Judge concluded that: “The Tribunal thus had no reason to think that the Grigorishin Respondents, ably advised by counsel and solicitors, had not said all that they wished to say in response to the reply submissions of the Claimants. In those circumstances there was no duty upon the Tribunal to ask whether they wished to say anything more about the Claimants’ submissions”. That places the onus on the legal representaƟves to spot new points raised late in the day, and to respond or at least ask the tribunal for clarificaƟon or further procedural direcƟons. On this basis, it would seem dangerous to let new points go unanswered, hoping that the tribunal will disregard them because they were unpleaded or had not been argued at the hearing. One can have some sympathy with the respondents in this regard. In an adversarial system, at some point a line should be drawn and the parƟes should be held to the arguments they have made, and which have been explored in accordance with the procedural Ɵmetable through legal submissions, evidence (if required) and orally before the tribunal. Important and potenƟally decisive legal points should not be taken late in the day. In pracƟce, however, this does occur and parƟes need to be alert. Having reviewed (and dismissed) all the respondent’s individual challenges, the judge returned to the submission that this was an excepƟonal case. The respondents had relied on an ‘aggregaƟon’ of the tribunal’s many alleged shortcomings, which they said amounted to a wholesale failure. That approach did not find favour with the judge, as this would encourage ‘grapeshot’ (and the individual allegaƟons were not, in reality, serious irregulariƟes). Counsel for the respondents also alleged that the tribunal had given much less consideraƟon to the respondents’ evidence, and to the challenges that the respondents had raised to the claimants’ evidence, than an English Court would have done. The respondents relied on the recent decision of the Court of Appeal in Harb v HRH Prince Abdul Aziz Bin Fahd Bin Abdul Aziz  EWCA Civ 556, where the standard expected of a judge in that regard was described as follows: “Our system of civil jusƟce has developed a tradiƟon of delivering judgments that describe the evidence and explain the findings in much greater detail than is to be found in the judgments of most civil law jurisdicƟons. This requires that a judgment demonstrates that the essenƟal issues that have been raised by the parƟes have been addressed by the court and how they have been resolved. In a case (such as this) which largely turns on oral evidence and where the credibility of the evidence of a main witness is challenged on a number of grounds, it is necessary for the court to address at least the principal grounds. A failure to do so is likely to undermine the fairness of the trial. The party who has raised the grounds of challenge can have no confidence that the court has considered them at all; and he will have no idea why, despite his grounds of challenge, the evidence has been accepted. That is unfair and is not an acceptable way of deciding cases.” Teare J noted that the ArbitraƟon Act 1996 imposed no such duty on tribunals. They had to act fairly and imparƟally under SecƟon 33, but that did not extend to how the award had to be wriƩen. The duty to give reasons arises under SecƟon 52(4) of the 1996 Act. That secƟon is not a mandatory provision and can be excluded by agreement between the parƟes: if the parƟes so wish, they could allow the tribunal to simply state who won, and how much was due to them. While the Court of Appeal has the (limited) power to review findings of fact made by the trial judge, the High Court has no such power in respect of arbitraƟons. The whole purpose of the 1996 Act was to constrain the role of the Court to that of necessary support and supervision, but not to review the reasoning. As the DAC Report on the bill that became the ArbitraƟon Act 1996, put it: the test is not what would have happened if the maƩer had been liƟgated. What about the excepƟonal case? Teare J did ask whether there could ever be an excepƟonal case, and thought that the answer was ‘no’ wherever the allegaƟon would require the court to assess the evidence that was before the court so that it could be decided whether the tribunal had, in fact, overlooked it. The Judge did add though that: “However, it is difficult and perhaps impossible to idenƟfy or describe an excepƟonal case before one encounters it.” We suspect it will not be overly long before the next disappoint- THE ARBITER WINTER 2017 11 ed, but well-funded, party comes to the Commercial Court declaring that they have, at long last, encountered the elusive ‘excepƟonal case’. The holler of the Ivey: a new ruling on the test for dishonesty by Ryan Deane One of the most famous professional poker players in the world, Phil Ivey, recently sued a London casino for his winnings in a game of baccarat. He won £7.7m over the course of two days. The casino refused to pay his winnings, accusing him of cheaƟng. Mr Ivey sued for the full amount. The High Court and Court of Appeal agreed that Mr Ivey had cheated and ruled in favour of the casino. Mr Ivey’s last hope was an appeal to the Supreme Court. In addiƟon to ruling on Mr Ivey’s case, however, the Supreme Court took the opportunity to change the test for dishonesty in all civil and criminal offences, a test that has endured for 37 years. Background The game of baccarat is a card game played at many casinos around the world. Similar to blackjack, it is a comparing card game played between two hands, the “player” and the “banker”. In the most famous variant, Punto Banco, the object of the game is to achieve, on one of the two posiƟons, a combinaƟon of two or three cards which, when added together, is nearer to 9 in total than the combinaƟon on the other posiƟon. Aces to nine count at face value, ten to King inclusive count as nothing. The ‘house edge’, the advantage the casino has over the gambler, is approximately 1.24%. Several variaƟons of baccarat have been popular since at least the 19th century. As with all card games played for money, its history is intertwined with cheaƟng. The most famous example is the royal baccarat scandal of 1891, also known as the Tanby CroŌ affair. In that case a lieutenant-colonel of the Scots Guards, Sir William Gordon-Cumming, was accused of cheaƟng at a private game of baccarat at the home of Tanby CroŌ. His friend, the Prince of Wales - the future King Edward VII - was acƟng as the dealer. Sir Gordon-Cumming was caught cheaƟng and made to sign a declaraƟon that, on condiƟon that the other gentlemen would keep their silence, he would “solemnly undertake never to play cards again as long as I live”. The secret was not kept for long. Sir Gordon Cumming publicly denied the allegaƟons of cheaƟng and brought an acƟon against his accusers for slander. The Prince of Wales was called as a witness, the first heir to the throne to be compelled to aƩend court since 1411. The jury found against the lieutenant-colonel, who was dismissed from the army the next day. The leader in the Times stated: “He is condemned by the verdict of the jury to social exƟncƟon. His brilliant record is wiped clean and he must, so to speak, begin life again. Such is the inexorable social rule. He has commiƩed a mortal offence. Society can know him no more.” Baccarat is also the favoured game of James Bond, appearing in many of Ian Fleming’s novels. In his 1953 debut, Casino Royale, the enƟre plot revolves around a game of baccarat chemin-de-fer between 007 and the villain Le Chiffre. Naturally Le Chiffre aƩempts to cheat by trying to kill Mr Bond, but fails to do so, subsequently losing the game and his life. Mr Ivey’s alleged cheaƟng was more pedestrian in nature. He had discovered that the paƩerns on the backs of cards produced by a certain manufacturer were not precisely symmetrical. The difference was sub-millimetric, but the machine which cut the cards leŌ very slightly more of the paƩern visible on one long edge of each card than on the other. Before a card is dealt from the boƩom of a ‘shoe’ (a device used to hold mulƟple decks of cards ready for dealing) one of the two long edges of the next card is on display. Someone with very sharp eyes siƫng next to the shoe can therefore determine which long edge is displayed on the card that is to be dealt next. That informaƟon on its own is of no help to the gambler. All the cards have the same Ɵny differences between the leŌ and right edges, so knowing which edge is displayed tells the gambler nothing about the value of the next card in the shoe. What the gambler needs to achieve is an arrangement of all the cards in the shoe such that all the high value cards (7, 8 or 9 in this variant of baccarat) are all facing the same way. If that is done, the gambler will know whether either of the two hands “player” or “banker” has been dealt a high value card and is more likely to win, and can bet accordingly. Such knowledge would reverse the advantage of the casino and give the gambler a long term edge of approximately 6.5%, if played perfectly accurately. So how to achieve this state of affairs? Mr Ivey couldn’t just rotate the cards himself - the invariable pracƟce at casinos is that any cards touched by the player would not be used again. The only person who touches the cards is the croupier. What Mr Ivey needed to do was persuade the croupier to rotate the high value cards without her realising why she was being asked to do so. This was possible because of the tendency of casinos to pander to the supersƟƟous requests of gamblers, parƟcularly high-stakes ones, who erroneously believe that such requests will improve their chance of winning. On his first Ɵme playing with a shoe with the asymmetrical cards, Mr Ivey therefore pretended that he was supersƟƟous and wanted the croupier to rotate certain cards in order to “change his luck”. The unsuspecƟng croupier obliged, having no 12 THE ARBITER WINTER 2017 idea of the true purpose of his request. Once all the cards in the shoe were exhausted, Mr Ivey claimed that he “had won £40,000 with that deck” and wanted to re-use the same cards again. The croupier didn’t know whether the claim was true but was happy to oblige. Using the same cards again would of course mean that the cards would have to be shuffled, potenƟally upseƫng the careful sorƟng Mr Ivey had achieved. In order to prevent this, he asked for an automaƟc shuffling machine to be used, which would keep all the edges of the cards the same orientaƟon as before. During play with the second shoe of cards, now rotated, Mr Ivey increased the stakes he was beƫng significantly. While during the first shoe he was placing comparaƟvely modest bets of between £4,000 to £75,000 per hand, bets were now being made of up to £150,000 per hand. By the end of the first day Mr Ivey had won approximately £2million. When the croupier ended her shiŌ he stopped playing and asked for the same shoe of cards to be used tomorrow. The next day Mr Ivey maintained his winning streak and played through the whole shoe (around 8 packs of cards). At that point the senior croupier of the casino told Mr Ivey that the cards would now be replaced. Mr Ivey played for a while longer, now asking for cards to be rotated at random in order to cover his tracks. By the end of play he had won £7.7million. The casino’s pracƟce aŌer such a large win was to conduct an ex post facto invesƟgaƟon and work out how it occurred and if any foul play was involved. AŌer several days examining the CCTV footage, and the cards that had been used, they discovered Mr Ivey’s technique, known as ‘edge sorƟng’. The Managing Director spoke to Mr Ivey and told him the game had been “compromised” and the casino would not be paying his winnings. Mr Ivey sued. Honest cheaƟng? The quesƟon before the court was simple. Had Mr Ivey cheated? It was accepted by both parƟes that there was an implied term of the contract between Mr Ivey and the casino that neither party would cheat. If Mr Ivey had breached that term, no winnings would be payable. Mr Ivey’s posiƟon was that he hadn’t cheated because he hadn’t been dishonest. The judge at first instance found that Mr Ivey gave factually frank and truthful evidence of what he had done. He held that Mr Ivey did not believe what he was doing was cheaƟng but was instead legiƟmate gamesmanship. Despite that finding, that court and the Court of Appeal held that Mr Ivey had indeed cheated. Mr Ivey appealed, his main defence being that the courts’ finding that he was honest was not compaƟble with their finding that he cheated. Dishonesty is a necessary part of cheaƟng. There was no such thing as an ‘honest cheater’. The Supreme Court was taken through the legal history of cheaƟng in the UK. The Gaming Act 1664 first addressed the social ill of gambling when not conducted for “innocent and moderate recreaƟon” but as a means of making a living. Anyone who gained winnings by cheaƟng would face a forfeit of three Ɵmes the amount won. If the person who was cheated did not sue, someone else could on their behalf. Half the forfeit would go to the loser and half to the Crown. If this seems harsh, it was about to become even harsher. By the Ɵme of the Gaming Act 1710 the forfeit became five Ɵmes the winnings and cheaƟng was recognised as a criminal offence, aƩracƟng corporal punishment. In fact if anyone lost more than £10, even if no cheaƟng was involved, they could recover a forfeit of three Ɵmes the loss, half now going to the poor of the parish instead of the Crown. Forfeits were eventually abolished in 1845 but the criminal offence of cheaƟng remained. That offence is now enshrined in secƟon 42 of the Gambling Act 2005, which states: “42. CheaƟng (1) A person commits an offence if he - (a) cheats at gambling, or (b) does anything for the purpose of enabling or assisƟng another person to cheat at gambling. (2) For the purposes of subsecƟon (1) it is immaterial whether a person who cheats - (a) improves his chances of winning anything, or (b) wins anything. (3) Without prejudice to the generality of subsecƟon (1) cheaƟng at gambling may, in parƟcular, consist of actual or aƩempted decepƟon or interference in connecƟon with(a) the process by which gambling is conducted, or (b) a real or virtual game, race or other event or process to which gambling relates.” The Supreme Court thought the concept of cheaƟng at common law was the same as in the criminal offence of secƟon 42. They considered the connecƟon between cheaƟng and dishonesty. Although the great majority of cheaƟng would involve behaviour that the ordinary person would describe as dishonest, they could think of many examples in which cheaƟng and dishonesty did not align. The runner who trips up his opponent would of course be cheaƟng, but would not ordinarily be described as ‘dishonest’. The stable lad who starves the favourite horse of water for a day and then gives two buckets of water to drink just before the race, so that he is much slower than normal, is also cheaƟng, but not dishonest. Similarly, one can be dishonest without cheaƟng. The Supreme Court recalled the Victorian “three card trick”, in which a group of associates pretending not to know each other would lure an unsus- THE ARBITER WINTER 2017 13 pecƟng vicƟm into playing the game by demonstraƟng how easy it was to win. Once lured in, however, the game was oŌen played genuinely, and the gambler lost simply because the dealer had sufficient speed of hand to deceive the eye. It was foolish to aƩempt to define cheaƟng, but it was clear to the court that Mr Ivey’s acƟons were a clear example. There would be no doubt he had cheated if he had gained access to the cards and re-arranged the cards himself. He had accomplished the same thing by tricking the croupier into thinking what she did was irrelevant. Mr Ivey did more than observe, he took acƟve steps to fix the deck. The Supreme Court concluded: “That, in a game which depends on random delivery of unknown cards, is inevitably cheaƟng. That it was clever and skilful, and must have involved remarkably sharp eyes, cannot alter that truth.” New test for dishonesty That resolved the case. Mr Ivey would not recover his winnings, and would instead be leŌ with a sizeable legal bill. The Supreme Court was leŌ uneasy, however, by the first instance judge’s decision that Mr Ivey had not been dishonest, even though what he had done was to deceive the croupier. This was a result of the applicaƟon of the test for dishonesty first laid down in the criminal case of R v Ghosh  QB 1053. Ghosh involved a two stage test. First, was the conduct complained of dishonest by the standards of reasonable and honest people. Second, did the defendant realise that the ordinary and honest person would regard his behaviour as dishonest. Only if the answer to both quesƟons was the test saƟsfied. The court at first instance accepted that Mr Ivey genuinely did not realise that ordinary honest people would consider what he was doing to be dishonest, and so he did not saƟsfy the second limb of the Ghosh test. The Supreme Court thought that this conclusion was evidence that there was something wrong with the law. It had the unintended effect that the more warped the defendant’s standards of honesty are, the less likely he will be convicted of dishonest behaviour. Moreover, in criminal cases juries found it puzzling and difficult to apply. It was Ɵme for a restatement of the law: “When dishonesty is in quesƟon the fact-finding tribunal must first ascertain (subjecƟvely) the actual state of the individual’s knowledge or belief as to the facts. The reasonableness or otherwise of his belief is a maƩer of evidence (oŌen in pracƟce determinaƟve) going to whether he held the belief, but it is not an addiƟonal requirement that his belief must be reasonable; the quesƟon is whether it is genuinely held. When once his actual state of mind as to knowledge or belief as to facts is established, the quesƟon whether his conduct was honest or dishonest is to be determined by the fact-finder by applying the (objecƟve) standards of ordinary decent people. There is no requirement that the defendant must appreciate that what he has done is, by those standards, dishonest.” A two limb test remains, with one ‘subjecƟve’ and one ‘objecƟve’ limb as before, but it is now irrelevant whether the defendant thinks their behaviour was dishonest. One must first ascertain the defendant’s belief as to the facts, then ask whether the ordinary decent person would consider someone with those beliefs, acƟng as the defendant did, to be dishonest. Applying the test to the facts of this case the Supreme Court held that on the facts known to Mr Ivey, his conduct was dishonest by the standards of ordinary decent people. Mr Ivey had been truthful, yes, but truthful about his dishonest opinions. The result was that the Supreme Court had gone out of their way to reformulate a test that had stood for 37 years just so that they could call Mr Ivey dishonest. This was unfortunate for a man that, the Supreme Court found, “is jealous of his reputaƟon and is adamant that what he does is not cheaƟng”. By the Ɵme of the Supreme Court judgment however, his reputaƟon was hardly prisƟne. Within a few months of playing baccarat in London, he had used exactly the same edge sorƟng technique to win $9.6 million at the Borgata casino in AtlanƟc City. The casino iniƟally paid his winnings but sued Mr Ivey a couple of years later, eventually obtaining a judgment from a federal judge that Mr Ivey repay the full amount with interest. Mr Ivey conƟnues to win millions of dollars every year as a professional poker player, fair and square. THE ARBITER WINTER 2017 15 Members of the Andrews Kurth Kenyon InternaƟonal ArbitraƟon team in the United Kingdom’s Houses of Parliament, before the statue of Lord Mansfield, the “father” of internaƟonal arbitraƟon. (We always dress this way).