Award Overturned for Serious Irregularity Where Decision Based on Issues Not Argued

OAO N. Shipping Co. v. Remolcadores De Marin SL, 2007 WL 2139977, [2007] EWHC 1821 (Queen’s Bench Div., Commercial Ct.)

In this case, buyers of a tug boat had brought a claim for damages for a misrepresentation by the sellers as to the total rated power of the vessel’s engine which had induced the contract.  The sellers argued, inter alia, that the representation, made in the form of a certificate of total rated power, was true, that the buyers had not relied on the representation, and had not shown that the representation was false.  The tribunal held that there had not been a representation by the sellers as to the “truth” of the certificate, but only as to its “authenticity.”  The buyers appealed the award under s.68 of the Arbitration Act 1996 (the “Act”) on the basis that no argument had been heard on the point.

The court found that the arbitrators had not given the parties a reasonable opportunity of putting on their case and had therefore reached their decision in breach of s.68 of the Act.  The threshold test of serious irregularity was satisfied.  The irregularity was serious because the matter was a small claims arbitration in which time for oral submissions had been short, and the parties had directed their advocacy only to those points in dispute; and because the buyers would have been awarded substantial damages but for the admission by the arbitrators of the representation issue.  As to the requirement of serious injustice, the court found that as a result of the serious irregularity the buyers had been deprived of an opportunity to advance submissions which were reasonably arguable or at least better than hopeless.  The award was set aside accordingly and the claim remitted to the tribunal for further consideration.

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