Atkins Ltd v Secretary of State for Transport, a recent TCC case, gave guidance on the grounds for a "serious irregularity" challenge under section 68 of the Arbitration Act 1996. Section 68 is similar to Rule 68 of the Scottish Arbitration Rules so the case is also of interest in Scotland, particularly given Lord Glennie's statement in Arbitration Application No.3 of 2011 that in relation to questions of interpretation and approach, English authorities are relevant and "there is no point in re-inventing the (arbitration) wheel".
The Facts
Atkins was appointed by the Secretary of State as managing agent and contractor for maintenance, repair of minor defects and management of major schemes for part of the highways network. The contract was an amended version of NEC3. A dispute arose in relation to the payment mechanism for repairing potholes. This went to adjudication and then to arbitration.
Atkins was unhappy with the outcome of the arbitration and claimed that there had been a serious irregularity on the basis that (1) the arbitrator did not effectively (or at all) address a key issue on which Atkins relied and (2) that the arbitrator either came to an obviously wrong decision or a decision that was in fact wrong so that permission to appeal should be granted and the appeal allowed.
The Decision
It was said that parties should not dress up challenges to factual findings or legal reasoning or conclusions of an arbitrator as a serious irregularity. Further, where a court is asked to conduct an exercise to determine whether or not an arbitrator has failed to deal with all issues put to him, the court "is not required to carry out a hypercritical or excessively syntactical analysis of what the arbitrator has written". In a "clear and obvious case" though, the court will find that there has been a failure.
The court analysed the arbitrator's award andconcluded "Whilst some arbitrators might have highlighted some different reasoning and proceeded to analyse the wording in verbally a different way, it is simply impossible to say that that there has been any, let alone a serious, irregularity here in circumstances in which, based on the words which the arbitrator himself uses, he knew what the area of issue was, analysed the wording, reviewed the commercial context and came to the decision which he did."
In relation to leave to appeal, the court did not consider the arbitrator was wrong and certainly not that it could be said the decision was "obviously wrong". This was the threshold test for leave to be granted under section 69(3)(c)(i) of the 1996 Act, the equivalent of Scottish Rule 70(3)(c)(i).
The court did not require to decide the point but commented on the test in section 69(3)(c)(ii), the equivalent of Scottish Rule 70(3)(c)(ii). That is a two part test requiring there to be a matter of general public importance and for the decision of the tribunal to be open to serious doubt. The matter was considered to be of general public importance because the contract was not a one off contract but was based on the NEC3 standard form which is widely used. Whilst that test would have been passed, the court did not consider, on balance, that the arbitrator's decision was open to serious doubt. This approach to what is a matter of general public importance where a standard form of building contract is concerned mirrors Lord Glennie's comments in the Court of Session case Arbitration Application No.3 of 2011.
Comment
This decision is helpful in providing guidance for arbitrators and parties in relation to when challenges may be appropriate and, for arbitrators, as to the content and structure of their decisions. It also sends a clear message, common in both the English and Scottish courts, that the court will be reluctant to intervene in an arbitration unless in clear and obvious cases of failure. This should give parties wishing to avoid their dispute ending up in court a high degree of comfort.
Disclaimer
The material contained in this article is of the nature of general comment only and does not give advice on any particular matter. Recipients should not act on the basis of the information in this e-update without taking appropriate professional advice upon their own particular circumstances.
