The claimant challenged an award of costs in which the
arbitrator had included the costs of litigation funding. In so
doing, the arbitrator had concluded that he had power to do so
because such costs fell within the scope of "other costs"
for the purpose of section 59(1)(c) of the Arbitration Act 1996
HHJ Waksman QC held as follows:
(1) Even if the arbitrator was wrong about the meaning of
"other costs", that would not amount to a "serious
irregularity" and hence no challenge under section 68 could be
(2) Although not necessary to deal with the point, the judge
agreed that the costs of litigation funding could "in
principle" extend to the costs of obtaining third party legal
funding: "Whether then to Award it is a matter of
discretion". Although the exercise of the
arbitrator's discretion was not being challenged here, the
judge noted that it had been based on factors which were
"perhaps unusual": namely, it was said that the claimant
had driven the defendant into expensive litigation as a result of
"its own reprehensible conduct" and the defendant had
also been left with no option but to obtain third party funding.
The judge concluded that "As a matter of justice, it would
seem very odd and certainly unfortunate if the arbitrator was not
entitled...to include the costs of obtaining third party funding as
part of "other costs" where they were so directly and
immediately caused by the losing party".
(3) In any event, there had also been a statutory waiver of the
right to object here (pursuant to section 73 of the Act) because of
continued participation, without objection, in the arbitral
proceedings. Although the "paradigm case" for section 73
is where an arbitrator could have corrected a procedural
irregularity had the complaint been made at an earlier stage, the
judge noted that "there is no causal requirement in
(4) The judge also considered the time for making an application
to challenge an award (if the claim had been well-founded). Citing
the earlier decision of K v S , the judge confirmed
that the reference to arbitral review in section 73 (which could be
the starting point for the 28 day period to bring the challenge),
does not apply to corrected awards, which are not the same thing.
The fact that a party has sought a corrected award does not,
without more, extend time: "However, if the application to
correct was material to the issue now being raised under section
68(2), then the 28 days would indeed run only from the date of the
corrected award". Material in this context means
"necessary to enable the party to know whether he has grounds
to challenge the Award or not".
Kazakhstan Kagazy v Zhunus: Whether permission of
court was needed to discontinue part of a claim
CPR r38.2 provides that the permission of the court is needed to
discontinue "all or part of a claim" in relation to which
the court has granted an interim injunction.
In this case, the claimant had had 2 claims (a Kazakh law claim
and a Manx law claim), but an earlier freezing order had been
obtained in respect of the Kazakh law claim only. The claimant then
wished to discontinue the Manx law claim and one of the issues in
this case was whether permission from the court had been needed (in
fact, permission had been sought and obtained).
Leggatt J noted that the word "claim" is used in three
different ways in the CPR: (1) to mean the entire action begun by
issuing a claim form; (2) to mean only a cause of action; and (3)
to mean all the causes of action asserted by a particular claimant
against a particular defendant. In the context of CPR r38, though,
he held that it refers "either to the entire action or, at its
narrowest, to all causes of action asserted by a particular
claimant against a particular defendant". Here, the
claimant had asserted a Kazakh law claim (in the sense of a cause
of action) which it had never sought to discontinue and so it was
only seeking to discontinue part of a claim. However, as the
freezing injunction has not been obtained in respect of that part
of the claim, no permission to discontinue had been required. The
judge rejected an argument that permission was needed if a freezing
injunction had been granted for any part of the claim, even if that
was not the part being discontinued.
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