Originally published in the Commercial Litigation and Dispute Resolution Newsletter Winter 2011.
In the recent High Court case of FBD Insurance plc v James Connors and John Gore-Grimes an arbitral award was set aside on the grounds of misconduct by the arbitrator(7). Less than a week before the arbitration was scheduled to take place on 13 December 2010, the arbitrator, who was the second named defendant in these proceedings, unilaterally postponed the hearing by one day to 14 December 2010. FBD applied for a two day adjournment on the basis that, while it had prepared for the hearing on 13 December 2010, an essential witness was unavailable to attend on 14 December 2010. The first named defendant sought to have the arbitration proceed on 14 December 2010 in circumstances where he was due to return to Australia on 16 December 2010.
Notwithstanding that FBD offered to pay the second defendant's reasonable additional air fare for returning to Australia on a later date, the arbitrator directed that the arbitration go ahead. FBD and its legal advisors consequently withdrew from the process and the arbitration took place in the their absence.
The High Court found that, while there was no bad faith on the part of the arbitrator, he had misconducted the arbitration in the technical sense. The combined effect of the refusal to adjourn which resulted in FBD not being heard, and the making of an award in FBD's absence was undoubtedly 'something substantial, something that smacks of injustice or unfairness'. The offer of FBD to pay the second defendant's travel expenses meant that his legitimate interest would not have been prejudiced if a two day adjournment had been granted. On the other hand, FBD's legitimate interest was defeated by the postponing of the hearing by the arbitrator in the first place and his subsequent refusal to accede to its request for a further adjournment in circumstances where an essential witness was not available. The award was therefore set aside. The Court also found however that the arbitrator should not have been joined as a party to the proceedings and that, as there was no bad faith on his part, he was awarded his costs against FBD on an indemnity basis.
Footnote
7. As the arbitration in question commenced before the
operative date of the recent Arbitration Act 2010, the proceedings
were brought under the Arbitration Act 1954.
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