Whether a party challenging an arbitral award should have first sought clarification from the arbitrator
Section 70(2) of the Arbitration Act 1996 provides that an award cannot be challenged or appealed if the applicant/appellant has not "first exhausted... any available recourse under section 57". Section 57 in turn provides that a party can apply to the arbitrator to correct an award, remove any ambiguity in the award or make an additional award in respect of a claim not dealt with by the arbitrator.
In this case, the applicant applied under section 57 to ask the arbitrator to correct his award and/or make an additional award. The arbitrator eventually admitted an irregularity but declined to act further without the agreement of the parties or a court order.
The respondent sought to rely on the case of Torch Offshore v Cable Shipping [2004] in order to argue that the applicant should have asked for clarification as to the reasons why the arbitrator had made the determinations he had and failure to do so meant that it had not exhausted its recourse under section 57, and so the challenge to the award was now time-barred.
In Torch Offshore, the judge had held that section 57 can be used to request further reasons from the arbitrator (or reasons, where none exist), and an award which contains inadequate rationale or incomplete reasons is likely to need clarification. Failure to seek clarification, it was decided, could mean that the applicant had available recourse under section 57 which had not been exhausted (and so a section 68 application could not be brought in that case).
Here, the judge held that the applicant had exhausted his recourse under section 57: "It is not the law that, whatever a party to arbitration does in applying to the arbitrator under s 57, the other party can always argue that the first party should have asked for clarification of the reasons for the Award and therefore has not exhausted his recourse under that section. It all depends on what he asks for".
COMMENT: This decision addresses a concern which arose from the Torch Offshore case that applicants must always ask for clarification if the reasons for an award are unclear or inconsistent before making an application under section 68 (something that was called "a potential trap for unaware applicants" in Arbitration Law Monthly). This case confirms that whether or not an applicant must first seek clarification will depend on the circumstances of the case and exactly what the applicant believes is wrong with the award.
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