The Commercial Court Report for the year 2021-2022 explained that “there has been a significant increase in arbitration applications” and in particular “there have been increases of 8% in applications under section 69 of the Arbitration Act 1996, of 54% in challenges brought under s.68 of the Act and of 59% in challenges brought under s.67 of the Act.”

Section 69 applications (appeal on point of law) 

2020 – 2021 – 37 section 69 applications, of which only 2 were successful. 

2021-2022 – 40 section 69 applications. 13 of those applications had been granted permission to appeal, with a final decision pending. 

During 2021-2022 it has taken an average of 111 days for a decision to grant or refuse permission to appeal and in 2020-2021 it took an average of 100 days. 

“only around 5% of appeals on points of law issued under s69 AA 1996 in 2018/2019 were successful.”[1]

Section 68 applications (irregularity) 

2021-2022 – court received 40 section 68 applications of which 5 have been dismissed without a hearing, 1 dismissed at hearing, 2 discontinues, 1 transferred out and 31 are pending and awaiting decision. 

2020-2021 – court received 26 section 68 applications, of which 1 was successfully challenged.  

In LMH v EGK [2023] EWHC 1832 (Comm) – The English Commercial Court dismissed a challenge to an arbitral award under s68, in part because the claimant had failed to exhaust arbitral remedies before bringing its challenge and there was also no merit in the claimant’s complaints about the way in which the tribunal had dealt with the issue. 

Section 67 applications (jurisdiction) 

2021-2022 – court received 27 section 67 applications, of which 5 were dismissed on the papers, 1 was unsuccessful, 1 was discounted and 20 remain pending. 

2020-2021 – court received 17 section 67 applications, of which 1 was successful. 

EGF v HVF [2022] EWHC 2470 (Comm) 16 Sep 2022 - Claimant applied to set aside an Interim Payment Order (IPO) and argued that it was “tainted with serious procedural irregularity” as two late witness statements were admitted without allowing the parties to cross-examine the new statements – arbitrators impartiality. The court found that section 67 was not engaged because an application to set aside the IPO did not amount to a challenge to the Tribunal’s substantive jurisdiction and the claimant also could not challenge under s68 as the claimant had not pleaded that the IPO had created any substantial injustice.

The admission of two late witness statements was found not to be biased. The claimant challenged the award under s67 and s68 AA 1996 on ground that the arbitrators had exceeded their substantive jurisdiction in making the partial award for an interim payment. The Tribunal made a partial award pursuant to UNCITRAL Rules ordering the claimant to make an interim payment to the first defendant of US$250 million. 

Held – the challenge to the IPO was not a challenge to the arbitrators’ substantive jurisdiction. The challenge instead would have had to have been under s68 on grounds that they had exceeded their powers – however, no case of substantial injustice was pleaded. 

Royal & Sun Alliance Insurance Ltd v Tughans (A Firm) [2022] EWHC 2589 (Comm) - The court found that section 68 had been triggered as a result of “the Tribunal’s decision to grant the respondent in the appeal a full indemnity in the final award, when the issue had not formed a part of the pleaded case at the merits hearing, but the point was only raised in their post-partial final award submissions. The claimant argued that it had been denied the opportunity to present its case on the issue.”

The professional indemnity insurer challenged the arbitral award. The arbitrator declared it was obliged to indemnify the claimant (a firm of solicitors), in respect of the firm’s liability in damages in the amount of a success fee it has received. The insurer argued the following:

1. that the issue of whether it was obliged to indemnify the firm in respect of the fee damages claim had never been referred to the arbitrator, he lacked jurisdiction to determine it pursuant to s67 AA 1996.
2. It was a serious irregularity for the arbitrator to grant the relief, given the fact that the firm had not brought a claim in the arbitration for an indemnity regarding the success fee – s68 AA1996. 
3. The arbitrator’s decision that the policy was capable of providing an indemnity in respect of the firm’s liability in damages in the amount of the success fee was wrong in law – s.69 AA 1996. 

The appeal was allowed in part – it was a serious irregularity for the arbitrator to grant the relief, given that the solicitor firm had disclaimed any application for relief and proceedings had not been conducted in accordance with the procedure agreed by the parties. The insurer also had been denied a reasonable opportunity to present its case. 

John Abbott FCIArb Arbitrator & Mediator

AbbottDR

Dispute Resolution  
 

[1] Latest legal publications | Mills & Reeve | Mills & Reeve (mills-reeve.com)