English Court Dismisses Attempt To Set Aside LCIA Award On Grounds Of Serious Irregularity

In the recent case of X v Y [2018] EWHC 741 (Comm), the English High Court dismissed an application to set aside an arbitral award under s68 of the English Arbitration Act 1996 (the Act) on the basis that the claimant should have first exhausted all remedies available to it by applying to the tribunal for correction or clarification of the award under s57(3) of the Act. The Court found that a tribunal had power under Article 27.1 of the LCIA Rules 1998 to clarify ambiguity in the award, and that Article 27.1 did not, in any case, oust the tribunal's equivalent power under s57(3) of the Act. The wording of Article 27.1 in the LCIA Rules 2014 now expressly refers to correcting any ambiguity.

The case is a useful reminder to unsuccessful parties to analyse quickly and thoroughly an award and to ensure that any available process under s57 is exhausted before an application is made under s68. In particular, those who consider that the tribunal's award is deficient for failing to deal with all issues put to it should assess whether such a complaint may be dealt with under s57(3) as a failure to give (adequate) reasons.

The arbitration and the challenge to the award

In the arbitration, administered under the LCIA 1998 Rules, the tribunal (Tribunal), concluded in its award (Award) that the claimant was liable under a contract and awarded the defendant damages of US $21,104,201.51. The claimant challenged the Award under s68(2)(a) (failure to comply with the duty to act fairly and impartially) and s68(2)(d) (failure to deal with all the issues put to the tribunal). Despite having issued its arbitration claim form on 5 January 2017, the claimant took no steps to list its s68 challenges and eventually the defendant applied for the challenges to be listed. The claimant served no skeleton argument and did not attend the hearing of the challenge.

A 'preliminary obstacle' under s57 of the Act to an award challenge

The defendant argued that none of the claimant's grounds for alleged serious irregularity was well founded. The defendant argued that, in any event, the challenge should be dismissed since the claimant had failed to exhaust any available recourse under s57 of the Act before applying under s68, as required by s70(2)(b). S57(1) provides that the parties may agree on the powers of the tribunal to correct an award or make an additional award. In the absence of such agreement, the tribunal may, either on its own initiative or upon application by a...