English Court Dismisses S68 Challenge To Procedural Order

In K v S [2019] EWHC 2386 (Comm), the English Court (the Court) dismissed a challenge to a London Court of International Arbitration (LCIA) arbitral tribunal's procedural order. The challenge was made on the grounds of serious irregularity under s68 of the Arbitration Act 1996 (the Act) but was dismissed for failing to satisfy any of the s68 requirements and for challenging a procedural order rather than an award. The judgment provides a clear indication of the parameters within which a s68 challenge may be brought.

Background

K was the Respondent and S was the Claimant in an arbitration under the LCIA rules about an Engineering, Procurement and Construction subcontract and alleged breaches of letters of termination.

K instructed a forensic accountant as an expert to identify "the causes of the collapse of K's business". The expert report produced concluded that S was largely responsible for the collapse of K's business and also provided an assessment of the quantum of losses.

S objected to the submission of the expert report, arguing that the issues addressed by the expert were not within the list of topics for expert evidence identified by the Tribunal and that the report was based on new factual and legal points that K had not pleaded or included in its witness statements. S sought to have the expert report withdrawn. K refused to do so alleging that the collapse of business point had been pleaded before and was within the list of topics for expert determination.

An application was made to the Tribunal and a hearing was held on the issue which resulted in the Tribunal reaching and issuing Procedural Order 5 (PO5). The Tribunal concluded that the report advanced a new claim which was not pleaded or sufficiently pleaded and should not be allowed in evidence.

K sought to challenge PO5 on the grounds of serious irregularity under s68 of the Act. K alleged that the decision not to allow the expert report to be admitted in the arbitration proceedings was not a legitimate exercise of the Tribunal's case management powers under s34 of the Act but an impermissible exclusion of material evidence and breach of the Tribunal's general duty under s33. Whilst K did not allege a failure of due process in the procedure by which the Tribunal made its decision, it was alleged that the decision itself led to a failure of due process because K was prevented from presenting its case on lost profits. K sought an order from the Court that the paragraphs of...