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Judicial Power To Overturn Arbitration Awards Is ‘Only a Long Stop’

Section 68 (1) of the Arbitration Act 1996 states:-

‘A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award’

This is not a tool to be used to simply appeal an Arbitration decision which is not agreed with. In the case below, Section 68 was used to appeal an Arbitration decision and failed. The Court rightly stated that Section 68 is not to be abused and unless there is ‘serious irregularity’ then no such appeal would succeed.

Commercial arbitrators have to deal with many very bitter disputes and their rulings, although supposed to be final, are not always greeted with equanimity. In one case, however, the High Court has emphasised that its power to overturn arbitration awards is intended to operate only as a long-stop in extreme cases.

A vendor had agreed to supply large volumes of coking coal to two buyers. The latter complained that the coal delivered did not comply with contractual specifications and was not of satisfactory quality within the meaning of the Sale of Goods Act 1979. In two separate awards, an arbitration panel ruled in favour of the buyers and directed the vendor to pay a total of almost $1.7 million in compensation.

In challenging the awards under Section 68 of the Arbitration Act 1996 (the Act), the vendor argued that they were infected by serious irregularity in that the panel had reached conclusions which ran contrary to the common ground between the parties without giving either of them an opportunity to make appropriate submissions. The vendor also sought permission to appeal under Section 69 of the Act.

However, the Court noted that judges should be reluctant to interfere with arbitration awards and that Section 68 should not be used as a side door for disguised attacks on arbitrators’ findings of fact. The Court found that the merits of both applications were relatively weak and refused to grant extensions of time that were required before the vendor could pursue them further. The awards were upheld.

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MLA 2017 18 Shortlisted 2