UK: "CELTIC EXPLORER" – What Happens When There Is A 12 Month Delay In The Publication Of An Arbitration Award?

Inordinate delay in the production of an arbitration award, whilst capable of amounting to a serious irregularity, was not enough on its own to justify setting aside an arbitration award. It was also necessary to show that the delay caused substantial injustice.

Background

An application was made under the Arbitration Act 1996 (the Act) to set aside an arbitration award which was published after a 12 month delay. The grounds of the challenge were that of serious irregularity under section 68 of the Act:

In order to establish a serious irregularity, an applicant must show not only that there was an irregularity of the kind set out in s.68(2), but that the irregularity caused or would cause substantial injustice to the applicant.

Decision

Flaux J rejected the defendant's argument that if a party does not complain of delay under s.24 of the Act before publication of the award, they lose the right to bring a s.68 challenge.

Delay in publication of an award is not in itself a ground of serious irregularity under s.68. Nevertheless, Flaux J held that inordinate delay is capable of amounting to a serious irregularity, this being a breach of the arbitrator's duty to avoid unnecessary delay under s.33 of the Act, but only if the inordinate delay caused or would cause substantial injustice.

Establishing substantial injustice involves showing that, but for the inordinate delay, the arbitrator might well have reached a different conclusion more favourable to the applicant. For this purpose, it was necessary for the applicant to demonstrate that the delay resulted in a failure to deal with all the issues (i.e. a serious irregularity under s.68 (d) of the Act). Flaux J was, however, satisfied that this was not the case here. The arbitrator had accepted the other side's expert evidence so the judge said he would have done the same on the issues which he did not deal with. So, the resulting outcome would have been the same.

Comment

The decision serves to prevent s.68 applications (based on delay) being used as a backdoor for impermissible challenges to the facts of a case. The applicant had submitted that in cases of delay, the Court should examine very closely and carefully the tribunal's findings and, if appropriate, remit to a different tribunal. Flaux J disagreed; s.68 was an exercise in checking due process only, which, in the case of inordinate delay, could not extend further than a close analysis of whether the arbitrator had dealt with all the issues put before him.

A high threshold needs to be reached by any applicant wishing to establish that inordinate delay in the publication of an arbitration award caused such substantial injustice that this would justify the award being set aside. In practice, this means that, providing the arbitrator has followed the due process, parties can usually do little where awards are published particularly late.

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