Arbitration award cannot be challenged for failure to consider a mere argument or line of reasoning

The Commercial Court has dismissed a challenge to an arbitral award made under section 68(2)(d) of the Arbitration Act 1996 where the tribunal had decided both the agreed issues in the dispute. Section 68 could not be used where the real objection to the award was an alleged error of fact as to the interpretation of foreign law or an alleged failure to consider an argument or line of reasoning, as opposed to a failure to deal with one of the issues referred to the tribunal for decision.

Background

Asset Management Corporation of Nigeria (AMCON) v Qatar National Bank (QNB) [2018] EWHC 2218 (Comm) concerned a dispute arising out of a sale of shares in a company known as Ecobank. An arbitration award was rendered in favour of QNB. AMCON challenged the award under section 68(2)(d) of the Arbitration Act, which applies where a tribunal has failed “to deal with all the issues that were put to it” and has thereby caused substantial injustice to the applicant. AMCON argued that the tribunal had failed to apply relevant principles of Nigerian law and to deal with its submissions on the effects of certain Nigerian statutes. The court initially dismissed the challenge on the papers without a hearing. AMCON then applied for the order to be set aside and for the section 68 application to be considered at a hearing.

The court’s decision

Failure to apply relevant principles of Nigerian law

The court emphasised that section 68 challenges must relate to serious irregularities affecting due process, which were to be distinguished from errors of law or errors of fact, and that the section only applies in extreme cases. AMCON had argued that the tribunal had failed to apply a principle of Nigerian law which required the court to adopt the more reasonable construction of a disputed contractual provision. However, the court found that, in adopting the construction put forward by QNB, the tribunal had applied Nigerian law as it understood it to be, and hence what was being complained of was an alleged error in fact-finding, which could not give rise to a serious irregularity under section 68.

Failure to deal with AMCON’s submissions

The court found that the tribunal had in fact dealt with AMCON’s submissions on the application of Nigerian statute law; it had simply found those submissions to be incorrect or irrelevant. In any event, “issues” within the meaning of section 68(2)(d) meant the agreed issues to be determined in the arbitration, which were to be distinguished from “arguments advanced”, “points made”, “lines of reasoning” or “steps in an argument”. In this particular case, the agreed issues were the meaning and effect of a certain provision in Ecobank’s Articles of Association and the meaning and effect of a certain clause in the sale contract. All the submissions made by AMCON fell within these two issues, and the tribunal had expressly decided both. Therefore, there was no serious irregularity and no possibility of substantial injustice.

Comment

This case, once again, illustrates the very high threshold for setting aside arbitral awards under section 68 of the Arbitration Act. The grounds for challenge must not be a question of either law or fact, but a matter of failure of due process. Secondly, if the challenge is brought under s.68(2)(d), the issue the tribunal has failed to deal with must be one of the substantive issues put to the tribunal for determination, not merely an argument or a submission in relation to one of those issues.

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The authors would like to acknowledge the help of Linh Dao, intern at CMS London, in preparing this article.