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Parties and witnesses must have the opportunity to address key points to ensure validity of award

United KingdomScotland
19/06/2019
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The High Court has allowed a challenge to an arbitration award after the arbitrators reached their decision based on an analysis that had not been put to the parties and failed to ensure that a key witness had the opportunity to address matters affecting the credibility of his evidence relating to key matters.

The issues

In the underlying arbitration, the tribunal found that D was estopped from demanding the payment of any debts owed by P before 1 January 2018. P had argued that the estoppel continued until 1 January 2020

In P v D and others [2019] EWHC 1277 (Comm), P challenged the award on two grounds:

  • a key witness had not been cross-examined on his recollection of the meeting which allegedly gave rise to the estoppel; and
  • it was not open to the arbitrators to conclude that the parties envisaged agreeing an extension of certain loans at a later date as part of a wider package because it had not been put to the parties during the hearing.

P alleged that these failings amounted to serious irregularities under s.68 of the Arbitration Act 1996 and that the tribunal had failed in its duty to act fairly and impartially under s.33.

Decision

The court stressed that fairness requires a witness to be given a fair opportunity to deal with any allegation that his evidence should be disbelieved (Markem Corp v Zipher Ltd [2005] EWCA Civ 267).

If the witness in question had been properly cross-examined and given the opportunity to deal with the arbitrators’ analysis of the key meeting and with what the arbitrators saw as weaknesses in his evidence, there might have been a different outcome. The judge therefore concluded that P’s challenge succeeded under both s.68 and s.33.

Comment

The High Court is generally reluctant to permit challenges to arbitral awards, so this decision is a timely reminder to arbitrators of the importance of ensuring that key witnesses have the opportunity to address any weaknesses in their evidence that may affect the outcome and that any argument that is likely to be fundamental to the arbitrators’ decision is put to the parties before the award is rendered.

For further information, please email the authors or your usual CMS contact.

The authors would like to acknowledge the assistance of Hamzah Butt, trainee at CMS London, in preparing this article.

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