In the recent English Commercial Court decision of Ispat Industries Ltd v Western Bulk Ltd [2011] EWHC 93 (Comm), the court held that an appeal based on section 68 of the Arbitration Act 1996 (the Act) would only be successful under the most serious of circumstances and where there was or stood to be a risk of substantial injustice to one of the parties.

The dispute surrounded a charter under a fixture recap which was cancelled due to an insurgency preventing access to the load port. The vessel was not refixed until several weeks later, and the issue of whether damages were payable by the charterers for cancelling the fixture went to arbitration. The panel ruled in favour of the owners of the vessel and, shortly thereafter, the charterers challenged the award asserting “serious irregularities” under section 68 of the Act, and on points of law, under section 69.

There were three grounds of alleged serious irregularity:

1. failure by the panel to address concerns raised by the dissenting arbitrator, thereby failing to deal with all the “essential issues” of the case;

2. failure to rule on and decide a specific disclosure application against the owners, but mentioning the lack of documentation in the arbitral award;

3. the last-minute admittance of a witness statement in support of the owners, which gave the charterers insufficient time to review the statement and prepare a response.

All three grounds were dismissed. As to the first ground, the judge held that there was a difference between dealing with an issue and setting out the reasons for it. The arbitrators had clearly discussed and decided on the dissenting arbitrator’s concerns, which was an essential issue; addressing the concerns of the dissenting arbitrator was not. The judge then stated that, even if the failure to address the concerns of a dissenting arbitrator was an irregularity, it would fall short of the requirement for serious irregularity as there was no substantial injustice caused to the charterer.

On the second ground, the judge found that there was no serious irregularity as the charterers themselves had withdrawn the application, stating at the time of withdrawal that they preferred the judge to draw negative inferences from the lack of documentation. The judge held that the third ground was a case management decision, and in any event did not prejudice the charterers as they were able to cross-examine the witness at the hearing.