In Latvian Shipping Co v Russian People’s Insurance Co (ROSNO) Open Ended Joint Stock Co [2012] EWHC 1412 (Comm) the Court considered the appeal of an arbitration award on the grounds of serious irregularities within the Tribunal’s findings.

The dispute, which arose out of a policy of insurance, concerned the question of whether the damage to the propeller of the “Ojars Vacietis”, a vessel owned by Latvian Shipping Co (LSC), had occurred when she grounded (an insured peril) at Wilmington, North Carolina, or subsequently when she was sailing through ice (an uninsured peril) in the Gulf of St Lawrence. Finding in favour of the insurer, ROSNO, the Tribunal concluded that although some damage to the propeller had probably been sustained during the grounding, it was impossible to quantify that damage and therefore, impossible to determine the proportion of the damage sustained as a result of grounding. Consequently, the Tribunal found that the damage to the propeller was not covered by the policy.

LSC appealed against the award contending that ROSNO had escaped liability despite admitting that some damage may have occurred as a result of grounding; that the Tribunal failed to permit recovery because LSC had not asserted an alternative claim; and that irregularities existed in the factual analysis by the Tribunal.

Mr Justice Field held that the Tribunal was not obliged to establish the quantum of the damage where it would evidentially be highly problematic and virtually impossible to do so. With this in mind it was not necessary for LSC to advance an alternate case for a partial award, which LSC would not have been able to advance in any case due to the evidential difficulty. Field J also stated that any failings by the Tribunal to take into account certain evidence did not impact on the overall finding that “not all” the damage had been sustained at Wilmington, therefore LSC’s challenge to the award was dismissed.

The case highlights the potential evidential difficulty of establishing the quantum of damages in a case where there are two possible causes of damage and the reluctance of the Court to overturn an award made by a Tribunal who has had the benefit of hearing the evidence first-hand.