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Contract Arbitration Proceedings Focused on Achieving Finality

Arbitration is akin to litigation in the Court.  One party will win, one party will lose.  The losing party is often left feeling aggrieved as to the decision of the court and will seek a way to appeal if possible (and commercially tenable).

Arbitration is binding.  There are very few grounds to appeal a decision and it is increasingly common for the limited grounds to be abused to defer the actual initial award made at arbitration from being settled.  

The court’s tend not to overturn an arbitration award unless the grounds are clear and obvious.  In the case below, an appeal was not successful which ultimately cost the defendant even more in legal fees.

It is in the very nature of contract arbitrations that one side or the other will often be left feeling aggrieved by the outcome. However, as one High Court case showed, judges are keen to achieve finality in dispute resolution and it is no easy task to overturn arbitrators’ awards.

Company A, the main contractor in respect of a power station construction project, had subcontracted company B to carry out civil and structural engineering works. Following termination of the subcontract, company B claimed that it was owed more than $4 million for work that it had performed. The dispute was put before an arbitration panel which ruled largely in favour of company B.

In challenging the award, company A argued that the panel had entirely ignored two of its defences to the claim and failed to address the essential parts of two others. It was submitted that that amounted to a serious irregularity in the proceedings, within the meaning of Section 68(2) of the Arbitration Act 1996, and the Court was invited to itself vary or set aside the award.

In rejecting those arguments, however, the Court found that the panel had fairly dealt with all important aspects of company A’s case. The panel did not treat company B’s invoices as conclusive proof of the sums due and, as it was entitled to do, weighed up all the evidence as to the value of the work done.

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MLA 2017 18 Shortlisted 2