At the International Bar Association conference last month in Seoul, the Arbitration Committee ran a panel - impressively, but perhaps over stuffed with the great and the good of international arbitration - on how to deal with a failure by counsel to raise a dispositive or determinative issue which the arbitral tribunal was well aware of. The truism that "it is not for the tribunal to make counsel's case for them" rang rather hollow in my ears, and the idea that the tribunal would issue a final and binding determination, subject of the estoppel concept of res judicata, on a basis which it knew was wrong did not sit right.
An eminent and very highly regarded international arbitrator was adamant - it the tribunal intervened it would be a sign of bias and a breach of natural justice. I'm not sure that anyone was entirely convinced, as the carefully phrased contributions from the following speakers suggested - "yes, of course natural justice must be first and foremost in the tribunal's mind ... we tend to have a preliminary conference where the relevant issues are discussed so the tribunal can give some guidance on what should be argued ..."
Coincidentally, the High Court of England & Wales recently considered a setting aside application which was on-point in Obrascon Huarte Lain SA & Contrack (Cyprus) Ltd v Qatar Foundation for Education, Science & Community Development [2019] EWHC 2539. The case concerned the construction of a hospital in Doha for £1.9 billion, which did not go well. The Qatar Foundation alleged that the contracting JV was in default and had not rectified its default within the required time, with the result that it issued a notice of termination. An issue arose over the interplay of the terms of the contract and Qatari law (which was determined as a question of fact), and the requirements for termination - specifically, whether or not the Qatar Foundation was required to obtain a tribunal or court order to validate its termination. The tribunal found that the contract had been lawfully terminated.
The JV challenged the partial award on the basis of serious irregularity, specifically that there was a breach of the duty of fairness as the legal analysis had not been explored fully or properly with the parties.
Noting that there is a high threshold for challenge, the court commented that the challenge procedure is "not to be used simply because one of the parties is dissatisfied with the result, but rather as a long stop in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice "calls out for it to be corrected" ... As a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults. The approach is to read an award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault."
In relation to the duty of fairness (also a question of fact), the court identified five broad and uncontroversial legal principles for establishing a breach of the duty to act fairly and impartially, giving the parties a reasonable opportunity of presenting their cases:
(1) there will be a breach of the duty where the tribunal decides the case on the basis of a point which one or both parties have not had a fair opportunity to deal with - a party should not first learn of the adverse point in the award
(2) if the tribunal considers that the parties have missed a point or considers a completely different basis for its decision, the parties need to be given notice and the opportunity to consider the alternative position and respond. This does not mean that every nuance or inference which the tribunal wishes to draw needs to be put to the parties if it differs from that which was precisely contended for in the arbitration
(3) a tribunal does not need to set out each step by which they reach their conclusion or deal with each point made by a party to an arbitration and a tribunal can deal with a number of issues in a composite disposal rather than deal with each issue seriatim
(4) except in exceptional circumstances, the right to challenge does not extend to the contention that the tribunal has disregarded or overlooked a particular piece of evidence since that amounts to an assertion that the tribunal made mistakes in their findings of fact
(5) it is enough for a challenge to succeed if the tribunal reached an unfavourable conclusion which, but for an irregularity, the tribunal might never have reached, provided always that the opposite conclusion is reasonably arguable.
The final principle tends to look like the court was having it both ways, but more critically the second principal would seem to deal with the core issue raised at the IBA decisively.
The JV failed in its challenge, as the court was unable to accept that the eminent and highly experienced tribunal made a fundamental error of fairness.