Key Facts
- •Palmat NV (claimant) challenged an LCIA arbitration award in favor of Bluequest Resources AG (defendant) under sections 67 and 68 of the Arbitration Act 1996.
- •The dispute arose from two agreements: a Sales Contract (LCS Agreement) for liquid caustic soda and a Purchase Agreement (Aluminium Agreement) for aluminium, both signed on May 31, 2017.
- •The agreements were linked: payment for the caustic soda was to be offset against the aluminium delivery.
- •Bluequest delivered the caustic soda, but Palmat failed to deliver the aluminium due to circumstances in Venezuela.
- •Bluequest claimed payment for the caustic soda, which the majority of the arbitral tribunal awarded.
- •Palmat challenged the award on jurisdictional grounds and for serious irregularity.
Legal Principles
Principles of English contract law on interpretation.
Arnold v Britton [2015] UKSC 36, Rainy Sky SA v Kookmin Bank [2011] UKSC 50, Chartbrook Ltd v Persimmon Homes [2009] AC 1101, Britvic Plc v. Britvic Pensions Ltd [2021] ICR 1648
Section 68 of the Arbitration Act 1996 on challenging awards due to serious irregularity.
Arbitration Act 1996, s.68
Standard for serious irregularity under s.68: high threshold requiring substantial injustice.
Terna Bahrain Holding Company WLL v Al Shamsi [2012] EWHC 3283, Obrascon Huarte Lain SA v Qatar Foundation [2019] EWHC 2539, Reliance Industries Ltd v Union of India [2018] EWHC 822
Outcomes
Jurisdictional challenge dismissed.
The court found the agreements were two separate sales contracts, not a single barter agreement, and the arbitration clause was validly incorporated into the LCS Agreement.
Section 68 challenge largely dismissed.
The court found no serious irregularities causing substantial injustice. The tribunal’s reasoning, while perhaps not perfectly articulated, addressed the key issues fairly.
Part of the award awarding interest on arbitration and legal costs set aside.
The court found that interest on these costs was not properly before the tribunal.