English High Court Clarifies Thresholds for Serious Irregularity Challenges under Arbitration Act 1996 in Quaid-e-Azam Thermal Power v Sui Northern Gas Pipelines

Citation: [2024] EWHC 70 (Comm)
Judgment on

Introduction

In the case of Quaid-e-Azam Thermal Power (Private) Ltd v Sui Northern Gas Pipelines Limited, the English High Court delivers detailed consideration on two key grounds under the Arbitration Act 1996: Section 68(2)(a), concerning serious irregularity affecting proceedings due to the tribunal’s alleged failure to act fairly and impartially, and Section 68(2)(d), relating to the tribunal’s failure to address all issues put to it. The judgment offers a meticulous examination of the principles governing challenges under these sections, illuminated by specific reference to the parties’ arbitration pleadings.

Key Facts

Quaid-e-Azam Thermal Power (Private) Limited (QATPL) challenged a final arbitration award concerning unpaid invoices under a Gas Supply Agreement (GSA) with Sui Northern Gas Pipelines Limited (SNGPL). QATPL alleged two primary grounds of challenge: that the Tribunal breached Section 33 of the Act, and that it failed to rule on a determinative issue under Section 68(2)(d) of the Act. Dame Clare Moulder DBE, presiding, meticulously reviews the pleadings, submissions, and the arbitral tribunal’s approach to render her judgment.

Serious Irregularity under Section 68(2)(a)

The court reiterates the high threshold set for what constitutes a serious irregularity under Section 68, referencing RAV Bahamas Ltd and another v Therapy Beach Club Inc [2021], where it was noted that the term is meant to limit court intervention to “extreme” cases invoking “substantial injustice.” In Terna Bahrain Holding Company WLL v Al Shamsi, it’s emphasized that only in cases where the tribunal has evinced extreme malconduct, so removed from reasonable expectations, that justice mandates rectification, can relief under Section 68 be appropriate.

The judgment clarifies that a breach of Section 33, which imposes the general duty of the tribunal to act fairly and provide reasonable opportunity for each party to address points, could constitute a serious irregularity. However, this does not extend to a party’s failure to recognize an opportunity to address their opponent’s case.

Failure to Address Issues under Section 68(2)(d)

Section 68(2)(d) is dissected into three guiding questions: the nature of an “issue,” whether the issue was put to the tribunal, and if the tribunal failed to deal with the issue. The court adheres to the principles from Secretary of State for the Home Department v Raytheon Systems Ltd [2014], noting that a tribunal does not fail to deal with an issue if it merely did not address every question that qualifies as an “issue”, provided the essential issues necessary for a decision were sufficiently resolved.

Crucially, Dame Clare Moulder DBE conducts a comprehensive review of the arbitration pleadings to discern whether there was a serious irregularity. She identifies that the tribunal dealt with the estoppel defense, viewing the issue of issuing monthly invoices as interwoven with estoppel and not as a standalone issue necessitating a separate determination.

The analysis is based on a “fair, commercial and commonsense reading” of the arbitration award and supporting documents, thereby negating hypercritical interpretations that could misrepresent the tribunal’s conduct or the core issues at stake.

Outcomes

The court dismisses QATPL’s application, concluding that there was no serious irregularity either under Section 68(2)(a) or Section 68(2)(d). The tribunal is found to have acted within the bounds of fairness and impartiality as per Section 33, and having addressed all essential issues as required, therefore yielding no occasion for the court’s intervention under the established threshold for serious irregularity.

Conclusion

Dame Clare Moulder’s analysis affirms that the bar for intervention under the Arbitration Act 1996 is set deliberately high, safeguarding the finality of arbitration awards and the arbitral process’s integrity. Her judgment underscores the emphasis on cautious judicial interference in arbitration, highlighting that only manifestly egregious procedural departures or oversights by tribunals warrant remedial action under Section 68. This case serves as a quintessential reminder that arbitration remains a largely autonomous dispute resolution mechanism, with court involvement reserved for truly exceptional circumstances.

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