Recently, the English High Court
(Commercial Court) had the occasion to consider the question whether delay in
publishing the award after completion of hearings was a ground for setting
aside the arbitral award under Section 68 of the English Arbitration Act, 1996.
In BV Scheepswerf Damen Gorinchem v. The Marine Institute [2015] EWHC 1810
(Comm)], the arbitrator passed the award 376 days after the completion of the
hearings. The losing party in the arbitration (“Damen”) challenged the award
for the reason that the arbitrator had committed serious irregularity as
provided under Section 68 primarily on three counts:
(1) the tribunal failed to comply
with its general duty of avoiding unnecessary delay,
(2) the tribunal’s delay led to
breach of Clause 20 of the applicable arbitral rules which provided that the
award should “normally be made available within not more than six weeks from
the close of the proceedings”, and
(3) owing to the delay, the
tribunal failed to deal with all the issues that were put to it.
The Commercial Court, after
analyzing the legal principles involved held the following:
(a) Section 68 deals with serious
failures by the tribunal to comply with due process which should result in
substantial injustice to the applicant. This “higher threshold” eliminates
technical and unmeritorious challenges.
(b) Unless, it is shown that such
serious irregularity resulted in substantial injustice to the applicant, the
award cannot be set aside. Damen had to
show that but for the undue delay, the arbitrator might have reached a
different conclusion more favourable to Damen.
(c) Damen’s reliance on
authorities dealing with delays in courts is inappropriate as the authorities
related to findings of fact but in Section 68 cases, the applicant cannot
attack the tribunal’s findings on facts.
(d) This restriction (bar on
review of findings of fact) on a court does not cease to exist merely because
there is an inordinate delay in passing the arbitral award.
(e) Closer scrutiny of awards on
the basis of delay is problematic because there is no principled basis to judge
delay. For instance, it is a question whether three months or four months would
constitute delay. Further, if the arbitrator delayed the award due to illness
which was recorded in the Award itself, would such an award also invite closer
scrutiny?
(f) However, merely because a
party does not complain about the delay of the arbitrator before the award is
issued, such failure will not result in a waiver or the right to complain about
the delay after the award is issued.
(g) If the award has dealt with
all the issues and is therefore impeachable otherwise, it does not matter if it
was passed twelve months after the hearing.
(h) Once the arbitrator has dealt
with a particular issue, the award cannot be challenged for the quality of the
tribunal’s reasoning.
On the basis of the aforesaid
reasons, the court rejected the Application although it held that the delay in
passing the award was “extremely regrettable”.
Comment:
Arbitrators are obligated to pass
awards within a reasonable time after completion of the hearings. Such an obligation stems from the universally
recognized duties of the arbitrators to devote proper time for the arbitrations they
accept and to conduct the arbitral proceedings efficiently without undue delay.
In view of these general obligations, the arbitrators are expected to render
their awards within such time as may be considered reasonable. What is reasonable time primarily depends on
the complexity of the dispute, the extent of pleadings and documentation in the
arbitration.
We had argued in in Undue Delayin Passing Arbitral Award as a Ground for Challenge? Volume 2, Issue 1, Indian
Journal of Law and Policy Review, pp. 185- 195 (2013) that delay per se should
not be a ground for setting aside the arbitral award. The English
Court has taken a similar stand. It is also pertinent to note that there is
similarity in the English court’s approach and that of the Delhi High Court in Oil India Ltd. v. Essar Oil Ltd., 2012(3) Arb. L.R. 220 (Delhi): MANU/DE/3862/2012.
[Also see, Peter Wilske, Legal Challenges to Delayed Arbitral Awards, Contemporary Asia Arbitration Journal Vol. 6 No.2 pp. 153-186, November 2013, for a detailed discussion on the topic.]
