arbitration-hewsletter

341 Pages·2016·3.54 MB·English

by  Hew R. Dundas

From: Hew Dundas [[email protected]]
Sent: 03 November 2001 09:48
To: Undisclosed List
Subject: ARBITRATION NEWS UPDATES 1-7 (COMBINED)

I am resuming distributing items of interest to the arbitral community, particularly where they might not be readily
available in the UK.

The attached short note on a recent Hong Kong case may be of interest.

If you would prefer not to receive such notes, please advise

With best wishes

Hew R. Dundas FCIArb

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Difficulties in challenging an arbitral award

A clear philosophy behind the Hong Kong Arbitration Ordinance is the perceived need to preserve the autonomy of
arbitrators and give finality to their Awards. The Hong Kong Ordinance severely restricts the rights of parties to
appeal against arbitral awards. Consequently, applications for leave to appeal are relatively rare.

The recent decision of the Hong Kong Court of First Instance in Zen Pacific Civil Contractors Ltd v Wellead
Construction & Engineering Co Ltd provides an example of an application for leave to appeal against an arbitral
award. The decision illustrates the difficulties in passing the stringent test applied by the Hong Kong Courts before
leave to appeal against an arbitral award will be given.

The parties were respectively sub-contractor and sub-sub-contractor on a major construction project. In the
arbitration, Wellead had been awarded HK$ 12m. Zen Pacific applied for leave to appeal.

The main issue in the application concerned the arbitrator's interpretation of the word "claim" in a supplementary
agreement between the parties. The supplementary agreement concerned the distribution of proceeds received
from Zen Pacific's Employer in respect of "claims" made by Wellead relating to the sub-sub-contract works and
"passed up the line" to Zen Pacific's employer. If there was a "claim" any proceeds from it were to go to Wellead.

The supplementary agreement defined "claims" as "work done and/or additional costs incurred and/or extra income
on top of BoQ rates which will not be automatically certified by the [Zen Pacific's] Employer without initiation,
putting forward argument and further substantiation by [Zen Pacific] to justify its entitlements."

In interpreting the meaning of this definition, the Arbitrator stated that either:
(i) the appointment of external claims consultants and lawyers to handle the dispute; or
(ii) the taking of formal arbitration proceedings to resolve the dispute
would suffice.

Zen Pacific argued that such interpretation was an arbitrary test which, if applied rigidly, would lead to unjust
results. For instance, sometimes an external lawyer might be consulted very early in the claim procedure but on
other occasions there could be months of negotiation about a claim without any consultation of such lawyer. In
practice the first example would not have yet become a "claim" whereas the second one probably would have.

However, the Court found that the Arbitrator had not created an inflexible test. The Arbitrator recognized that there
was a need to define "claims" and said that engaging external lawyers or consultants "would suffice": this was not
a rigid formula. Having clarified his approach to the meaning of "claims" he then could then apply it to each issue in
the case. The Arbitrator had examined each issue on its own facts and he had not blindly adopted an inflexible
test.

The Court affirmed the legal requirement for a successful application for leave to appeal on "one off" issues: i.e. the
applicant:
(i) must demonstrate that the arbitrator was plainly wrong in his decision; and
(ii) must be able to so quickly and without elaborate argument

In this case the Arbitrator's careful and considered approach had been sufficiently well-removed from being plainly
wrong and therefore leave to appeal on this ground was refused.
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Arbitration Update 2 – 21st November 2001 @ 1135
Dear Colleagues,

1. “Arbitration Law Monthly” Vol. 1/8 carries an interesting report on a case (not yet formally reported) Bay
Hotel & Resort Limited v Cavalier Construction Co Ltd, concerning construction of a hotel in the Turks &
Caicos Islands (TCI) in which the Privy Council (hearing an appeal from the Court of Appeal of the TCI)
considers inter alia:
(i) issues regarding the Seat of the arbitration, the requirement for reasons in the Award and joinder of 3rd
parties;
(ii) the interface between the curial law and the institutional Rules (in this case the AAA Construction
Industry Arbitration Rules), not least because of the US connection both through application of AAA
rules but also that the hearing took place in Miami.

The first instance Court in the TCI decided that the procedural law was that of the USA since the hearing
took place in Miami; this was upheld by the Appeal Court but rejected by the Privy Council; I have to
observe that, on the brief facts presented in the article, the two TCI Courts’ decisions in this regard are
incomprehensible.

2. The question of the role and responsibilities of Party-Appointed Arbitrators was one of the two discussion
topics at the 15th November meeting of the Oil & Gas Branch of the Arbitration Club and was also raised at
the CIArb’s CPD Day for International Arbitrators the very next day. I attach some brief notes I made for
the Oil & Gas Branch meeting which may be of interest.

3. While Adjudication may not be of universal interest, the recent TCC case C&B Scene Concept Design
Limited v Isobars Limited is interesting in that the Court refused to enforce the Adjudicator’s Decision on
the grounds that he had (following the test laid down in Bouygues v Dahl-Jensen) “ answered the wrong
question” in that he misconstrued the contractual provisions and his decision based thereon was
‘answering the wrong question’. One commentator has suggested that the C&B/Isobars decision indicates
a significant widening of the Court’s willingness to review Adjudicators’ decisions. Further there appears to
be a substantial inconsistency between the C&B/Isobars decision and that in the Scottish case S&L Timber
Systems Limited v Carillion Construction where the Court of Session enforced an Adjudicator’s decision
notwithstanding his making an error of law in reaching his decision.

4. There has been an interesting case, Pearce-v-Ove Arup Partnership Limited, concerning the
consequences for expert witnesses who fail to fulfil the duty laid on them by CPR Part 35 that their
overriding duty is to the Court; this supports and extends the earlier pair of cases Stevens v Gullis and
Gullis v Pile where an expert was thoroughly trashed by the Court. In Pearce, the Judge observed that the
evidence given by an expert witness was so biased and irrational that it significantly failed to meet the Part
35-required standards. The expert appeared to see his role as arguing his appointor’s case irrespective of
the strength of his argument and without taking an objective view. Since the expert was substantially
responsible for the case coming to Court at all (with consequent wasted time and costs) the Judge stated
that if any Judge concluded that any expert had seriously failed to meet his Part 35 duty, the matter should,
in appropriate cases, be referred to the expert’s professional body. YOU HAVE BEEN WARNED

With best wishes

Hew
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AARRBBIITTRRAATTIIOONN CCLLUUBB
OOIILL && GGAASS BBRRAANNCCHH
““EExxcceelllleennccee TThhrroouugghh SShhaarriinngg””

”The Party-Appointed Arbitrator (“PAA”):
Differing Perceptions and Expectations of the Role”

Basic Issue
 “It is a fundamental principle in international commercial arbitration that an arbitrator must be and shall
remain independent” [Redfern/Hunter];
 R+H “English perspective” - is this always the case everywhere ?

Examples of PAAs as advocates
 State to State arbitrations eg UK vs Saudi Arabia in the Buraimi Oasis case;
 US-Iran Claims Tribunal despite being (in theory) conducted under UNCITRAL Rules;
 US Uniform Arbitration Act 1955; however the Federal Arbitration Act 1950 applies the same standards to
both PAA and non-PAA (9 USC §10(b));
 some US State laws eg the presumption of non-neutrality in New York [Statewide Insurance Co v Klein 482
NYS 2d 307]; an award can be vacated only if a party’s rights were prejudiced by bias of an arbitrator
required to be neutral (ie the sole or a presiding arbitrator);
 US practice to regard PAA as non-neutral unless otherwise agreed; refer AAA/ABA Code;
 some Labour Relations arbitrations;
 some trade association rules (eg LMAA Terms (1987) Art 2(b): these state that if the PAAs are not to act
as advocates then they must be wholly impartial);

General Observations
 “When I am representing a client in an arbitration, what I am really looking for in a [PAA] is someone with
the maximum disposition towards my client but with the minimum appearance of bias” [Hunter]
 “It is also a truism that a party will strive to select an Arbitrator who has some inclination or disposition to
favour that party’s side of the case such as by sharing that party’s legal or cultural background or by
holding doctrinal views that, fortuitously, coincide with that party’s case” [Bishop/Reed]
 “There is a distinction to be drawn, however, between a general sympathy of disposition and a positive bias
or prejudice” [Bishop/Reed];
 “Each side’s selection of “its” Arbitrator is perhaps the single most determinative step in the arbitration”
[Bishop/Reed];
 “The ability to appoint one of the decision-makers is a defining aspect of the arbitral system and provides a
powerful instrument when used wisely by a party” [Bishop/Reed];
 heavy interface with considerations of impartiality/independence (I+I)

Model Law/Institutional Rules
 Model Law (Art. 12(2)), UNCITRAL (Art.10.1), ICC (Art 2.8), ICSID (Rule 6.2), LCIA (Arts 5.2, 10.3), AAA
International Rules (AAAIR) 1997 Art. 7), LMAA Terms either
 expressly require independence and/or impartiality; and/or
 give as a ground for challenge any justifiable doubt as to the arbitrator’s impartiality and/or
independence;
LMAA Terms (1997 – see above re1987) state at Art. 3 “an original arbitrator is in no sense to be
considered as the representative of his appointer”
 hence non-neutral PAAs arise only in ad hoc arbitrations; but NB US-Iran Claims Tribunal;

Possible Problem Areas for Discussion
 dichotomy if one party sees its PAA as advocate, the other sees its as Hunter’s model;
 misunderstanding the role of the PAA gives rise to a possible necessity to abandon the arbitration as fatally
compromised (R+H quote the Buraimi Oasis case);
 extent (if any) of communication Party to/from its PAA;
 AAAIR (Art 7(2)) regulate this – other Rules leave it to I+I provisions;
 addressed in IBA Code of Ethics (§ 5.3) and AAA/ABA Code
 pre-appointment interviews:
 common in USA but generally refused in England;
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 AAAIR (Art 7(2)) prohibit communication with only very limited exceptions; IBA Code of Ethics has
same effect (§ 5.1);
 Other Rules and/or general practice limit scope of contact Part/PAA;
 The ICC refused to confirm appointment of a PAA who had spent 40-50 hours with ‘his’ Party but in
a 1991 US case a 2-hour meeting was held not to establish partiality
 role of PAA in selecting Tribunal Chairman;
 refer IBA Code § 5.2, AAAIR Art 7(2);
 general practice worldwide to permit PAA to consult with Counsel for ‘his’ Party i.r.o. nominations
for Chairman;
 self-policing role of other members of tribunal, particularly Chairman;
 fine dividing line between acting as advocate and assisting the tribunal to understand better ‘his’ party’s
case;
 appearance of bias vs actual bias; contrast Pinochet № 2 with AT&T v Saudi Cable

A Conclusion – Discussion May Give Rise to Others
 “The role of a PAA in modern ICA is an extremely difficult one, requiring great knowledge, ability and
integrity to ensure that all is properly and necessarily required to be done in protecting the integrity and
outcome of the arbitral process is done without stepping over the fine line leading to impropriety and
disqualification or removal” (de Fina)

Hew R. Dundas FCIArb

References
 “Law and Practice of International Commercial Arbitration” 3rd ed; Alan Redfern & Martin Hunter (“R+H”);
 AAA/ABA Code of Ethics reproduced in [1985] Yearbook Commercial Arbitration 131 (subsequently
updated)
 “Practical Guidelines for Interviewing, Selecting and Challenging Party-Appointed Arbitrators in
International Commercial Arbitration” by R Doak Bishop and Lucy Reed; ARBITRATION
INTERNATIONAL [1998] 395;
 “The Party-Appointed Arbitrator in International Arbitration: Role and Selection” by AA da Fina;
ARBITRATION INTERNATIONAL [1999] 381;
 “Ethics of the International Arbitrator” by Martin Hunter in [1987] 53 ARBITRATION 219;
 “A Code of Ethics for Arbitrators in International Commercial Arbitration” by Martin Hunter and Jan
Paulsson [1985] INTERNATIONAL BUSINESS LAW REVIEW 153.
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Arbitration Update 3 – 8th March 2002 @ 1102

Dear Colleague,

Further to my newsletters of 3rd and 21st November 2001, I set out below issue 3 of my informal newsletter, the
pause since #2 deriving from several factors including absence abroad and pressure of other commitments. The e-
mailing list for these newsletters consists of professional colleagues such as yourself with common or overlapping
interests, particularly those who may not have ready access to research facilities, technical support departments
etc or who may not have the time to scour legal websites, read journals etc. As before, if you do not wish to
receive these newsletters, please advise and I will immediately remove you from the distribution list.

I would be happy to take in contributions on the understanding that since these newsletters (a) are wholly gratis
and (b) go out in my name I may exercise appropriate editorial rights.

The following matters have crossed my path in recent weeks

1. Arbitration: Interface between Law of the Arbitration and Party-Agreed Procedures/Rules
English law is clear and simple on the interface between statute and any agreement between the parties as
regards procedure, whether by institutional rules or otherwise; in particular (a) the mandatory provisions of
the 1996 Act itemised in Schedule 1 cannot be ousted and (b) where an agreement between the parties is
silent on a matter then the default provisions of the 1996 Act kick in. The equivalent interface is less
distinctly expressed elsewhere.

In Singapore, the Model Law applies to international arbitration (Singapore International Arbitration Act
1994); at least the legislators intended it to do so. However, the recent case John Holland Pty Ltd v Toyo
Engineering Corporation revealed an anomaly in the law in that the parties’ choice of ICC Rules was held
to exclude the Model Law in its entirety; such was evidently never the intent of the Model Law draftsmen
and not of those of Singapore either. A recent amendment to the legislation has corrected the anomaly.

However, some commentators have seized on the case as being the equivalent of the approaching
Yucatan asteroid in 65,000,000 BC “Death of the Model Law”, “Death of the ICC” etc were the implications
of some of the headlines. The Singaporeans, being commendably rational people, took the obvious step of
amending the law to remove the unintended anomaly. The case does throw up some other interesting
facets – see J.Int.Arb. Vols18/4 and 19/1.

As postscript, note that the back-to-back articles in J.Int.Arb are by Toyo’s Solicitors; I am becoming
concerned at the proliferation of articles in journals about such cases written by one party’s Solicitors, not
least because another recent such article in an otherwise highly reputable publication appears to me to be
so disgracefully partisan as to be wholly unprofessional and does the journal in question no credit at all.

2. Arbitration: How NOT to Do It
As we all know, Arbitrators, certainly including those that lecture on the CIArb and other courses, are all-
seeing paragons of distinction, are giants of human intellect, possess the Wisdom of Solomon and apply
more brain power than the entire 12-man House of Lords Appellate Committee combined in solving
everyday problems in arbitration. Well, almost and perhaps not always.

Two recent TCC judgements have addressed cases where arbitrations have gone badly wrong and in both
cases the arbitrators have come in for powerful, even ferocious judicial criticism.

In RC Pillar & Sons Ltd v Mr & Mrs G Edwards, a £95,000 house-building dispute involving no significant
legal or technical complexities was so badly handled (inter alia the arbitrator was either unaware of his
powers under s.30(1)(c) or was unable to interpret correctly the arbitration agreement (which was worded
in a wide form)) that the parties combined costs totalled more than £320,000 and the arbitrators fees
>£40,000; the Award gave it to Pillar in almost the full value of its claim then, pursuant to s.57, the award
was corrected to remove some evident blunders and amended to £10,000 in the Edwards’ favour. Further,
the 212-page award included 147 pages reproducing in full (photocopies) the parties’ respective pleadings
but omitted reasoning in many areas. The key to the TCC decision is the likely effect on costs, there being
sealed offers on the table. The Judge (the admirable and forthright HHJ Thornton QC) had quite a lot to
say about the handling of the arbitration and this “How Not To Do It “ case study might be of relevance to
CIArb training courses.

In Wicketts and Sterndale v Brine Builders Ltd and Siederer, the handling of the arbitration was, if anything,
worse and recent FCIArb graduates may well be shocked (as I was in Pillar) at the gulf between what is
taught/examined and what appears to happen in practice. The Judge (HHJ Seymour QC) has even more
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to say about the arbitrator’s conduct – this does NOT make pleasant reading, rather the opposite – quite
painful. Counsel for the winning Wicketts/Sterndale duo was none other than the legendary Ms Karen
Gough, better known to the CIArb as Madam President.

I am preparing an article covering these two cases for “ARBITRATION”.

3. Discain v OpecPrime – The Sequel
Last year, the case Discain v OpecPrime was widely covered in the construction press since the
Adjudicator had engaged in telephone discussions with an adviser to one of the parties to the exclusion of
the other party. Although there was no impugning of the Adjudicator’s motives, the Court refused to
enforce his decision because of the prejudice thereby caused. I do not propose to comment further on this
first case.

The dispute, concerning steelwork included in the redevelopment of a block of flats, which was the centre
of Discain v OpecPrime then went to Court and, in an unusually full judgement, HHJ Seymour QC had,
inter alia, to address two key issues.

First, it was very difficult to establish what the contract between D and O actually was given D’s initial
quotation, O’s counter-proposal, variations both real and alleged, generally poor record-keeping, the
involvement of a second contractor carrying out part of the steelwork, the design/build interface etc etc.
The Judge sets out his analysis of what the contract was with great care and it is a model analysis in this
tricky area.

Second, the evidence given by D and O’s respective witnesses was often wholly contradictory and the
Judge sets out his reasons for preferring one witness to another or one part of evidence to another with
equally great care; the case forms a model of how to deal with conflicting evidence.

I will be preparing an article on these two (and other) issues shortly.

4. Confidentiality in Arbitration
The topic of Confidentiality in Arbitration has been a hot one since the 1995 decision by the High Court of
Australia (ie the supreme Federal Court) in Esso v Plowman that there was no implied confidentiality
obligation in the law of Victoria governing arbitration; contrary to much of the commentary and discussion,
the decision is binding only on the state of Victoria and, although very persuasive elsewhere in Australia, is
not binding on any other State and I have been advised that it is unlikely that NSW would follow it. Sir
Patrick Neill QC (as he then was) shredded the Australian judgement in Arbitration International Vol. 12/3
and in a 1998 decision (Ali Shipping v Shipyard Trogir) the English Court of Appeal rejected the Australian
view so far as English law was concerned (again the commentaries often misrepresent Ali Shipping in this
regard, implying that Ali Shipping either predated Esso or somehow ignored it; rest assured – the latter is
emphatically not the case).

In December 2000, the Swedish Supreme Court decided in A.I. Trade Finance v Bulgarian Trade Bank that
there was no such implied obligation in Swedish law. The case has a number of curious twists and many
of these are revealed in an outrageously partisan narrative of events written by AITF’s US Counsel in
J.Int.Arb Vol. 19/1 at p.1-32.

Key facts of the story are that (1) AITF’s Counsel arranged publication in Mealey’s of a crucial Interim
award on jurisdiction (2) the Chairman of the Tribunal then copied the award from Mealey’s to the Swedish
Supreme Court and (3) the Supreme Court then gave a crucial ruling on another related matter in the case,
largely based on the award, thereby creating a circular chain of reasoning. Bulbank’s case was, in part,
based on (a) the breach of confidentiality in AITF’s publishing the interim award (b) the Chairman’s actions
in (in effect) disclosing the award to the Court; you may not be surprised either that the Chairman was a
former Justice of the Swedish Court or that Bulbank felt that it had been stitched up.

Although the Swedish Supreme Court dismissed all of Bulbank’s objections, I am left with a distinctly
unsatisfactory impression from the whole story. In particular and had this been an English case, I would be
unable to reconcile the Chairman’s actions with his obligation under s.33(1)(a) and would be equally unable
to reconcile AITF’s with s.40(1); my impressions in these regards are wholly supported by the overall self-
justifying tone of the article in J.Int.Arb.

5. Contracts (Right of Third Parties) Act 1999 (the “Act”)
A recent Seminar on the effect of the Act on shipping industry (s.6(5) substantially excludes application of
the Act to contracts for the carriage of goods by sea) reminded me that it also applies to arbitration
agreements; S.8 addresses these.

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Per s. 8(1) of the Act, where a right under s.1 (ie the right of a 3rd party to enforce a term in a contract to
which it is not party) of the Act to enforce a term is itself subject to an arbitration agreement (the “AA”) then,
for purposes of the Arbitration Act 1996 (“AA96”) and provided that the AA is in writing per s.5 AA96, the 3rd
party shall be treated as a party to the AA.

Per s.8(2) of the Act, where a 3rd party has a right under s.1 to enforce an AA and the AA is in writing and
the 3rd party does not fall into s.8(1), then it will still be treated as party to the AA.

These provisions will cover a number of cases which arise in practice, eg where one of the parties to a
building contract such as a property developer in fact ‘delegates’ all or part of the work to an affiliate
construction company

6. CPR Changes
It is tempting for arbitrators to believe that “CPR does not apply to me” and, post the 1996 Act, there has
been a conscious move away from application of the White Book/CPR in arbitration; such move is not,
however, universal – I still hear of White Books being brought into recent arbitrations and I look forward to
the circumstance in which I can issue an Order requiring its removal from the hearing room. However, the
CPR does affect arbitrations in, inter alia, two main ways.

First, CPR Part 35’s provisions as to the use of Experts in litigation offer very helpful guidance to arbitrators
and in many cases it will be difficult for an arbitrator to diverge too far from Part 35 principles, not least that,
to the (substantial) extent they have been derived from Cresswell J’s dicta in Ikarian Reefer, they constitute
the law.

Second, Practice Direction 49G had hitherto addressed the procedures governing arbitration claims in
Court (ie anything in the 1996 Act allowing reference to the Court) but will be replaced w.e.f. 25th March
2002 by a new CPR Part 62 and Practice Direction 62. PD49G has been substantially re-enacted in PD62
but there are a number of changes which cannot be ignored. These have been amply addressed in the
appropriate legal press and it is not appropriate to consider them here. The new additions to CPR are
available f.o.c. on the Lord Chancellor’s Department website.

7. Jurisdiction and Conflict of Laws
An EC Regulation effective 1st March 2002, implemented by the Civil Jurisdiction and Judgements Order
2001 and having direct effect, has amended the Civil Jurisdiction and Judgements Act 1982 which had
incorporated the Brussels Convention 1968 into English law. . The most significant effect of the
amendment is on the cross-border English/Scottish regime which will now be broadly (but not completely)
in line with the Regulation.

8. Professor William Tetley QC
Professor Tetley, a Canadian, is one of the world’s most eminent jurists, particularly in respect of shipping
law but he has been involved in arbitration, UNCITRAL etc etc; he has a website at
http://tetley.law.mcgill.ca including glossaries at http://tetley.law.mcgill.ca/glossarymaritime.htm. This is
well worth a visit

With best wishes

Hew R. Dundas
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Arbitration News Update 4 – 29th April 2002 @ 1151

Dear Colleague,

Further to my newsletters of 3rd and 21st November 2001 and 8th March 2002, I set out below issue 4 of my informal
newsletter. The e-mailing list for these newsletters consists of professional colleagues such as yourself with
common or overlapping interests, particularly those who may not have ready access to research facilities, technical
support departments etc or who may not have the time to scour legal websites, read journals etc. As before, if you
do not wish to receive these newsletters, please advise and I will immediately remove you from the distribution list.

I would be happy to take in contributions on the understanding that since these newsletters (a) are wholly gratis
and (b) go out in my name I may exercise appropriate editorial rights.

Since it ties in with my deadlines for “ARBITRATION”, I will seek to issue quarterly, on or around 31st January, 30th
April, 31st July and 31st October unless major developments suggest interim issues.

The following matters have crossed my path in recent weeks; items marked ¶ denote cases upon which I have
submitted an article for ARBITRATION but you would be welcome to have an advance copy.

1. Gannet v Eastrade (¶)
In an LMAA documents-only arbitration arising out of a voyage charterparty, the Arbitrator inadvertently
made a mistake in awarding $21,858 in respect of one item of Gannet’s claim when in fact that item had
previously been agreed by the parties at $860. On application by the parties under s.57, the Arbitrator
corrected his Award, reducing the total awarded to Gannet from $35,330 to $15,120 against $261,768
claimed; so far, so simple. However, the original Award gave Gannet its costs (“costs follow the event”)
but, in correcting his Award, the arbitrator issued a revised costs award giving Gannet only 50% of its
costs; in both cases Eastrade was to pay its own and the Arbitrator’s costs. Two issues arose: (1) did the
Arbitrator have jurisdiction to vary his costs award [s.57 refers] and (2) if so, was he entitled to decide that
costs should NOT follow the event [s.61(2) refers].

It was held that, although there was no provision in s.57 to vary a costs award when there had been no
mistake in the original one, s.57 allowing only for correction of mistakes, it was common sense that, if the
correction to the principal Award necessitated an amendment to the costs award, such should be within the
power of the Arbitrator since the alternative, remittal under s.68(3), was expensive and would arrive at the
same end-result. Further, the discretion in s.61(2) was clear and the Arbitrator was fully entitled to decide
as he did that Gannet should recover only 50% of its costs, not least because his reasoning was clearly set
out.

As postscripts:
(i) In contrast to my earlier reporting of near disastrous arbitrations, the Judge praised this Arbitrator
for the admirable quality of his Award and his reasoning;
(ii) It is curious that such a lacuna could arise in s.57 but reassuring that the combination of the Act
and the common-sense approach of the Judge comfortably papered over the gap.

2. ADR in the English Courts (¶)
In Dunnett v Railtrack plc (judgement delivered on 22nd February 2002) the Court of Appeal gave teeth to
the CPR by disallowing costs in a case where the parties failed to use ADR, notwithstanding the outcome
of the case itself, in an instance where the Court had strongly recommended that ADR should be tried. Mr
Dunnett had been willing to try ADR if Railtrack would but the latter, presumably highly confident of its
chances at trial, refused to play ball. Railtrack was proved correct in this in that Mr Dunnett’s claim was
dismissed but this victory proved partially pyrrhic in that the Court refused to award Railtrack its costs.

Confirming its earlier decision in Frank Cowl & Ors v. Plymouth City Council, the Court repeated that it was
every lawyer’s duty to further the CPR’s objectives and that failure to try ADR would lead to adverse costs
consequences.

3. Calderbank Letters/Without Prejudice Correspondence (¶)
In National Commercial Bank Limited v. Kanishi (Far East) Limited, a Hong Kong case, e Court addressed
whether KFEL’s without prejudice offer (“WPO”) to settle could be considered i.r.o. costs. NCB won
judgement in its favour, having rejected KFEL’s offer, and the Court awarded costs to NCB. KFEL
submitted that the judgement amount was little different to its WPO so that NCB should not be awarded
costs. The Court refused to admit the WPO letter into evidence for consideration i.r.o. costs since clear and
express language was necessary in making any such offer; in particular, “without prejudice" is insufficient
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in isolation to permit the WPO letter to be admitted into evidence i.r.o. costs and also the letter must
expressly state either "without prejudice save as to costs" and/or that the offeror reserves the right to
submit the letter into Court i.r.o. costs. KFEL’s letter failed in this regard, the WPO letter was refused
admittance and KFEL’s argument on costs was rejected.

4. On The Juridical Character of the Seat under the Arbitration Act 1996
There is an excellent article in the latest Lloyds Maritime and Commercial Law Quarterly with the above
title (full reference LMCLQ [2002] 66) with particular reference to Dubai Islamic Bank v Paymentech case.
It explains in detail the interface between the proper law of the contract, the law of the seat and the law of
the arbitration. In that case, arising out of a dispute between two members of the international VISA credit
card system, an award was made under VISA Rules and an appeal was heard by the VISA Appeals Board
while In London and the final award issued by it in London; the English High Court held that the seat of the
arbitration was in California.

5. The Proportionality Principle and the Award of Costs; Home Office v Lownds (¶)
A major statement of policy was made by the Lord Chief Justice, Lord Woolf, on 22nd March 2002, sitting in
a very strong Court of Appeal; he gave the only judgement.

6. When is a Contract Evidenced in Writing ?
While this is significant in terms of the Arbitration Act 1996 (refer s.5(2)(c) and 5(3)), it is no less so in
adjudication since HCGRA applies only to agreements in writing, the approach to definition matching that in
s.5 AA96.

Construction Industry Law Letter (April 2002 issue) reports on the CoA case RJT Consulting Engineers
Limited v. DM Engineering (Northern Ireland) Limited (judgement delivered 8th March 2002): DME had
commenced adjudication proceedings against RJT who had contended that HCGRA did not apply since
there was no written agreement nor one “evidenced in writing “ (broadly the same definition as in s.5(2)(c)
and 5(3) AA96). The Adjudicator held that there was and this was upheld in the TCC. The CoA reversed
this decision albeit on the facts and with certain qualifications.

7. Leave to Appeal
s.69 gives a party the right to appeal to the High Court on a question of law arising out of an Award but this
right is severely restricted by s.69(3) whereas its predecessor section 21 of the 1950 Act allowed wide-
ranging judicial review; in 1995 the DAC had rejected (para 285) a submission that such appeals should
be entirely abolished. S.69(3) and the anti-interventionist approach is bolstered by s.69(8) further
restricting the right of appeal to the Court of Appeal in requiring [HC] leave to appeal to the [CoA]. Court
practice in recent years has generally (but not exclusively) been that applications for leave to appeal are
granted or refused without reasons.

The recent CoA case North Range Shipping Ld v Seatrans Shipping Corporation (26th March 2002) arose
out of a s.69 application (see my item 8 below) but its main interest is in respect of the examination by the
CoA of the “without reason” practice in the context of Art. 6 HRA and also whether the brief reasons given
by David Steel J in this case were adequate. The ECtHR has stated that “… The Court reiterates that
Article 6(1) obliges the courts to give reasons for their judgments, but cannot be understood as requiring a
detailed answer to every argument. … ” but stated in a separate case that “… The limited nature of the
subsequent issue of the grant or refusal of leave to appeal did not in itself call for oral argument at a public
hearing or the personal appearance of the [parties] before the Court of Appeal.” The CoA concluded in
North Range that “S. 69(3) contains a variety of threshold tests. At the very least we think an unsuccessful
applicant for leave should be told which of those tests he has failed. This … appears to be the current
practice of commercial judges. But does the judge need to go further and explain in every case why the
relevant threshold test has been failed ? We think the answer to this question is “No”.”

Accordingly the CoA, rather wittily in my view, granted leave to appeal but immediately dismissed the
appeal.

The current issue (19/2 – April 2002) of Journal of International Arbitration has an article in which the
author asserts that “ … arbitral awards are not reviewable for errors of law” and that “ .. the USA stands as
an exception”. The first statement is, strictly, inaccurate (the author himself contradicts it) and the second,
implying (at least at first sight) that the USA is the sole exception, is perhaps inadvertently misleading. Of
course, Article 34 of the Model Law does not expressly provide for review by the Court of questions of law.

As a postscript, it should be noted that the judgement of Tuckey LJ includes the following crystal clear
statements:
10