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Relief and confidentiality: Sowden v Smyth-Tyrrell and UMS Holdings Ltd v Great Station Properties SA

Two recent decisions of the High Court have provided salutary illustrations, reminders and guidance as to substantive and procedural aspects of English arbitration law: one in the context of the requirements for relief under section 68 of the Arbitration Act 1996 (AA 1996), and the other as regards arbitral confidentiality and the extent to which that may survive (or be protected in) a challenge process via the High Court.

Relief under section 68

In Sowden v Smyth-Tyrrell, the court was concerned with a statutory arbitration. The decision reminds us of five things.

First, the AA 1996 is no less applicable to statutory/mandatory arbitration than to consensual arbitration (see paragraph 56, citing Compton Beauchamp Estates Ltd v Spence per Morgan J at paragraph 37.

Second, that for the purposes of sections 57 and 70(2) of the AA 1996, where, on a fair reading, the application to the tribunal under section 57 seeks in substance the clarification which is relevant to the subsequent application under section 68, the fact that it may not have done so in so many words will not bar the latter by reason of section 70(2) (see paragraph 22).

Third, for the purposes of section 68, it must be shown that what has happened is “so far removed from what could reasonably be expected of the arbitral process” (per the Departmental Advisory Committee on Arbitration (DAC) Report at paragraph 280) that the court can answer “yes” to the question: “Is this so unfair that it cannot reasonably have been expected of the process?”. Without that, there will have been no “substantial injustice”: see paragraphs 55-60.

Fourth, where a party seeks to argue that section 68 is triggered because of a failure of the tribunal to address an argument advanced before it, “Arbitrators do not have to deal with every argument on every point raised; they should deal with essential issues” (per Morison J in Fidelity Management SA v Myriad International Holdings BV at paragraph 9). As stated by Clarke J in Van der Gieesen-de-Noord v Imtech Marine at paragraph 14:

“A failure to deal with an issue is not the same as a failure to set out the reasoning for rejecting a particular argument.”

Fifth, the fact that the tribunal admits to an irregularity does not preclude the court from determining (on an application under section 68) that there is in fact no serious irregularity for the purposes of the section: see paragraphs 21, 25 and 38.

Confidentiality

Meanwhile, in UMS Holdings Ltd v Great Station Properties SA, Teare J provided guidance on the scope of arbitral confidentiality in the context of a challenge to an arbitral award in the High Court (there, under section 68 of the 1996 AA 1996, further to a reference under the London Court of International Arbitration (LCIA) Rules).

The respondents challenged an award under section 68, and the hearing of that challenge was heard in public (further to an order of the court). The challenge under section 68 failed and the resulting judgment was also treated as public.

The respondents contended that the claimants remained under an obligation of confidentiality under Article 30 of the LCIA Rules and that the challenge process under section 68 AA 1996 (and any judgment or order made as part of that process) did not serve to discharge that. They therefore applied for an order to the effect that the award may not be used by that party for any purpose other than the proceedings.

Teare J (applying NAB v Serco Limited at paragraphs 26 and 36) concluded that, by the section 68 process, the award had entered the public domain: see paragraph 20.

Against that backdrop, Teare J therefore concluded that the obligation under Article 30 of the LCIA Rules (which he concluded, on balance, gave rise to an undertaking “to keep confidential” all awards) no longer continued to exist: see paragraph 21.

However, the judge was “troubled by the suggested conclusion that the Claimants should therefore be able to do with the Award as they wish”. This was especially so “in circumstances where the court does not know what the Claimants intend to do with the Award” and where “The Award was a confidential document and has only entered the public domain because the court considered, having regard to the principle of open justice, that the section 68 challenge should be heard in public”: see paragraph 22.

Accordingly, as part of the court’s “inherent jurisdiction to regulate the consequences of its order that the section 68 challenge be heard in public”, Teare J made the order sought by the respondents, stating, at paragraphs 22 and 23, that:

“It does not appear to me to follow that where the Award has entered the public domain because of the court’s own order the Claimants should be free to do what they like with the Award. Some uses of the Award (for example, showing it to a business associate) would be inimical to the confidentiality which normally attaches to awards”.

Quadrant Chambers Nevil Phillips

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