Residential development – Contractor – Disputes between parties culminating in arbitrations – Arbitrator making award in favour of defendant – Claimant alleging serious irregularities and applying to set aside award – Claimant seeking extension of time for application – Whether grounds for extension being established – Application dismissed
The defendant developer employed the claimant as the main contractor to design and build a building that comprised 114 flats on 11 levels. Disputes between the parties gave rise to two arbitrations. The first concerned various alleged incentive agreements that involved bonus payments for early completion and waivers of liquidated damages for late completion. No order was made for disclosure of documents, which was left for the parties to agree on a basis of co-operation.
A few weeks prior to the issue of the arbitration award in favour of the defendant, disclosure of documents was given in the second arbitration. The claimant’s solicitor believed that some of those documents should have been disclosed in the first arbitration. In November 2007, he wrote to the defendant, asking for an explanation of the “serious omissions” from disclosure in the first arbitration and he included a schedule of documents that should have been disclosed. There was further correspondence between the parties but the claimant failed to disclose the documents sought and, on 28 January 2008, the claimant, as the losing party in the first arbitration, applied, under section 68(2)(g) of the Arbitration Act 1996, to have the first award set aside on ground of serious irregularity because the award had been obtained by fraud or contrary to public policy. An application was also made, under section 80(5) of the 1996 Act, for an extension of time to make the substantive application that had been commenced 66 days outside the 28 day time limit set out in section 70(3).
Issues arose as to the approach to be adopted by the court in respect of the principles that should be applied to such an application, particularly the weight to be given to the relative strength or weakness of the underlying application.
Held: The application was dismissed.
The time limits for any court intervention in the arbitration process, including an application under section 68, were important and reflected the policy expressed in section 1 of the 1996 Act. The length of the delay, its causation and the reasonableness of the parties’ conduct were the primary factors. The weight to be given to the strength of the section 68 application was not a primary factor. However, a weak case would count against the application for extension, while a strong case would positively assist the application: AOOT Kalmneft v Glencore International AG [2002] 1 Lloyd’s LR 128; Nagusina Naviera v Allied Maritime Inc [2002] EWCA Civ 1147; and Thyssen Canada Ltd v Mariana Maritime SA [2005] EWHC 219 (Comm); [2005] 1 Lloyd’s Rep 640 applied.
The deliberate withholding of documents that were ordered to be disclosed in an arbitration might be considered to be reprehensible conduct and thus be contrary to public policy under section 68(2)(g). The withholding or non-disclosure of documents that had not been ordered to be disclosed by the arbitrator, or had not been agreed to be disclosed, could not be described as reprehensible or fraudulent unless such non-disclosure formed part of some other fraud or reprehensible conduct on the part of the non-disclosing party. If grounds arose under section 68(2)(g) based upon lying or deception on the part of the respondent to the application, it would be necessary to demonstrate that the award was dependent upon or was reached as a result of the lying or deception. If the grounds under section 68(2)(g) were established, it would still be necessary to show that substantial injustice would be caused to the applicant as a result thereof. They might not be difficult to establish if the section 68(2)(g) grounds had been established: Profilati Italia Srl v Painewebber Inc [2001] 1 Lloyd’s Rep 715 and Thyssen Canada applied.
In the present case, there was no good reason or excuse why the application under section 68 of the 1996 Act could not have been brought within the prescribed period. Moreover, the substantive application under section 68(2)(g) was weak and it was doubtful whether the claimant could establish any serious injustice. It was unlikely that any court would conclude that the non-disclosure of the documents in question was reprehensible or unconscionable given the arbitrator’s limited orders about co-operative disclosure.
Marc Rowlands (instructed by Hammonds, of Leeds) appeared for the claimant; Nerys Jefford QC (instructed by Eversheds LLP, of Manchester) appeared for the defendant.
Eileen O’Grady, barrister
