Author: Nicola Sharp
22 December 2023
3 min read
The purpose of an arbitration award is for the parties to have a final and binding decision about their dispute.
However, in very limited circumstances it is possible to appeal an award to the High Courts of England and Wales.
The Arbitration Act 1996 permits a party to appeal an award if it:
To make appeals even more restrictive, many arbitral rules expressly exclude the parties’ right to appeal. The London Court of International Arbitration (LCIA) is one of those institutions. Under Article 26.8 the parties “waive irrevocably their right to any form of appeal”. But the LCIA does permit a party to appeal where the proper legal processes for the arbitration were not followed.
Against that backdrop, it appears to be an uphill battle to appeal an award from the LCIA.
However, in the recent case of Palmat NV v Bluequest Resources AG  EWHC 2940 (Comm), the claimant pursued a challenge in the High Court.
On 13 March 2020, Bluequest referred its claim for payment from Palmat to arbitration. In the most simple terms, Bluequest contended that Palmat owed it money for the delivery of aluminium, pursuant to contracts between the parties.
The award was published on 14 May 2022, with corrections published on 8 July 2022.
Bluequest’s claim succeeded, but with one of the three arbitrators dissenting.
Palmat appealed the award on the ground of jurisdiction (s.67) and it alleged that there had been ‘serious irregularity’ in the tribunal’s process, which gave rise to a substantial injustice (s.68).
The jurisdiction challenge was dismissed on the basis of the construction of the relevant agreements, which is specific to the facts of the case.
In this article we focus on the s.68 challenge and the application to future decisions on whether or not to appeal an arbitral award.
In short, the challenge was dismissed. The judge set aside the part of the award that awarded interest on the defendant’s costs of the arbitration and its legal expenses, but dismissed all other parts of the appeal.
The overarching reason for the appeal’s dismissal is that the test of a serious irregularity giving rise to substantial injustice involves a high threshold.
Both elements of the challenge must be present: (i) the serious procedural irregularity and (ii) the substantial injustice towards the party.
The reason it is a high bar is that the court draws a balance between the need for finality of the award and the need to protect parties against the unfair conduct of the arbitration. Only an extreme case will justify the court’s intervention.
The judge drew upon the summary from Popplewell J (as he then was) in Terna Bahrain Holding Company WLL v Al Shamsi  EWHC 3283 (Comm), explaining that:
“Relief under s.68 will only be appropriate where the tribunal has gone so wrong in its conduct of the arbitration, and where its conduct is so far removed from what could reasonably be expected from the arbitral process, that justice calls out for it to be corrected.”
An example may be where one party was not given an opportunity to present their arguments.
That was not the case in this matter. The claimant’s arguments for a serious irregularity were (in brief summary):
The purpose of the Arbitration Act 1996 when it was drafted was to reduce the extent of intervention by the courts in the arbitral process. The courts continue to show a reluctance to intervene in arbitral decisions.
This case emphasises the general standpoint that a party cannot use s.68 simply because it is dissatisfied with the result at arbitration. As Carr J put it, s.68 must only be “a longstop in extreme cases” (Obrascon Huarte Lain SA v Qatar Foundation for Education, Science and Community Development  EWHC 2539).
With that in mind, parties should think carefully about whether or not to appeal an award. There is an obvious time and cost implication in extending the legal proceedings to appeal. Parties also lose the element of privacy and confidentiality in their dispute, as the court decision will be published in the public domain.
Given the high threshold to overcome for appeals to succeed, and the court’s general reluctance to intervene in arbitration, parties should be wary about launching into an appeal.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.