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Judgment of the Court of Appeal of the Bahamas

By a lease agreement dated the 31st December, 2011 the appellant leased premises from the respondents to operate a beach club and restaurant. In March, 2013 the respondent commenced proceedings to have the lease set aside as being void, illegal and of no effect because it violated the International Landholding Act. The trial judge heard the matter, but reserved his judgment and ordered the status quo to remain. After the judgment had been reserved, but before the judgment was delivered, the respondent demolished the subject premises. Subsequent thereto the lease was ruled valid by the trial judge. The issue that was referred to arbitration, therefore, related to the forcible eviction of the appellant during the currency of a valid lease.
The arbitrator ordered the respondents to pay the appellant special damages, general damages for consequential loss and exemplary damages for a total of $9,670,000.00; with interest at 5% from the 18th July, 2013; and costs.
Subsequently, the respondent challenged the arbitrator's award on the basis of substantial jurisdiction (pursuant to section 89 of the Arbitration Act (AA)); serious irregularity (pursuant to section 90 of the AA); and an appeal on a point of law (pursuant to section 91 of the AA). The challenges to the substantial jurisdiction and on a point of law were dismissed by the trial judge. Pursuant to section 90, that is, that a serious irregularity had occurred, the judge remitted the consequential damages component of the award back to the arbitrator for reconsideration. The serious irregularity was that the arbitrator did not consider the issue of whether the appellant could claim losses occurring not only in the remaining term of the current lease but also in the renewal period.
The appellant now appeals the findings and remittance orders and asks this Court to declare the orders nullities and or to set them aside with consequential orders for costs.
Held (Barnett, JA (Actg.) dissenting): appeal allowed; remittance orders set aside; award of arbitrator upheld. Costs to the appellant, here and below, certified fit for two counsel, to be taxed if not agreed.
per Longley, P: the appellant complains that the judge had no jurisdiction to make the remittance order; alternatively, the judge failed to make a determination as to whether the respondent suffered, or would suffer, a substantial injustice as a result of the irregularity, before making the remittal order. In essence, the appellant argues that before there can be a remittance on the basis of serious irregularity the judge must first find that there was an irregularity and then consider whether that irregularity has caused or will cause substantial injustice. What is substantial injustice for these purposes? “The accepted test now seems to be that there is substantial injustice if it can be shown that the irregularity in the procedure caused the arbitrator to reach a conclusion which, but for the irregularity, they might not have reached, as long as the alternative was reasonably argued.” “The test of “substantial injustice” is intended to be applied by way of support for the arbitral process, not by way of interference with that process.”
The burden is on an applicant to prove substantial injustice and he, as a matter of principle, has the obligation to make the assertions in his pleadings to challenge the award. The other side must know what the challenge is and the case it has to meet. Until this precondition is met the applicant is unable to adduce evidence in support and the judge cannot make the case for him. As the issue of substantial injustice was not pleaded, and, therefore, no finding made on it by the learned judge the remittance order must be set aside.
The appellant claimed damages for consequential loss for the remainder of the term of the lease, as well as damages for the renewal period; the respondents simply denied the claim and put the appellant to strict proof. Nowhere did they plead illegality, uncertainty, invalidity or unenforceability, except in their closing arguments; the only issue raised was quantum. The arbitrator awarded damages for the appellant's damages for consequential loss. The complaint here seems to be that the arbitrator got it wrong by awarding such damages. In which case the challenge should have been brought pursuant to section 91 of the Act as section 90 challenges are only concerned with due process, not whether the tribunal “got it right”. Therefore, there was no evidential basis for the judge to find that there was a serious irregularity pursuant to section 90(2)(d). As such, the remittance order is erroneous as no irregularity is shown nor has it been shown that the respondent will suffer substantial injustice.
A v B [2017] EWHC 596 (Comm) applied
Brockton Capital LLP v Atlantic-Pacific Capital Inc. [2015] 2 All ER (Comm) 350 mentioned Bulfracht (Cyprus) Ltd v Boneset Shipping Co. Ltd. ('The Pamphilos') [2002] 2 Lloyd's Rep. 681 mentioned
Lesothos Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 applied SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm) applied Terna Bahrain Holding Co Wll v Ali Shamsi et al [2012] EWHC 3283 (Comm) applied Transition Feeds LLP v Itochu Europe [2013] EWHC 3629 (Comm) applied
per Barnett, JA (Actg.): By section 92(2) of the Act, a serious irregularity occurs where one of the factors set out in sections 90(2)(a) through (i) exist and that the irregularity has caused or will cause substantial injustice. Therefore, if a judge finds that one of the irregularities mentioned in sections 90(2)(a) though (i) exists and that that irregularity has caused or will cause substantial injustice to an applicant the judge is entitled to set aside the award in whole or in part.
There are two issues raised by this appeal. Firstly, was the trial judge correct to find that there was an irregularity falling within section 90(2)(d). Secondly, if he was correct that an irregularity exists, should his decision be set aside on the ground that he did not state that the irregularity that he found to exist has caused or will cause substantial injustice. It is common ground that for there to be a serious irregularity under section 90(2) there must exist an irregularity within (a) through (i) and that irregularity has caused or will cause substantial injustice.
A review of the award does not reflect that the arbitrator considered the issue of whether Therapy would be entitled to damages during the renewal period. It seems to have proceeded on the basis that Therapy was entitled to these damages. Whilst not every argument of counsel demands consideration by the Tribunal this was an issue which turned out to be a central one. It was this factor that caused the learned judge to determine that an irregularity within the ambit of section 90(2) existed.
It is accepted without reservation that not every irregularity which falls within section 90(2) (a) through (i) will lead to a finding of serious irregularity which enables the court to exercise its powers under section 90(3) of the Act. The irregularity must have caused or will cause substantial injustice. It is correct that in many cases there must be evidence before the tribunal to satisfy it that the irregularity has caused or will cause substantial injustice. That issue is often fact sensitive. However, there may be irregularities which by their very nature will cause substantial injustice. In this case it is unarguable that the failure to consider whether the renewal option was efficacious must lead to substantial injustice. If the option was not efficacious, then any award which took into account lost profits during the three year renewal period would cause substantial injustice. The injustice caused by the failure to consider that issue is self-obvious and no evidence would be required.

Ascot Commodities NV v Olam International Ltd [2001] EWHC 520 (Comm) applied Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd 2013 VSC 614 applied Lesothos Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 distinguished

Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC) applied

Teekay Tankers Ltd v STX Offshore and Shipbuilding Co Ltd (No 2) [2018] 1 All ER 279 mentioned

Judgment delivered by the Honourable Sir Hartman Longley, P:

1.
A contractual dispute between the parties to this action led to a reference to a single arbitrator, retired Justice Cheryl Albury. The award was challenged by the respondent. That challenge was heard by Justice Winder of the Supreme Court. He upheld part of the award and remitted other significant parts of the award to the tribunal for reconsideration, apparently on the basis that a serious irregularity was shown. It is against that remittance order that the appellant now appeals to this court.

The Facts

2.
By a lease agreement dated the 31st December, 2011, Therapy Beach Club Incorporated (Therapy) leased premises from the respondent to operate a Beach Club and restaurant facilities. In March 2013, the respondent commenced proceedings by originating summons seeking a declaration that the lease agreement entered into with the respondent was void, illegal and of no effect because its terms violated the International Persons Landholding Act. The action came on for hearing before Sir Michael Barnett, CJ (as he then was) (the CJ) who reserved judgment and ordered the status quo remain. In the interim, and before awaiting the judgment, the respondent demolished the premises, the subject of the lease. Subsequently, the CJ ruled that the lease was valid.
3.
The dispute then concerned the forcible eviction of the appellant from premises during the currency of a valid lease. That dispute was referred to arbitration after the parties entered into a written arbitration agreement.
4.
In the arbitration the appellant claimed damages for breach of contract, damages in tort, damages for trespass, conversion and unlawful interference with commercial interest. The claim was essentially denied by the respondents. The arbitral hearing was heard over a number of days in 2017 with parties adducing evidence from several witnesses including expert financial witnesses.
5.
The arbitrator delivered her award on the 22nd August, 2017. By that award, the respondent was ordered to pay to the appellant the sum of $9,670,000.00 with interest at 5% from the 18th July, 2013.
6.
The award was made up as follows:

Special damages $370,000.00

General Damages for consequential loss $6,800,000.00

Exemplary damages $2,500,000.00

Interest at 5% from 18th July 2013 Costs

7.
By Notice of Motion the respondent challenged the award of the arbitrator on the basis of substantial jurisdiction under section 89 of the Arbitration Act, 2009 (the Act); serious irregularity under section 90 of the Act and an appeal on a point of law under section 91 of the Act.
8.
The challenges under sections 89 and 91 of the Act were dismissed by Winder, J.
9.
However, the learned judge remitted the consequential damages component of the award in the amount of $6,800,000.00 back to the arbitrator for reconsideration and he did so on the basis of his finding pursuant to section 90 of the Act that the consequential damages component of the award was seriously irregular because the arbitrator did not consider the issue of whether Therapy could claim losses occurring not only in the remaining term of the current lease but also in the renewal period. That appeared to be the result of a finding that there was a serious irregularity pursuant to section 90 (2)(d) of the Act.
10.
He also found that the award in paragraph 165 was unfair because the applicants were not afforded an opportunity to make representations prior to the decision to make deductions and allowances. That appears to be a reference to section 44 and section 90(1)(a) of the Act.
11.
Further, he found that in so far as the arbitrator conflated the award for consequential loss it was ambiguous and was remitted to her, presumably pursuant to section 90(2)(f) of the Act.
12.
With the leave of the court that the appeal gave rise to points of law of general public importance, the appellant appeals the findings and remittance orders and asks the court to declare the findings and the remittance orders nullities and or to set them aside with consequential orders for costs.
13.
The appellant relies on the following grounds of appeal:

“1. The Appellant's Primary Ground of Appeal is a Jurisdictional Ground. The Supreme Court derives its Jurisdiction to interfere with an Arbitrator's Award on the grounds of Serious Irregularity solely from Section 90 of the Act. Section 90 (2) of the Act expressly prescribes that Jurisdiction by stating "Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant" (Emphasis Added) and Section 5 of the Act makes Section 90 a Mandatory Provision. The Learned Judge had no Jurisdiction to make findings of Serious Irregularity under Section 90 of the Act and to Set Aside and Remit the Consequential Losses component of the Award to the Arbitrator for Reconsideration on the basis of such findings; (i) Without conducting the Second Stage of the investigation under Section 90 as to whether the Irregularities which he found to have existed caused or would cause Substantial Injustice to the Respondents AND (ii) Without actually making the Mandatory finding that there was or would be resultant Substantial Injustice.

2. Further or alternatively, having regard (i) to the said provisions of Section 90(2) of the Act; (ii) to the fact that the applicant "bears the burden" of establishing Substantial Injustice and (iii) to the fact that the Respondents did not assert that the alleged Irregularities caused or would cause them Substantial Injustice, the Learned Judge erred in Law by making findings of Serious Irregularity under Sections 90(2)(a), 90(2)(d) and 90(2)(f) where no Substantial Injustice had been asserted or shown by the Respondents and where in those circumstances those Grounds of Challenge also ought to have been dismissed.

3. The Learned Judge in the purported exercise of his jurisdiction under Section 90 (2)(d) of the Act found that, "the Award does not reflect that the Arbitrator considered the issue of whether Therapy would be entitled to damages during the renewal period" and he also found that "this was an issue raised by Therapy in paragraph 70 of the Statement of Claim and the said issue was joined by the Applicants in their Defences. The issue was also traversed in closing submissions". In making this finding the Learned Judge purported to be exercising the jurisdiction under Section 90 (2)(d) of the Act, that being the ground that 'the Tribunal had failed to deal with all of the issues put to it'. The Learned Judge erred in Law because (i). the question of "whether Therapy would be entitled to damages during the renewal period" was NOT the basis of the Respondents' Challenge to the Award under Section 90(2)(d) it was the basis for the challenge to the Award under Section 90(2)(b) that being that the Tribunal had 'exceeded its powers" by awarding damages in this manner; (ii) in any event, assuming without accepting, that this had been a ground of challenge advanced by the Respondents under Section 90(2)(d), the Learned Judge nevertheless erred in Law by equating the "facts" and/or "claims" pleaded by the Appellant in its Statement of Claim, the "facts" and/or "defences" raised by the Respondents in their Defences and the "arguments" made by the Respondents in their closing submissions as "Issues" put to the Tribunal as envisaged by Section 90(2)(d) of the Act and (iii) the Learned Judge erred by purporting to make a finding under Section 90(2)(d) without considering and finding that there was or would be Substantial Injustice to the Respondent by reason of such irregularity.

4. The Learned Judge found that, " ... the lump sum award was a serious irregularity in that the tribunal conflated the awards for consequential loss for breach of contract, trespass and unlawful interference with economic interest, thereby rendering the award ambiguous and contrary to section 90(2)(f)" and he also found that, "The Applicants ought to know what portion of the global sum of $6,800,000 awarded for consequential loss is for breach of contract, which portion is allocated to the claims for trespass and/or for unlawful interference with economic interest, all of which have their own measure of damages." In making this finding, the Learned Judge was exercising his jurisdiction under Section 90 (2)(f) of the Act, that being the ground that the Award was "uncertain or ambiguous as to its effect" [Emphasis Added] and in so doing the Learned Judge Erred in Law because (i) the assertion that the Tribunal had conflated the damages for consequential loss for breach of contract, trespass and unlawful interference with economic interest without specifying what portion of the lump sum award was attributable to each of the three (3) causes of action was NOT the basis of the Respondents' Challenge to the Award under Section 90(2)(1), or its assertion of "ambiguity" in the effect of the Award or at all; (ii) in any event, assuming without accepting, that this had been a ground of challenge advanced by the Respondents under Section 90(2)(1) of the Act, the Learned Judge erred in law because the finding or implication that such "conflation" had any bearing on the "effect" of the Award as envisaged by Section 90(2)(d) of the Act amounted to an error of Law; (iii) the Learned Judge erred in Law by finding that the consequential loss award which was exclusively an award for Loss of Profit, has a different "measure of damages" depending on the cause of action, that being a misstatement of law confusing the issues of the ability to recover consequential losses with the manner of actually assessing loss of profits which remains the same regardless of the cause of action; (iv) the Learned Judge also erred in Law by failing to consider the fact that the Respondents had at no time during the Arbitration Proceedings taken objection to the so called "conflation" of the loss of profits claim and had thereby loss the right to object to the same and (v) the Learned Judge erred in Law by purporting to make a finding under Section 90(2)(f) without considering and finding that there was or would be Substantial Injustice to the Respondent by reason of such irregularity.

5. The Learned Judge in the purported exercise of his jurisdiction under Section 90(2)(a) and Section 44 of the Act stated, "the decision of the Arbitrator at paragraph 165 of the award was unfair and contrary to Section 44 of the Arbitration Act in that the Applicants were not afforded an opportunity to make representations prior to her decisions to make deductions and allowances ... ". Given the fact that the Arbitrator at Paragraph 165 of the Award was explaining the process of her actual "estimation" of the loss of profits awards consistent with the authorities of Parabola Investments Ltd and another v Browallia Cal Ltd , Ramzam v. Brookwide and Fiona Trust & Holding Corporation and others v Privalov and others (No 2) which she had already described in Paragraph 161 of the Award as being "instructive" for the process of assessing such loss, the Learned Judge erred in Law (i) by finding and/or implying that the Arbitration Tribunal in making its said "estimate" of loss of profits after having already heard the parties' respective submissions on what the award for loss of profits should be, was thereafter, during its process of deliberations and assessment to arrive at such "estimate", required to again hear from the parties on discounts and allowances inherent in the process of such estimation; (ii) the Learned Judge erred in Law by finding and/or implying that the parties have such a right to be heard during this process "estimation"; (iii) the Learned Judge erred in Law by failing to have regard to the said authorities which confirmed the Tribunal's inevitable power to make "discounts" in the course of the inherently imprecise process of "estimating" loss of profits as a part of the exercise of that discretion without regard to the parties; (iv) the Learned Judged erred in Law by finding in these circumstances that there was "Unfairness" as envisaged by Section 44 of the Act or at all and (v) the Learned Judge erred in Law by purporting to make a finding under Section 90(2)(a) without considering and finding that there was or would be Substantial Injustice to the Respondent by reason of such irregularity.

6. Having regard to all of the circumstances of the case, no Judge exercising his Jurisdiction under Section 90 of the Act and properly directing himself on the law and particularly the "high threshold" for such applications and the Court's consideration of finality of Arbitrations, could have reached the conclusion that the Consequential Damages component of the Award should be Set Aside and Remitted, that findings of Serious Irregularity could and/or should be made under Section 90 of the Act where no Substantial Injustice had been alleged, shown, considered and found by the Court, that findings of Serious Irregularity could or should be made on grounds not advanced by the Respondents in the Notice of Motion in support of the respective applications, and that a finding of Unfairness and breach of Section 44 of the Act could or should be made in circumstances where the Tribunal had heard the parties on what the loss of profit award should be and thereafter exercised the discretion implicit in the assessment of that award.”

Grounds 1 and 2

14.
The attack upon the judgment of Winder, J. is essentially two-fold. First, it is contended that the judge had no jurisdiction to make the remittance order and in the alternative, the second ground of appeal, that the judge had failed to comply with the provision of the Act by not making a determination as to whether the respondent suffered substantial injustice or would suffer substantial injustice as a result of the alleged serious irregularity before making the order for remittance. Though expressed as separate grounds they are intertwined.
15.
It is important first to set out certain relevant provisions of the Act.
16.
Section 90 of the Act provides as follows:

“90. Challenging the award: serious Irregularity.

(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant -

(a) failure by the tribunal to comply with section 44;

(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction);

(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;

(d) failure by the tribunal to deal with all the issues that were put to it;

(e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;

(f) uncertainty or ambiguity as to the effect of the award;

(g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;

(h) failure to comply with the requirements as to the form of the award; or

(i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.

(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may -

(a) remit the award to the tribunal, in whole or in part, for reconsideration;

(b) set the award aside in whole or in part; or

(c) declare the award to be of no effect, in whole or in part.

(4) The court shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.

(5) The leave of the court is required for any appeal from a decision of the court under this section.

17.
Section 44 of the Act provides as follows:

“44. General duty of the tribunal.

(1) The tribunal shall –

(a) act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent, and

(b) adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined.

(2) The tribunal shall comply with that general duty in conducting the arbitral proceedings, in its decisions on matters of procedure and evidence and in the exercise of all other powers conferred on it.”

The Jurisdictional Ground

18.
It is the submission of the appellant that in making the remittance order on the finding of serious irregularity, the learned judge failed, as a precondition to making a remittance order, to consider whether the irregularity found by him caused or would cause the respondent substantial injustice.
19.
That terminology is derived from the Act itself. Section 90(2) provides that:

“90. (2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant…”

20.
For these purposes the alleged irregularities which the judge found are (a), (d) and (f) of section 90. They are:

(a) failure by the tribunal to comply with section 44;

...

(d) failure by the tribunal to deal with all the issues that were put to it;

...

(f) uncertainty or ambiguity as to the effect of the award;

21.
Without conceding that the finding of serious of irregularity was justified on the evidence, (a position which becomes evident in grounds 3, 4, 5 and 6) the appellant therefore argues that before there can be a remittance on the basis of irregularity the judge must first find that there was an irregularity and then consider whether that irregularity has caused or will cause substantial injustice to the respondent/applicant. As a corollary they argue that there is an evidential burden on the respondent/applicant to show how it is or may have been prejudiced by the irregularity.
22.
Counsel for the appellant relies upon a number of UK authorities to make the point and to support her submissions. I refer to some of the authorities cited by the appellant.
23.
In Lesotho Highlands Development Authority v Impregilo SpA and others [2005] UKHL 43 Lord Steyn at paragraph 28 of the judgment of the House of Lords says relative to section 68 of the UK Act (which is identical to section 90 of the Act):

“A number of preliminary observations about section 68 are pertinent. First, unlike the position under the old law, intervention under section 68 is only permissible after an award has been made. Secondly, the requirement is a serious irregularity. It is a new concept in English arbitration law. Plainly a high threshold must be satisfied. Thirdly, it must be established that the irregularity caused or will cause substantial injustice to the applicant. This is designed to eliminate technical and unmeritorious challenges. It is also a new requirement in English arbitration law. Fourthly, the irregularity must fall within the closed list of categories set out in paragraphs (a) to (i).

24.
Similarly, in Transitions Feeds LLP v Itochu Europe plc [2013] EWHC 3629 (Comm), a case also cited by the respondents, Field, J. Said at paragraph 17:

17. I gratefully adopt the approach taken by Flaux J in paragraphs 6, 7 and 30 in Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] EWHC 3066 (Comm); [2013] 2 CLC 901:

'6. In order to succeed under section 68 an applicant needs to show three things. First of all, a serious irregularity. Secondly, a serious irregularity which falls within the closed list of categories in section 68(2). Thirdly, that one or more of the irregularities identified caused or will cause the party substantial injustice. As Hamblen J said in Abuja International Hotels v Meridien SAS [2012] EWHC 87 (Comm) at [48] to [49], the focus of the enquiry under s. 68 is due process, not the correctness of the tribunal's decision. As the DAC Report states, and numerous cases since have reiterated, the section is designed as a long-stop available only in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected. This point, that section 68 is about whether there has been due process, not whether the tribunal “got it right”, is of particular importance in the present case, where, for the reasons set out below, the claimants' real complaint is that they consider that the tribunal reached the wrong result, not a matter in relation to which an arbitration award is susceptible to challenge under s. 68…”

25.
The view of section 68 expressed in Lesotho was also echoed in cases like Bulfracht (Cyprus) Ltd v Boneset Shipping Co. Ltd. ('The Pamphilos') [2002] 2 Lloyd's Rep. 681 and Brockton Capital LLP v Atlantic-Pacific Capital Inc. [2015] 2 All ER (Comm) 350 and a number of other authorities.

The case for the respondents

26.
The respondents in essence argue that it is not a question of jurisdiction at all. I agree. However, this seems to be more a question of semantics. Sometimes the words are used interchangeably to mean power. It is clear that the judge had the jurisdiction to make the order and finding of irregularity. That jurisdiction comes from the Act itself once an award is made and there is an application to challenge it.
27.
The real question, however it is couched, is whether the judge was obligated, having found irregularity, to go further, as some of the cases suggest, and also consider whether that irregularity caused or was likely to cause substantial injustice to the applicant/respondent, before remitting the matter to the tribunal for further consideration. In other words, was such a finding, a precondition to a remittance order?
28.
As I understand the submissions of the respondent on this point it is that was unnecessary for the judge to make a specific finding that the irregularity would cause or caused substantial injustice. The judge clearly did not do this expressly in his ruling. The respondent contends that it is implicit on the record that the learned judge, who made at least three (3) references to section 90 of the Act in his ruling, must have adverted his mind to this issue before making the remittance orders.
29.
The respondents rely upon the minute of the learned judge made at the conclusion of the hearing to submit that he must have found substantial injustice before remitting the matter.
30.
It seems to me this position is untenable. The highest the minute can be said to have attained is that the judge found an irregularity and maybe injustice. However, 'substantial injustice' is what he was required to consider and find before remitting the award.
31.
This begs the question what is 'substantial injustice' for these purposes? Again, this is a question that has been addressed repeatedly with a consistent answer.
32.
In Transitions Feeds the court said at paragraph 23:

“23. Has the failure of the board to deal with the price allowance issue caused substantial injustice to the buyers? The approach the court should take when dealing with this question is accurately set out in paragraph 20.8 to Professor Merkin's arbitration law:

'However, in determining whether there has been substantial injustice, the court is not required to attempt to determine for itself exactly what result the arbitrator would have come to but for the alleged irregularity, as the process would in effect amount to a rehearing of the arbitration. Instead, if the court is satisfied that the applicant had not been deprived of his opportunity to present his case properly, and that he would have acted in the same way with or without the alleged irregularity, then the award will be upheld. By contrast, if it is realistically possible that the arbitrator could have reached the opposite conclusion had he acted properly in that the argument was better than hopeless, there is potentially substantial injustice. The accepted test now seems to be that there is substantial injustice if it can be shown that the irregularity in the procedure caused the arbitrators to reach a conclusion which, but for the irregularity, they might not have reached, as long as the alternative was reasonably arguable.' [Emphasis added]

33.
So too in Bulfracht (Cyprus) Ltd, a decision of Justice Coleman sitting in the Commercial Court of the Queen's Bench Division, it was said that:

“…It is for this reason that section 68 involves a two-stage investigation. The first stage involves asking whether there has been an irregularity of at least one of the nine kinds identified in sub-section (2)(a) to (i).”

And later he says:

“The second stage of the investigation required by section 68 is as to whether the irregularity has caused or will cause substantial injustice. In the report of the Departmental Advisory Committee, para 58, the following passage is material:

'The Court does not have a general supervisory jurisdiction over arbitrations. We have listed the specific cases where a challenge can be made under this Clause. The test of “substantial injustice” is intended to be applied by way of support for the arbitral process, not by way of interference with that process. Thus, it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the Court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened simply cannot on any view be defended as an acceptable consequence of that choice.'

This passage shows that those who framed the bill contemplated that the courts' intervention would be engaged not merely in those cases where some injustice has been caused to the applicant by the incidence of the serious irregularity but where the substance and nature of the injustice goes well beyond what could reasonably be expected as an ordinary incident of arbitration. [Emphasis added]

34.
To my mind these authorities all support the position advanced by the appellant that the learned judge was required to do a separate investigation, pursuant to section 90, to determine if the serious irregularity found caused or was likely to cause substantial injustice to the applicant/respondent before remitting the matter for reconsideration. The issue is simply one of due process. That is why Coleman said:

“The second stage of the investigation required by section 68 is as to whether the irregularity has caused or will cause substantial injustice…The test of “substantial injustice” is intended to be applied by way of support for the arbitral process, not by way of interference with that process. Thus, it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the Court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened simply cannot on any view be defended as an acceptable consequence of that choice.This passage shows that those who framed the bill contemplated that the courts' intervention would be engaged not merely in those cases where some injustice has been caused to the applicant by the incidence of the serious irregularity but where the substance and nature of the injustice goes well beyond what could reasonably be expected as an ordinary incident of arbitration.”

35.
I cannot say having reviewed the minute or judgment of Winder, J that he duly adverted his mind to this issue or that if he had what his conclusion would have been.
36.
What is most significant in this regard is that the respondent failed to reference this requirement in its Notice of Motion to set aside the award or to adduce any evidence to support it even though one gleans that in the Notice they alleged irregularities without necessarily specifying the section under which their complaints fell.
37.
What clearly emerges from all the authorities is that the burden is on the applicant seeking to set aside an arbitration award on the basis of serious irregularity to prove that he has either suffered or will in the future suffer substantial injustice.
38.
If the burden is indeed on the applicant, then it seems to me as a matter of principle that he has the obligation to make the assertions in his pleadings to challenge an award. Two averments must be pleaded: 1. that a serious irregularity has occurred and 2. that he has suffered substantial injustice or will suffer substantial injustice. That to my mind is an imperative obligation. It cannot be inferred. The other side must know what the challenge is and the case he has to meet and he will only know that from the pleading, not from the arguments but from the pleading.
39.
Having done that then it is open to him to adduce evidence in support of his application to set aside the award on the basis that he has suffered substantial injustice or will suffer substantial injustice as result of the irregularity.
40.
However, until he has met the precondition to plead substantial injustice he cannot adduce evidence to support it and more fundamentally the judge hearing a challenge cannot make the case for him.
41.
It seems to me that this is borne out by the clear words of the statue. It puts the opposing party on notice as to the case he has to meet. Otherwise, how is the other party to know what case it has to meet and respond to? The audi alteram partem rule requires the party to know what case it has to meet so that it might adduce evidence and or an argument to counter the case or to consent.
42.
So, for example, in the Transitions Feeds case at paragraph 24, Mr. Parsons, Counsel for the Defendant, made a robust submission to the judge at first instance hearing the challenge to the award on the basis of irregularity that no substantial injustice was shown for several reasons. However, Field, J. rejected them before remitting the matter for consideration by the board. That is what should have happened in this case before the remittance order was made. Unfortunately it was not done.
43.
The 3rd edition of Atkin's Encyclopedia of Court Forms in Civil Proceedings (2016 issue) contains precedents that, I think, would be useful to be followed in this jurisdiction in such cases and I append them to this judgment (forms 95, 96 and 97). Had a similar practice been followed in this case the judge may well have duly adverted his mind to the principal issue.
44.
The respondents appear to argue in paragraph 56 of their skeleton arguments that a finding of serious irregularity must mean that substantial injustice has been shown or was shown to exist. That argument to my mind is fatally flawed. Were that the case the section would not have been drawn in terms which require the judge to 'consider' whether there has been substantial injustice.
45.
The House of Lords decision in Lesotho makes clear than an applicant cannot succeed before first showing as a precondition that there has been substantial injustice. It cannot be assumed as Lord Steyn pointed out. It must be proved.
46.
Mr. Bethel is of a different view. I cannot agree especially since nowhere in its pleadings do the respondents refer to that obligation, nor did it attempt to do so and the judge never made any mention of it and if he had so found there is no doubt he would have referred to his finding in this regard.
47.
Most significantly, the argument of the respondent in paragraph 59 of the skeletons to the effect that the judge, by setting out the section, must be taken to have considered the question of substantial injustice is not only made without authority but runs counter to the authorities which exist and to which the appellant has made reference, including Lesotho, a decision of the House of Lords.
48.
In the circumstances I am constrained to allow the appeal and set aside the remittance orders.
49.
I turn now to grounds 3, 4, 5 and 6 of the Notice of Appeal.

Grounds, 3, 4, 5 and 6

50.
The appellant contends that the findings of serious irregularity were erroneous.
51.
The judge found that the arbitrator did not address the issue raised by the respondent as to whether the appellant was entitled to damages for the unexpired term of the lease as well as the renewal period nor did she consider the issue raised by the respondent that the option for the renewal was void and unenforceable because it was uncertain and illusory.

The approach of the courts to issue irregularity

52.
I refer once again to the case of Transitions Feeds. There Field J. said at paragraph 17:

“17. '…7. In cases under section 68(2)(d), there are four questions for the court: (i) whether the relevant point or argument was an “issue” within the meaning of the sub-section; (ii) if so, whether the issue was “put” to the tribunal; (iii) if so, whether the tribunal failed to deal with it; and (iv) if so, whether that failure has caused substantial injustice: see per Andrew Smith J in Petrochemical Industries Co v Dow Chemical [2012] EWHC 2739 (Comm); [2013] 2 CLC 864 at [15].

30. Mr Bright then effectively subjected each sentence of this paragraph to a minute textual analysis with a view to demonstrating that the tribunal had failed to deal with the question of continuing renunciation. That is the wrong approach. A number of cases have emphasised that the court should read the award in a reasonable and commercial way and not by nitpicking and looking for inconsistencies and faults: see per Bingham J in Zermalt Holdings SA v Nu-LifeUpholstery Repairs Ltd [1985] 2 EGLR 14 cited with approval by Andrew Smith J in [27] of Petrochemical Industries Co v Dow Chemical . A similar point was made by Teare J in Pace Shipping v Churchgate Nigeria Ltd [2009] EWHC 1975 (Comm); [2009] 2 CLC 446 at [20] specifically deprecating a minute textual analysis. Quite apart from the fact that this is the wrong approach, it did not assist the claimants' case …'

18. In Petrochemical Industries Co (KSC) v Dow Chemical Co [2013] 2 CLC 864 (at paragraphs 16, 26 and 27) Andrew Smith J had this to say on what constitutes an 'issue' and the considerations relevant to whether an issue had been dealt with by a tribunal for the purposes of s. 68(2)(d):

'16. A distinction is drawn in the authorities between, on the one hand “issues” and, on the other hand, what are variously referred to as (for example) “arguments” advanced or “points” made by parties to an arbitration or “lines of reasoning” or “steps” in an argument (see, for example, Hussmann (Europe) Ltdv Al Ameen Development & Trade Co [2000] CLC 1243 , 1260–1 and Bulfracht (Cyprus) Ltd v Boneset Shipping Co Ltd (The Pamphilos) [2002] 2 Ll Rep 681 , 686). These authorities demonstrate a consistent concern to maintain the “high threshold” that has been said to be required for establishing a serious irregularity (see Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43; [2005] 2 CLC 1 paragraph 28 and the other judicial observations collected by Tomlinson J in ABB AG v Hochtief Airport GmbH [2006] EWHC 388 (Comm) paragraph 63). The concern has sometimes been emphasised by references to “essential” issues or “key” issues or “crucial” issues (see respectively, for example, Ascot Commodities NV v Olam International Ltd [2002] CLC 277 , 284; Weldon Plant v Commission for New Towns [2001] 1 All ER (Comm) 264 , 279; and Buyuk Camlica Shipping Trading & Industry Co Ltd v Progress BulkCarriers Ltd [2010] EWHC 442 (Comm)), but the adjectives are not, I think, intended to import a definitional gloss upon the statute but simply allude to the requirement that the serious irregularity result in substantial injustice: Fidelity Management SA v Myriad International Holdings BV [2005] EWHC 1193 (Comm) at paragraph 10. They do not, to my mind, go further in providing a useful test for applying s. 68(2)(d).

26. Sub-section 68(2(d) is about the tribunal “dealing with” issues. The question whether an issue was dealt with depends upon a consideration of the award: as Mr Gavin Kealey QC said in Buyuk Camlica Shipping Trading & Industry Co Inc v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm) at paragraph 38:

“It is not sufficient for an arbitral tribunal to deal with crucial issues in pectore , such that the parties are left to guess at whether a crucial issue has been dealt with or has been overlooked: the legislative purpose of section [68(2)(d)] is to ensure that all those issues the determination of which are crucial to the tribunal's decision are dealt with and, in my judgment, this can only be achieved in practice if it is made apparent to the parties (normally, as I say, from the award or reasons) that those crucial issues have indeed been determined.”

27. As Mr Smouha submitted, and Lord Grabiner acknowledged, a tribunal does not have to “set out each step by which they reach their conclusion or deal with each point made by a party to an arbitration”: Hussmann (Europe) Ltd v Al AmeenDevelopment & Trade Co [2000] CLC 1243 paragraph 56. Nor does a tribunal fail to deal with an issue that it decides without giving reasons (or a fortiori without giving adequate reasons): see Margulead Ltd v Exide Technologies [2004] EWHC 1019 (Comm) at paragraph 43. No less pertinent in this case, as I see it, are these considerations:

(i) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an “issue”. It can deal with an issue by making clear that it does not arise in view of its decisions on the facts or their legal conclusions.

(ii) By way of amplification of this point, a tribunal may deal with an issue by so deciding a logically anterior point that the issue does not arise. For example, a tribunal that rejects a claim on the basis that the respondent has no liability is not guilty of a serious irregularity if it does come to a conclusion on each issue (or any issue) about quantum: by their decision on liability, the tribunal disposes of (or “deals with”) the quantum issues.

(iii) A tribunal is not required to deal with each issue seriatim: it can sometimes deal with a number of issues in a composite disposal of them.(iv) In considering an award to decide whether a tribunal has dealt with an issue, the approach of the court (on this as on other questions) is to read it in a “reasonable and commercial way expecting, as is usually the case, that there will be no substantial fault that can be found with it”: Zermalt Holdings SA v Nu-LifeUpholstery Repairs Ltd [1985] 2 EGLR 14 at p. 14F per Bingham J.

(v) This approach may involve taking account of the parties' submissions when deciding whether, properly understood, an award deals with an issue. Although submissions do not dictate how a tribunal is to structure the disposal of a dispute referred to it, often awards (like judgments) do respond to the parties' submissions and they are not to be interpreted in a vacuum.'”

53.
At paragraph 70(iv)(ii) of the Statement of Claim the appellant claimed damages for consequential loss for remainder of the term of the lease, as well as damages for the renewal period.
54.
In their Defence the respondents simply denied the claim in paragraphs 28 and 27, putting the appellant to strict proof.
55.
Counsel for the respondents position at the arbitration hearing appeared to be that the appellant was, at best, entitled to damages assessed on the basis of the liquidated or fixed damages clause of $7,500.00 per month. Alternatively, his position was that the appellant was only entitled to nominal damages. The arbitrator disagreed and said why she did and she awarded the appellants damages for consequential loss.
56.
The issues raised were dealt with. The validity of the lease and the option were not issues raised.
57.
Several points need to be made in this regard.
58.
First, the real complaint here seems to be that the arbitrator got it wrong by awarding damages as she did. In its closing submissions the respondent raised, for the first time after the evidence was adduced and closed, a point that it could have and probably should have pleaded viz that the option to renew the lease was void and unenforceable for uncertainty and was illusory.
59.
In fact, in its application to set the award aside, the respondent did not, as the learned judge found, raise an issue irregularity with the award for damages for the unexpired and renewal period of the lease. Their complaint in grounds 4, 5, 6, 7 and 8 of the Notice of Motion (NOM) is that if the tribunal had jurisdiction to make the award it did, it exceeded its powers. That is a section 90(2)(b) complaint, not a section 90(2)(d) complaint. There is no doubt that the substance of the respondents complaint in this regard is that the finding and award were erroneous in law. In which case the challenge should have been brought by way of appeal pursuant to section 91 of the Act because section 90 challenges are only concerned with due process, not whether the tribunal 'got it right'.
60.
The only complaint about the failure of the tribunal to deal with an issue concerning the lease is contained in ground 9(1) of the NOM where the respondents allege that the tribunal failed to deal with the issue: whether any loss and damage resulted from the breach of the terms of the lease and, if so, the quantum of the loss occasioned by the breach. That only needs to be stated to be rejected as an irregularity.
61.
And so, it is not easy to understand how the learned judge came to his conclusion on this aspect of the case that there was a section 90(2)(d) issue irregularity.
62.
If he had found that there was an excess of jurisdiction issue one would only have need to ask the question did the tribunal have the power to make the award, which it did?
63.
If pleadings still matter, then the case found by the judge was not the case put by the respondent.
64.
Secondly, it is not every issue raised that must be addressed by the arbitrator. So, for example, judges have said that if liability and quantum are issues for the arbitrator, a ruling that there is no liability does not require a separate ruling or where there is a dispute as to whether the interest charged should be simple or compound, a ruling one way or the other disposes of the other without any specific reference.
65.
Third, the raising of an issue for consideration by an arbitrator is not simply an issue of argument or submission. The authorities clearly spell this out. To raise an issue it must be spelt out in the pleadings. That makes complete sense; for how will it be addressed otherwise.
66.
In this case the notion that the respondent raised the issue of the validity of the option to renew or the question of damages has no evidential basis. In their pleadings the respondent simply denied or took issue. No where did they plead illegality, uncertainty, invalidity or unenforceability, except in their closing arguments. The only issue raised was quantum.
67.
Therefore, in my judgment there was no evidential basis for the judge to find that there was an irregularity pursuant to section 90(2)(d) and so the remittance order in paragraph 50(1) of the ruling is, in my judgment, erroneous and must be set aside for two reasons: no irregularity is shown, nor has it been shown that the respondent has suffered or will suffer substantial injustice.

The unfairness irregularity

68.
The learned judge ruled in paragraph 50(2) of his ruling that the decision of the arbitrator to make certain deductions and allowances was unfair because she did not give the respondent an opportunity to make representation in this regard.
69.
This appears to be the complaint laid in ground 10 of the respondents' NOM.

The approach of the courts to allegations of unfairness

70.
In SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm) Mr. Justice Males said:

“1. This is a challenge to an arbitration award on the ground of serious irregularity pursuant to section 68 of the Arbitration Act 1996. The irregularity alleged is that the arbitrators proceeded to an award instead of awaiting the outcome of court proceedings in Ukraine which would or might have had a significant impact on the decisions they had to make. It is said that this has resulted in substantial injustice to the claimant (“SCM”) because the Ukrainian courts have now reached conclusions which are irreconcilable with those of the arbitrators: in short, and at the risk of over simplification, whereas the arbitrators have found that SCM is liable to pay the outstanding purchase price of over US $760 million for shares in a Ukrainian company, the decision of the Ukrainian courts means that those shares will be confiscated without compensation for reasons which are the responsibility of the defendant (“Raga”).

2. In order to succeed with its challenge to the award, SCM has to show, in summary, that (1) the arbitrators' decision to issue the award without waiting for the outcome of the Ukrainian court action was a breach of their duty under section 33 of the 1996 Act to conduct the arbitration fairly and (2) that this breach has caused or will cause it substantial injustice.

...

53. Sections 33 and 68 are mandatory provisions from which the parties are not free to derogate. They are concerned with ensuring due process and not with whether the arbitrators have reached the right conclusion, whether as a matter of law or fact. As has been said many times, a section 68 challenge faces a “high threshold” (Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, [2006] 1 AC 221 at [28]) or a “high hurdle” (The Magdalena Oldendorff [2007] EWCA Civ 998, [2008] 1 Lloyd's Rep 7 at [35]). In short, it must be shown that something has gone badly wrong with the fairness of the procedure. This is in accordance with the policy of the 1996 Act which respects the parties' choice of arbitration as the means to settle their disputes and gives the arbitrators extensive powers to decide all matters of procedure and evidence. This policy means that decisions by arbitrators will be upheld regardless of whether they are (in the court's opinion) right or wrong. The court has a strictly limited power to intervene. Nevertheless, in appropriate cases, high thresholds are there to be crossed and high hurdles to be jumped. The question is whether this is such a case.

54. I draw attention to some features of this regime which are relevant in the present case.

55. First, in order to determine whether there has been a breach of the section 33 duty it is necessary to establish that the arbitrators have acted unfairly (para (a)) or have adopted procedures which have resulted in unfairness (para (b)). As explained in The Magdalena Oldendorff at [35], the section is concerned with unfair conduct by the arbitrators:

“… section 33 has to be approached by reference to the conduct of the arbitrators. For an irregularity to be established in a case of this kind it must be established that the tribunal have acted unfairly (partiality is not in issue) by failing to give a party a reasonable opportunity of putting his case or dealing with that of his opponent.”

56. It follows that the question whether the arbitrators' decision not to defer the award constituted an irregularity must be determined as at the date of publication of the award. That is the conduct by the arbitrators on which SCM relies. At that stage the SPFU action was in being but had not yet reached any conclusion. The fact that this action eventually succeeded, and did so within a reasonably short period, is therefore irrelevant to the question of irregularity, although it is relevant to the question of substantial injustice. The arbitrators' task was to assess the position as it stood at the date of their award.

57. Second, it follows also that what must be shown is unfairness by the arbitrators and not merely a mistake or misunderstanding by the losing party or its lawyers. That is the ratio of The Magdalena Oldendorff, where counsel for the shipowners had not appreciated that a point on which the arbitrators decided the case (“the 17 hour point”) was being run by the charterers as an alternative to their primary case. The Court of Appeal rejected the owners' submission at [37] that the arbitrators “must have been aware that he had not dealt with the 17 hour point, and that they owed an obligation to ask him whether he had anything further to say on the point in addition to the points already taken as to why the charterers could not succeed”. Waller LJ held at [40] that this “would be placing an unfair burden on any tribunal where (I stress) they do not appreciate that a point is being missed”. The position would be different however, if the arbitrators do appreciate that a party has missed the point (see [42]). In that situation there would be unfairness by the arbitrators.

58. Third, the arbitrators' duties under section 33 are to give each party a reasonable opportunity of putting its case and to adopt procedures providing a fair means for resolving the dispute. Whether the opportunity given is reasonable and whether the procedures are fair are objective questions to be determined by the court, but these are not unduly demanding standards. A party may have been given a reasonable opportunity of putting its case even if there is more evidence that could have been adduced. A procedure may be fair even if it is not perfect.

59. In some cases, including a challenge to a decision not to defer an award, the fairness of the arbitrators' decision will depend upon evaluation of a range of factors. In some such cases there will be no single right answer, that is to say that while some tribunals may have been prepared to defer their decision, others would not. The question then will be whether the arbitrators' decision not to do so was one which they were entitled to reach.

60. Fourth, the arbitrators are charged with avoiding unnecessary delay in accordance with the object of arbitration identified in section 1 of the Act (“to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”). Thus unnecessary delay is to be avoided even in the absence of prejudice. In some cases to defer an award could itself be unfair and therefore in breach of the arbitrators' section 33 duties. In other cases, however, delay may be necessary in order to avoid unfairness. Indeed, it is debatable whether necessary delay is properly to be regarded as delay at all. It may seem, therefore, that arbitrators are faced with walking something of a tightrope, vulnerable to attack by both parties. However, the critical issue is fairness. Provided the arbitrators act fairly, the court will support their decision.

61. Fifth, where the fairness of a procedural decision by arbitrators is challenged, the court will wish to examine any reasons given by the arbitrators for their decision. Ultimately, however, the question is not whether the reasons given by the arbitrators are sound but whether the procedure has been fair.

62. Sixth, in contrast with the question whether there has been an irregularity, substantial injustice may be either present or future. It is necessary to show that the irregularity “has caused or will cause” substantial injustice. However, it is not enough merely that it may do. If the injustice has not yet occurred, the court must form a view about whether it will do so.

63. Seventh, however, it is not necessary to show that but for the irregularity the result of the arbitration would have been different. There will be a substantial injustice if the result might well have been different. This was explained by Colman J in Vee Networks Ltd v Econet Wireless International Ltd [2004] EWHC 2909 (Comm), [2005] 1 Lloyd's Rep 192 at [90] and has been followed in other cases:

'It is unnecessary and in the circumstances undesirable for me to express a view as to whether the arbitrator came to the right conclusion, even if by the wrong route, or whether, had he ignored the 2003 amendments, he should have reached the same or a different conclusion. The element of serious [sc. substantial] injustice in the context of section 68 does not in such a case depend on the arbitrator having come to the wrong conclusion as a matter of law or fact but whether he was caused by adopting inappropriate means to reach one conclusion whereas had he adopted appropriate means he might well have reached another conclusion favourable to the applicant. Thus, where there has been an irregularity of procedure, it is enough if it is shown that it caused the arbitrator to reach a conclusion unfavourable to the applicant which, but for the irregularity, he might well never have reached, provided always that the opposite conclusion is at least reasonably arguable. Above all it is not normally appropriate for the court to try the material issue in order to ascertain whether substantial injustice has been caused. To do so would be an entirely inappropriate inroad into the autonomy of the arbitral process.'

....

87. Weighing all these factors, this was not a case in my judgment where compliance with the arbitrators' section 33 duties required a deferral of the award. Viewing the position as it stood at the date of the award, with the SPFU action having only just been commenced, the arbitrators could not have been criticised if they had decided to defer the issue of their award, at least for a short while, in order to find out more information about the issues likely to be decided in the SPFU action and the likely timescale for a decision. Some tribunals might have proceeded in this way. However, the arbitrators had a wide discretion as to how to proceed and their decision was one which they were entitled to reach. I conclude that it was not unfair so as to constitute a breach of either limb of section 33.

88. This conclusion means that there was no irregularity within the meaning of section 68 and accordingly that the issue of substantial injustice does not arise. Had it done so, however, I would have concluded that there was a substantial injustice because the conclusion of the arbitrators might well have been different if they had had the benefit of the decision of the Ukrainian courts at first instance and on appeal. For this purpose it is sufficient to refer to the arbitrators' own acknowledgement that a decision of the Ukrainian court might affect their conclusion. It may be that close examination of the Ukrainian decision either at first instance or on appeal would suggest that this was unlikely, but I would not accept Raga's submission that it could not have done so. Following the Vee Networks approach, that would be to make an inappropriate inroad into the function of the arbitrators. As it is, however, the point does not arise.

89. For these reasons SCM's section 68 challenge to the award is dismissed.”

71.
Again, after the finding by the judge of an irregularity i.e. unfairness pursuant to section 90(1)(a) that the respondent was not allowed to make representation, he should have gone on to consider where the substantial injustice was caused thereby. This he failed to do.
72.
Further, it is clear that the parties had the opportunity to make whatever representation they may have wished to make at the closing stage of the arbitration. Everyone knew that the central issue was the amount of damages for consequential loss and the experts spoke to this.
73.
As Popplewell said in Terna Bahrain Holding Co Wll v Ali Shamsi et al [2012] EWHC 3283 (Comm) at paragraph 85 :

" (5) There is however, an important distinction between on the one hand a party having no opportunity to address a point, or his opponents case, and, on the other hand, a party failing to recognize or take the opportunity which exists . The latter will not involve a breach of s. 33 or a serious irregularity.”

74.
It was not the duty of the arbitrator to call the parties back if they failed to address an aspect of the component of damages that they must have known or foreseen in the circumstances which had to be addressed, for it was the submission of the respondent that the appellant was entitled to no more than nominal damages for consequential loss.
75.
The assessment of damages for consequential loss is not an exact science. So what more could the respondents have done if, as they alleged, they had had an opportunity to make further representations. Would it have changed the mind of the arbitrator in paragraph 165?
76.
The burden was on the respondents to show how this became an irregularity and how it caused or was likely to cause substantial injustice.
77.
Even now the respondents have not put forth anything to say that the award would have been different. Their argument that the appellant was only entitled to nominal damages had already been rejected and could not get better. They had submitted that the lease had not been varied and if their argument was accepted, as it was, it followed that Mr. Occasio's projections would have been inaccurate and unacceptable, leaving the Tribunal as the arbiter of fact with the responsibility of making the assessment. If the alternative position was not proffered it was simply because the respondent's position was that the appellant was only entitled to nominal damages. The respondents relied heavily upon acceptance of the Cowheard report and not anything else. Their case could not be put higher.
78.
Moreover, the burden was on them to prove or show how they had been substantially injured, not for the judge to make a case for them. That is why courts do not interfere as a matter of principle with awards.
79.
In any event, the respondents in ground 10 of the NOM were referring to the disaggregation point which they claimed was not supported by the evidence before the tribunal. That was not a section 44 complaint but a section 91 complaint.
80.
This was the position taken in relation to the consequential loss where the complaint in ground 13 of the NOM was that there was no evidence to support the finding.
81.
In my judgment, this is not an irregularity under section 90 but a point of law for an appeal under section 91 of the Act.
82.
Therefore, it seems to me that the judge having failed to consider the question of substantial injustice the remittance must be set aside.

The ambiguity irregularity

83.
In paragraph 50(3) of his ruling the judge found that the conflation of the award for consequential loss rendered the award ambiguous.
84.
It is not entirely clear what the ambiguity is or what injustice was caused to the respondent in the circumstances, save that the respondents says they want to decide how to apportion the award. That is so disingenuous that it only needs to be stated to be rejected. The judge does not say what the ambiguity is.
85.
A finding of ambiguity only means that the judge was satisfied that an irregularity was established for the purposes of section 90 that may affect the award.
86.
The respondent had to go further and show how it has caused substantial injustice or will in the future cause it.

Was the award ambiguous in its effect?

87.
Liability was joint and several. It could safely be left to the parties who are liable to agree portions or pay and seek contribution in the amount they think justified by law. That required no clarification. They denied liability despite their connectivity. They never asked for the arbitrator to break out the liability or the damages so they could settle it and that is not what they are now asking.
88.
Before the Tribunal the case proceeded on the basis of joint representation and responsibility. There was no division in the Defence. They were and are one; they were unified in the proceedings before the Tribunal, the Supreme Court and in the Court of Appeal.
89.
It was never a part of the case for the respondents that they are on separate teams and that the judge had to make separate findings of liability or responsibility or that they were batting on separate wickets for the purposes of damages.
90.
Ambiguity must mean more than what the respondent alleges in ground 11 of the NOM.
91.
I close with these salutary words from Butcher QC (Sitting as a Deputy High Court Judge) in the case of A v B [2017] EWHC 596 (Comm):

“13. To these points I would add that, as a matter of general approach, the courts do not look at arbitration awards with a predisposition to find faults in them. The matter was put thus by Bingham J in Zermalt Holdings SA v Nu-Life Upholstery Repairs Ltd [1985] 2 EGLR 14:

'As a matter of general approach, the courts strive to uphold arbitration awards. They do not approach them with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults in awards, and with the objective of frustrating the process of arbitration. Far from it. The approach is to read an arbitration award in a reasonable and commercial way, expecting, as is usually the case, that there will be no substantial fault to find with it.'

14. Such an approach has been held to be the correct one under the 1996 Arbitration Act: see for example Primera Maritime (Hellas) v Jiangsu Eastern Heavy Industry Co [2013] EWHC 3066 (Comm), [2014] 1 Lloyd's Rep 255, at [10].

92.
In conclusion, the appellant submitted the following points of law which must necessarily be as follows:

Point of Law: “1. The Jurisdictional issue as to whether the Court in the exercise of its Statutory Jurisdiction under Section 90 of the Act, has the jurisdiction and/or is empowered to make a finding of Serious Irregularity under any of the sub-paragraphs of that Section without conducting the Second Stage of that Investigation as to whether such Irregularity caused or would cause Substantial Injustice AND without actually making the finding that there was or would be Substantial Injustice.” Answer: Negative.

Point of Law: “2. In the absence of such Jurisdiction ground, whether the Court on the hearing of a challenge under Section 90 of the Act should uphold such challenge in circumstances where the applicant has neither alleged nor shown that the irregularity caused or would cause Substantial Injustice.” Answer: Negative.

Point of Law: “3. Whether the Court in the exercise of its Statutory Jurisdiction under Section 90 of the Act, has the power to make a finding of Serious Irregularity under any of the sub-paragraphs, on grounds which were neither advanced nor relied upon by the applicant in its originating process.” Answer: Negative.

Point of Law: “4. Whether the "Issues" envisaged by Section 90(2)(d) of the Act and/or the Ground of Challenge that the Tribunal "failed to deal with an issue put to it" contemplates and/or includes "Facts" and/or "Claims" pleaded by the parties in their Pleadings and "arguments" contained in their written submissions or whether "Issues" as provided for in the Section is limited to the specific "Issues" which were put to the Tribunal for determination.” Answer: Affirmative.

Point of Law: “5. In the specific context of Section 90(2)(d) of the Act, given that United Kingdom Courts have consistently made a distinction between "arguments" made by Counsel and the "Issues" envisaged by the Section and have excluded the former, whether Bahamian jurisprudence in its consideration of Section 90(2)(d) ought to widen the scope of this jurisdiction by the inclusion of the "arguments" made to the Tribunal and whether this could be done without an amendment to the Section.”

Answer: Negative.

Point of Law: “6. The ambit and extent of a party's right to be afforded the opportunity to present his case under Section 44 of the Act.”

93.
For the above reasons, I would allow the appeal and set aside the remittance orders made by the learned judge and uphold the award made by the learned arbitrator. Costs to the appellant, here and below certified fit for two counsel, to be taxed if not agreed.

The Honourable Sir Hartman Longley, P

94.
I agree.

The Honourable Mr. Justice Isaacs, JA

Judgment delivered by the Honourable Sir Michael Barnett, JA (Actg.):

95.
This is an appeal by Therapy Beach Club Incorporated (“the appellant”) against a decision by a Judge of the Supreme Court remitting part of an award for reconsideration by an arbitrator.

The Facts

96.
By a lease agreement dated the 31st December, 2011, the appellant leased premises from RAV Bahamas Limited and Bimini Bay Resort Management Limited (“the respondents”) to operate a beach club and restaurant facilities.
97.
The dispute concerns the forcible eviction of the appellant from premises during the currency of a valid lease. That dispute was referred to arbitration after the parties entered into a written arbitration agreement.
98.
In the arbitration the appellant claimed damages for breach of contract, damages in tort, damages for trespass, conversion and unlawful interference with commercial interest. The claim was essentially denied by the respondents. The arbitral hearing was heard over a number of days in 2017 with parties adducing evidence from several witnesses including expert financial witnesses.
99.
The arbitrator delivered her award on the 22nd August, 2017. By that award, the respondent was ordered to pay to the appellant the sum of $9,670,000.00 with interest at 5% from the 18th July, 2013.
100.
The award was made up as follows:

Special damages $370,000.00

General Damages for consequential loss $6,800,000.00

Exemplary damages $2,500,000.00

Interest at 5% from 18th July 2013

Costs

101.
By Notice of Motion (“NOM”) the respondent challenged the award of the arbitrator on the basis of substantial jurisdiction under section 89 of the Arbitration Act, 2009 (the Act); serious irregularity under section 90 of the Act and an appeal on a point of law under section 91 of the Act. The challenges under sections 89 and 91 of the Act were dismissed by Winder, J.
102.
However, the learned judge upheld the challenge on the ground of serious irregularity under section 90 of the Act. He remitted the consequential damages component of the award in the amount of $6,800,000.00 back to the arbitrator for reconsideration. He did so on the basis of his finding pursuant to section 90 of the Act that the consequential damages component of the award was seriously irregular because the arbitrator did not consider the issue of whether Therapy could claim losses occurring not only in the remaining term of the current lease but also in the renewal period. He found that there was a serious irregularity pursuant to section 90 (2)(d) of the Act.
103.
Further, he found that in so far as the arbitrator conflated the award for consequential loss it was ambiguous and was remitted to her, pursuant to section 90(2)(f) of the Act.
104.
With the leave of the court that the appeal gave rise to points of law of general public importance, the appellant appeals the remittance orders and asks the court to declare the remittance orders nullities and or to set them aside with consequential orders for costs.
105.
There was no cross appeal by the respondents against the dismissal of the challenges under sections 89 and 91 of the Act.
106.
It is settled law that the court will only interfere on a limited basis with the decision of an arbitrator.
107.
Section 90 of the Act does, however, give a judge of the Supreme Court the power, upon application by a party to an arbitration, to remit an arbitration award back to the arbitrator in whole or in part for reconsideration where the judge finds that there has been a serious irregularity affecting the award.
108.
Section 90 of the Act is in the following terms:

“90. Challenging the award: serious Irregularity.

(1) A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

(2) Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant -

(a) failure by the tribunal to comply with section 44;

(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction);

(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;

(d) failure by the tribunal to deal with all the issues that were put to it;

(e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;

(f) uncertainty or ambiguity as to the effect of the award;

(g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;

(h) failure to comply with the requirements as to the form of the award; or

(i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.

(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may -

(a) remit the award to the tribunal, in whole or in part, for reconsideration;

(b) set the award aside in whole or in part; or

(c) declare the award to be of no effect, in whole or in part.

(4) The court shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.

(5) The leave of the court is required for any appeal from a decision of the court under this section.

109.
By section 92(2) of the Act, a serious irregularity occurs where one of the factors set out in sections 90(2)(a) through (i) exist and that the irregularity has caused or will cause substantial injustice.
110.
Therefore, if a judge finds that one of the irregularities mentioned in sections 90(2)(a) though (i) exists and that that irregularity has caused or will cause substantial injustice to an applicant the judge is entitled to set aside the award in whole or in part.
111.
In the present case the judge said the following:

“18 The Applicants make various complaints surrounding the determination of the Arbitrator to make an award outside of the three year term of the lease. The various grounds are:

(1) The Tribunal exceeded its powers in awarding general damages for consequential loss for breach of contract, trespass and unlawful interference with economic interest for a six (6) year period.

(2) The lease was for a term of three (3) years, the demolition took place on 18 July 2013 and therefore the award was irregular in that damages for the alleged tortious acts of the appellants were backdated by the Tribunal to run from the commencement of the lease and for a three (3) option year.

(3) The Tribunal did not deal with the issue put to it namely (i.) term of the lease expired on 30 December 2014 and (ii.) the option clause was uncertain illusory and unenforceable as it required the parties to agree the rents to apply to the renewal term.

(4) The tribunal was empowered to award damages for a period being the remainder of the lease from the 18 July 2013 to 30 December 2014. The tribunal had no power to award tortious damages for the period prior to the demolition or after the expiration of the term of the lease.

112.
The applicants say that no evidence was led during the course of the arbitration, nor at any time did the applicants accept, that the lease had been extended as per clause 5 for a further 3 year period. They also say that no notice had been given by the appellant of an intention to renew the lease prior to the expiration of the lease and the parties never discussed, much less agreed, a rent for the renewal period. Accordingly, they argue, the arbitrator exceeded her powers in awarding damages for any period beyond the 30th December, 2014.
113.
The applicants also say that the arbitrator never addressed the issue of whether the lease had been renewed, nor did she address the critical issue, raised in the applicants' closing submissions, to the effect that the renewal clause was in any event unenforceable; it being uncertain and illusory in accordance with the above stated principles.
114.
The importance of the issue is seen in the Supreme Court of Victoria case of Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd 2013 VSC 614, at para. 69, per Hargave, J.:

"This conclusion was based on a decision of this court by Cussen J in Beattie v Fine. In that case, which was also approved by Gibbs J in Godecke v Kirwan as the above quotation from his Honour's reasons demonstrates, Cussen J held that an express option for renewal contained in a deed of lease 'at the rental to be agreed upon by the lessor' was illusory and unenforceable. The lessee had contended that the agreement contained two separate promises: one of which gave the lessee the right to exercise the option without naming any rental, and that, in the absence of agreement by the lessor, the result would be that the lessee would be entitled to retain possession of the land and be under an obligation to pay as rent either (1) the amount which a jury or the Court should fix as reasonable, or (2) the amount which a jury or the Court should fix as that which the lessor, acting bona fide, would or ought to have agreed to."

115.
A review of the award does not reflect that the arbitrator considered the issue of whether Therapy would be entitled to damages during the renewal period. It seems to have proceeded on the basis that Therapy was entitled to these damages. Whilst not every argument of counsel demands consideration by the Tribunal this was an issue which turned out to be a central one. It was first raised by Therapy in paragraph 70 of the Statement of Claim and the said issue was joined by the applicants in their defences. The issue was also traversed in closing submissions.
116.
The judge then set out the provisions of section 90 of the Act and continued;

“The Applicants were entitled to the consideration of the Tribunal on this issue and insofar as it was not provided I find that there was a serious irregularity and that part of the Award ought to be set aside and re-mitted pursuant to Section 90(2) (d).”

117.
In my judgment there are two issues raised by this appeal. Firstly, was the trial judge correct to find that there was an irregularity falling within section 90(2)(d). Secondly, if he was correct that an irregularity exists, should his decision be set aside on the ground that he did not state that the irregularity that he found to exist has caused or will cause substantial injustice.
118.
It is common ground that for there to be a serious irregularity under section 90(2) there must exist an irregularity within (a) through (i) AND that irregularity has caused or will cause substantial injustice.
119.
Was the judge correct to find that an irregularity within section 90(2)(a) through (i) existed?
120.
The judge found that an irregularity under 90(2) existed because of the failure of the arbitrator to deal with all of the issues that were put to her.
121.
More specifically the judge held in paragraph 22:

“A review of the Award does not reflect that the Arbitrator considered the issue of whether Therapy would be entitled to damages during the renewal period. It seems to have proceeded on the basis that Therapy was entitled to these damages. Whilst not every argument of counsel demands consideration by the Tribunal this was an issue which turned out to be a central one. It was first raised by Therapy in paragraph 70 of the Statement of Claim and the said issue was joined by the Applicants in their Defences. The issue was also traversed in closing submissions.”

This would place it within 90(2)(d).

122.
The appellant has submitted that there was no irregularity falling within 90(2)(d). It asserts:

“In the event that the Court does not accept Appeal Ground 2, Grounds 3 through 6 highlight the fact that there was in any event no Serious Irregularity to support the Serious Irregularity Finding such that the Serious Irregularity Finding ought to be set aside on that basis.”

123.
Firstly, there could be no proper finding of serious irregularity under section 90(2)(d) of the Act on the basis of a ground which RAV asserted in relation to its section 90(2)(b) complaint only and had not asserted in relation to its Section 90(2)(d) challenge.
124.
Secondly, there was in any event, no failure by the arbitrator to deal with an “issue” put to her as envisaged by the authorities. [See Lesotho Highlands Development Authority v Impergilo SpA and others [2005] UKHL 43]
125.
Thirdly, there was no ambiguity in the effect of the award.
126.
In any event, there could be no proper finding of serious irregularity under section 90(2)(f) of the Act on the basis of a ground of “ambiguity” which RAV had not asserted.
127.
Finally, there was no “unfairness” in the assessment of the award such that there could be no proper finding of serious irregularity under section 90(2)(a) and Section 44 of the Arbitration Act.
128.
I do not agree.
129.
In my judgment the trial judge was correct to find that the issue raised by the parties was not dealt with by the arbitrator. The issue whether the appellant should recover damages for a renewal period in circumstances where option to renew was not enforceable was an issue which the arbitrator was obliged to consider as it was put to her by the parties.
130.
Moreover, the challenge under section 90(2)(d) was raised in the NOM at paragraph 6 where the applicants/respondents claimed;

“A declaration that the Tribunal exceeded its powers and failed to deal with all of the issues put to it”

and later in grounds 7 and 8 where they had as one of their grounds that:

“the applicants contend that the Tribunal did not deal with the issue put to it, namely, (i) that the term of Lease expired on 30th December, 2014 as no notice had been given to exercise the option period for a further three (3) year period and (ii) that the option clause was uncertain, illusory and unenforceable as it required the parties to agree the rents to apply to the renewal term.”

131.
In the premises, the applicants say that the award is seriously irregular, in that, the Tribunal (if it had jurisdiction, which is denied) exceeded its powers in awarding damages for six (6) years. At best, the Tribunal was only empowered to award damages for a period being the remainder of the lease, that is, from the 18th July, 2013 to the 30th December, 2014. The Tribunal had no power to award tortious damages for the period prior to demolition or after the expiration of the term of the lease.
132.
The appellant relies on the decision of the House of Lords in Lesotho. In my view that decision is of limited assistance.
133.
In Lesotho, the central issue was whether the Tribunal had exceeded its powers under section 68(2)(b) of the English statute which is equivalent to section 90(2)(b) of the Act in making an award in a currency other than Lesothan currency. Pursuant to this provision, a party may apply to the court challenging an award on the ground of serious irregularity if (inter alia) the Tribunal had exceeded its powers (otherwise than by exceeding its substantive jurisdiction under Section 67 of the English Act, which is section 89 of the Act. In that case, the arbitration clause provided for arbitration under the rules of the ICC and ICC Rule 28.6 provides that all parties as far as they are allowed to do so, forego any right of appeal to the courts. This was an effective exclusion agreement of the right of appeal on a point of law under Section 69 of the English Act or section 89 of the Act. The applicant in that case was trying to use “serious irregularity” to appeal on a point of law which right it forfeited in the arbitration agreement.
134.
Under the English statute unless otherwise agreed by the parties, the Tribunal may order the payment of a sum of money “in any currency”. Under Section 49(3), again unless otherwise agreed by the parties, the Tribunal “may award simple or compound interest from such dates at such dates with such rests as it considers meets the justice of the case”.
135.
Lord Steyn in the House of Lords approached the currency issue with two questions: Did the Tribunal have power to express the award in any currency pursuant to Section 48 (4) of the Act or was any power limited by terms of the Contract? If the Tribunal had made an error of law did it amount to an excess of jurisdiction under Section 68 (2)(b) of the English Act which is section 90(2)(b) of the Bahamas statute?
136.
Lord Steyn concluded that the Tribunal's power under Section 48(4) was not constrained by the terms of the contract between the parties. However, if he was wrong on that point, he found that that the highest case that could be put was that the Tribunal committed an error or law and as such it did not constitute erroneous excess of power under Section 68(2)(b) or 90(20(b).
137.
With respect, the Lesotho decision was not concerned with the issue of section 90(2)(d) which was the provision that Winder, J. had for consideration and which is the subject of this appeal. He was not remitting the award for excess of jurisdiction under section 90(2)(b). He was remitting the award because the arbitrator failed to consider an issue which was put to her by the parties.
138.
I do not think the reliance on the Lesotho decision is helpful.
139.
In my view the decision of the English court in Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC) is more helpful in considering the provisions of section 90(2)(d) of the Act. In that case Aikenhead J summarized the law with respect to the identical section in the English statute. He said:

“The legal teams are, properly, in agreement to a very large extent as to what the law and practice are in relation to applications under s 68(2)(d) of the Arbitration Act 1996. I can summarise it as follows:

'(a) Section 68 reflects 'the internationally accepted view that the court should be able to correct serious failures to comply with the 'due process' of arbitral proceedings: cf art 34 of the Model Law.' (see Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, Paragraph 27); relief under Section 68 will be appropriate only where the tribunal has gone so wrong in the conduct of the arbitration that 'justice calls out for it to be corrected.' (ibid). [my emphasis]

(b) The test will not be applied by reference to what would have happened if the matter had been litigated (see ABB v Hochtief Airport [2006] 2 Lloyd's Rep 1, paragraph 18).

(c) The serious irregularity requirement sets a 'high threshold' and the requirement that the serious irregularity has caused or will cause substantial injustice to the Applicant is designed to eliminate technical and unmeritorious challenges (Lesotho, paragraph 28) [my emphasis].

(d) The focus of the enquiry under Section 68 is due process and not the correctness of the tribunal's decision (Sonatrach v Statoil Natural Gas [2014] 2 Lloyd's Rep 252 paragraph 11).

(e) Section 68 should not be used to circumvent the prohibition or limitations on appeals on law or of appeals on points of fact (see, for example, Magdalena Oldendorff [2008] 1 Lloyd's Rep 7, Paragraph 38, and Sonatrach Paragraph 45).

(f) Whilst arbitrators should deal at least concisely with all essential issues (Ascot Commodies NV v Olam International Ltd [2002] CLC 277 Toulson J at 284D), courts should strive to uphold arbitration awards (Zermalt Holdings SA v and Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14 at page 15, Bingham J quoted with approval in 2005 in the Fidelity case [2005] 2 Lloyds Rep 508 paragraph 2) and should not approach awards 'with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults on awards with the objective of upsetting or frustrating the process of arbitration'.

(g) As to Section 68(2)(d):

(i) There must be a 'failure by the tribunal to deal' with all of the 'issues' that were 'put' to it.

(ii) There is a distinction to be drawn between 'issues' on the one hand and 'arguments', 'points', 'lines of reasoning' or 'steps' in an argument, although it can be difficult to decide quite where the line demarking issues from arguments falls. However, the authorities demonstrate a consistent concern that this question is approached so as to maintain a 'high threshold' that has been said to be required for establishing a serious irregularity (Petrochemical Industries v Dow [2012] 2 Lloyd's Rep 691 paragraph 15; Primera v Jiangsu [2014] 1 Lloyd's Rep 255 paragraph 7).

(iii) While there is no expressed statutory requirement that the Section 68(2)(d) issue must be 'essential', 'key' or 'crucial', a matter will constitute an 'issue' where the whole of the Applicant's claim could have depended upon how it was resolved, such that 'fairness demanded' that the question be dealt with (Petrochemical Industries at paragraph 21).

(iv) However, there will be a failure to deal with an 'issue' where the determination of that 'issue' is essential to the decision reached in the award (World Trade Corporation v C Czarnikow Sugar Ltd [2005] 1 Lloyd's Rep 422 at paragraph 16). An essential issue arises in this context where the decision cannot be justified as a particular key issue has not been decided which is critical to the result and there has not been a decision on all the issues necessary to resolve the dispute or disputes (Weldon Plan Ltd v The Commission for the New Towns [2000] BLR 496 at paragraph 21).

(v) The issue must have been put to the tribunal as an issue and in the same terms as is complained about in the Section 68(2) application (Primera at paragraphs 12 and 17).

(vi) If the tribunal has dealt with the issue in any way, Section 68(2)(d) is inapplicable and that is the end of the enquiry (Primera at paragraphs 40-1); it does not matter for the purposes of Section 68(2)(d) that the tribunal has dealt with it well, badly or indifferently.

(vii) It matters not that the tribunal might have done things differently or expressed its conclusions on the essential issues at greater length (Latvian Shipping v Russian People's Insurance Co [2012] 2 Lloyd's Rep 181, paragraph 30).

(viii) A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue (Fidelity Management v Myriad International [2005] 2 Lloyd's Rep 508, paragraph 10, World Trade Corporation, paragraph 19). A failure by a tribunal to set out each step by which they reach its conclusion or deal with each point made by a party is not a failure to deal with an issue that was put to it (Hussman v Al Ameen [2000] 2 Lloyds Rep 83).

(ix) There is not a failure to deal with an issue where arbitrators have misdirected themselves on the facts or drew from the primary facts unjustified inferences (World Trade Corporation at paragraph 45). The fact that the reasoning is wrong does not as such ground a complaint under Section 68(2)(d) (Petro Ranger [2001] 2 Lloyd's Rep 348, Atkins v Sec of State for Transport [2013] EWHC 139 (TCC), paragraph 24).

(x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an 'issue'. It can 'deal with' an issue where that issue does not arise in view of its decisions on the facts or its legal conclusions. A tribunal may deal with an issue by so deciding a logically anterior point such that the other issue does not arise (Petrochemical Industries at paragraph 27. If the tribunal decides all those issues put to it that were essential to be dealt with for the tribunal to come fairly to its decision on the dispute or disputes between the parties, it will have dealt with all the issues (Buyuk Camlica Shipping Trading & Industry Co Inc v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm), paragraph 30).

(xi) It is up to the tribunal how to structure an award and how to address the essential issues; if the issue does not arise because of the route the tribunal has followed for the purposes of arriving at its conclusion, Section 68(2)(d) will not be engaged. However, if the issue does arise by virtue of the route the tribunal has followed for the purposes of arriving at its conclusion, Section 68(2)(d) will be engaged.

(xii) Whether there has been a failure by the tribunal to deal with an essential issue involves a matter of a fair, commercial and commonsense reading (as opposed to a hypercritical or excessively syntactical reading) of the award in question in the factual context of what was argued or put to the tribunal by the parties (and where appropriate the evidence) (Ascot Commodities v Olam [2002] CLC 277 and Atkins, paragraph 36). The court can consider the pleadings and the written and oral submissions of the parties to the tribunal in this regard. [emphasis mine]

(h) In relation to the requirement for substantial injustice to have arisen, this is to eliminate technical and unmeritorious challenges (Lesotho, paragraph 28). It is inherently likely that sub-stantial injustice would have occurred if the tribunal has failed to deal with essential issues (Ascot, 284H-285A).

(i) For the purposes of meeting the 'substantial injustice' test, an Applicant need not show that it would have succeeded on the issue with which the tribunal failed to deal or that the tribunal would have reached a conclusion favourable to him; it necessary only for him to show that (i) his position was 'reasonably arguable', and (ii) had the tribunal found in his favour, the tribunal might well have reached a different conclusion in its award (Vee Networks Ltd v Econet Wire-less International [2005] 1 Lloyd's Rep 192, paragraph 40).

(j) The substantial injustice requirement will not be met in the event that, even if the Applicant had succeeded on the issue with which the tribunal failed to deal, the court is satisfied that the result of the arbitration would have been the same by reason of other of the tribunal's findings not the subject of the challenge." [Emphasis added]

140.
In my judgment section 90(2)(d) of the Act should be considered in a similar manner as described by the English court in Raytheon Systems Case.
141.
In my view Justice Winder's finding in paragraph 22 of his judgment was entirely proper. The issue of the efficacy of the renewal option was an essential issue for the arbitrator to consider and there is nothing in her award that evidences that she considered it at all. It appears as if the majority accepts that the issue was not dealt with by the arbitrator and section 90(2)(d) has been met.
142.
Was the judge's failure to find that the arbitrator's failure to consider whether the issue of the inefficacy of the option clause had caused or will cause substantial injustice fatal to his judgment?
143.
I accept without reservation that not every irregularity which falls within section 90(2) (a) through (i) will lead to a finding of serious irregularity which enables the court to exercise its powers under section 90(3) of the Act.
144.
The irregularity must have caused or will cause substantial injustice. It is correct that in many cases there must be evidence before the tribunal to satisfy it that the irregularity has caused or will cause substantial injustice. That issue is often fact sensitive.
145.
However, there may be irregularities which by their very nature will cause substantial injustice. As the court has pointed out in Ascot Commodities NV v Olam International Ltd [2001] EWHC 520 (Comm):

“Since the purpose of arbitration is to determine central issues between the parties, if there has been a flaw in that this has not been done, that is likely in the very nature of things to be a matter of serious injustice…”

146.
In Raytheon Systems Ltd the court summarized it as follows:

“(h) In relation to the requirement for substantial injustice to have arisen, this is to eliminate technical and unmeritorious challenges. It is inherently likely that substantial injustice would have occurred if the tribunal has failed to deal with essential issues…

(i) For the purposes of meeting the 'substantial injustice' test, an Applicant need not show that it would have succeeded on the issue with which the tribunal failed to deal or that the tribunal would have reached a conclusion favourable to him; it necessary only for him to show that (i) his position was 'reasonably arguable', and (ii) had the tribunal found in his favour, the tribunal might well have reached a different conclusion in its award…

[j] The substantial injustice requirement will not be met in the event that, even if the Applicant had succeeded on the issue with which the tribunal failed to deal, the court is satisfied that the result of the arbitration would have been the same by reason of other of the tribunal's findings not the subject of the challenge."

147.
In this case it is, in my view, unarguable that the failure to consider whether the renewal option was efficacious must lead to substantial injustice. If the option was not efficacious, then any award which took into account lost profits during the three year renewal period would cause substantial injustice. The injustice caused by the failure to consider that issue is self-obvious and no evidence would, in my judgment, be required.
148.
It is doubtful that the option clause is enforceable. It is in the following terms:

“If the Lessee shall be desirous of continuing the Term hereby created for a further term of Three (3) years (which additional term will be deemed to be included in the reference “the Tent”) at the expiration of the Term and shall on or before six (6) months before the expiration thereof give to the Lessor notice in writing of such its desire and if there shall not at the time of such notice be any: existing breach or non-observance of any of the covenants on the part of the Lessee hereinbefore contained then the Lessor will at the expense of the Lessee grant to the Lessee a Lease of the Restaurant Premises for the further term of Three (3) years from the expiration of the said tern. Such renewal shall be subject to the parties agreeing to rents to apply to the renewal term and any such renewed Lease shall contain the like covenants and the provisions as are herein contained apart from this renewal clause.”

149.
Having regard to the principles extensively set out in the judgment of Walker, J. in Teekay Tankers Ltd v STX Offshore and Shipbuilding Co Ltd (No 2) [2018] 1 All ER 279 at paragraphs 110 to 210 there is an arguable case that the option was void for or uncertainty and the additional three years should not have been included in calculating the damages.
150.
Certainly it was an issue for the arbitrator to have considered.
151.
Whilst it was perhaps prudent for the judge to have spelt this out in his judgment, I do not think he should be criticised for failing to state the self-obvious proposition. Further, still I do not think it would be a proper exercise of our appellate jurisdiction to set aside his decision when we are ourselves satisfied that on the material the irregularity i.e. the failure to consider such an important issue will cause substantial injustice.
152.
Finally, it seems to me that this award is manifestly unreasonable and unfair $6.8 million dollars as damages for a breach of a lease agreement was ambiguous. It is unclear how that sum was determined that the respondents ought to know the basis upon which the sum was arrived at by the arbitrator.
153.
It must be kept in mind that clause ii of the lease provided:

ii. That the Lessor may, at its sole discretion and at any time during the Term (or any additional and/or renewal term), and upon ninety (90) days' written notice to Lessee, choose to relocate the Restaurant Premises to another comparable site on the Resort property, such relocation site to be approved by Lessee. Lessor must pay all relocation expenses and must provide Lessee, at Lessor's cost, with a building and build out of similar like and kind as provided to Lessee at the initial location without contribution from Lessee. The new location must be available and the building and build out completed prior to the cessation of Lessee's business as the Restaurant Premises. Lessor must compensate Lessee for lost profits after 90 days of nonoperation due to the relocation, with a maximum payment of $7500 per month. Common Area Charges will be suspended during the entire period of nonoperation due to the relocation. AU other terms, conditions and covenants of this Lease shall remain in full force and effect.

154.
If the parties at the beginning of the lease agreed that the sum of $7,500.00 per month represented an estimate of the maximum loss the appellant would suffer as a result of the closure or non-operation of the club, the sum of $6.8 million as consequential damage as a result of the closure of the club over six years is manifestly unfair and ambiguous and the arbitrator must have taken into account matters which she ought not to have taken into account. The sum is so high that no arbitrator acting reasonably could properly have come to the conclusion that it was a fair reflection of the loss suffered by the appellant. The arbitrator could not have properly considered all of the issues that she was obliged to consider.
155.
For these reasons I would have dismissed the appeal and remitted the award to the arbitrator for her to consider the issue of the option. If she is unable to act I would simply set aside that part of the award in its entirety.
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