(i) The arbitrator held that Therapy had been wrongfully evicted from the Sakara Beach Club and granted its claims for breach of contract, trespass, conversion and unlawful interference with economic interests.
(ii) Therapy had claimed that there had been a variation of the lease with RAV so that, in addition to the Sakara Beach Club, it had a lease of a nearby restaurant known as "Atlantic Seafood". The arbitrator rejected that claim and held that there had been no such variation of the lease. Therapy's claims for damages in respect of Atlantic Seafood were therefore dismissed.
(iii) In assessing damages for Therapy's contractual and tortious claims for consequential loss of profits, the arbitrator accepted the approach of Therapy's expert witness, Mr Ocasio. He had estimated Therapy's loss of profits for a six-year period, which included a three-year renewal period, as being $12m. However, the arbitrator then discounted that figure in two ways: first, by one third, to reflect the failure of the claim that the lease had been varied to include Atlantic Seafood; and, secondly, by a further 15%, to reflect the fact that Mr Ocasio's figures were based on his memory and not supported by documents. Therapy was therefore awarded $6.8m as general damages for consequential loss of profits.
(iv) The arbitrator also awarded Therapy special damages of $370,000, and exemplary damages of $2,500,000.
(v) The total sum awarded was, therefore, $9,670,000.00 plus interest from 18 July 2013 and costs.
(i) By paragraphs 5 to 8 of the notice of motion, which have subsequently been referred to as "the paragraphs 5 to 8 ground", RAV complained that the period for which general damages for consequential loss of profits had been awarded should not have extended beyond the original term of the lease, which expired on 30 December 2014, and should not have included the three-year renewal period. RAV complained, in particular, that the arbitrator failed to deal with two issues that were put to her about that renewal. First, the arbitrator did not deal with the complaint that no notice (six months' notice was required) had been given by Therapy to exercise the option to renew the lease for a further three-year period. Secondly, the arbitrator did not deal with the complaint that the option clause in the lease was uncertain, illusory and unenforceable because it was subject to the parties agreeing the rents to apply in the renewal term.
(ii) By paragraph 10 of the notice of motion, which has subsequently been referred to as "the paragraph 10 ground", RAV complained that the expert evidence before the arbitrator failed to disaggregate the losses in respect of the claims the arbitrator had rejected (for the Atlantic Seafood restaurant) from the losses in respect of the claims which she had allowed (for the Sakara Beach Club); and that the arbitrator had herself disaggregated or discounted those losses on a basis (by a third and then by 15%, as described at para 9(iii) above) which was not supported by the evidence and was not canvassed with, or addressed by, the parties and in respect of which RAV had not been given the opportunity to make representations prior to the award.
"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.
24. 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 remitted pursuant to Section 90(2)(d)."
"37. The first time the method of adjusting Mr Ocasio's global figure, so as to arrive at a figure for the Sakara Beach Club was advanced, was in the Award itself. It does, as argued by the Applicants, appear to represent the Arbitrator's entirely impressionistic way of adjusting a global figure. Regrettably, the Applicants (or Therapy) were not afforded an opportunity to make representations prior to her decision to make adjustments/deductions and allowances for: (1) the removal of sums attributable to claims which she had disallowed (in relation to the varied lease agreement); and (2) the inaccurate recall of the Respondent's expert witness.
38. Having regard to the authorities therefore, the decision of the Arbitrator at paragraph 165 of the award was unfair and contrary to section 44 of the [Arbitration Act] and I am satisfied that this ground ought to prevail."
"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…
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.
44. The respondents appear to argue in … 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 that 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."
"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.
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 ie the failure to consider such an important issue will cause substantial injustice."
"…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."
"21(1) Any person aggrieved by any judgment, order or sentence given or made by the Supreme Court in its appellate or revisional jurisdiction, whether such judgment, order or sentence has been given or made upon appeal or revision from a magistrate or any other court, board, committee or authority exercising judicial powers, and whether or not the proceedings are civil or criminal in nature may, subject to the provisions of the Constitution and of this Act, appeal to the court on any ground of appeal which involves a point of law alone but not upon any question of fact, nor of mixed fact and law nor against severity of sentence:
Provided that no such appeal shall be heard by the court unless a Justice of the Supreme Court or of the court shall certify that the point of law is one of general public importance.
23(1) An appeal shall lie to Her Majesty in Council from any judgment or order of the court upon appeal from the Supreme Court in a civil action in which the amount sought to be recovered by any party or the value of the property in dispute is of the amount of four thousand dollars or upwards, and with the leave of the court but subject nevertheless to such restrictions, limitations and conditions as may be prescribed in relation thereto by Her Majesty in Council, in any other proceedings on the Common Law, Equity, Admiralty or Divorce and Matrimonial sides of the jurisdiction of the Supreme Court.
(2) Save as is provided in this section the decision of the court in any civil proceedings brought before it on appeal shall be final.
(3) Nothing in this section contained shall be deemed to restrict or derogate from the right of Her Majesty in Council in any case to grant special leave to appeal from the decision of the court in any cause or matter."
"90. Challenging the award: serious irregularity.
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.
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;
(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."
"280. Irregularities stand on a different footing. Here we consider that it is appropriate, indeed essential, that these have to pass the test of causing 'substantial injustice' before the court can act. 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. In short, Clause 68 is really designed as a long stop, only available 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." (emphasis added)
"…nowhere in section 68  is there any hint that a failure by the tribunal to arrive at the "correct decision" could afford a ground for challenge"
"….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."
"(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 [is] 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…"
"Since the whole process of arbitration is intended as a way of determining points at issue, it is more likely to be a matter of serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed, than if the complaints go simply to procedural matters.
It is inherently likely to be a source of serious injustice if irregularities occurred of the kind to which I have referred. 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." (emphasis added)
"(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  2 Lloyd's Rep 691, para 15; Primera v Jiangsu  1 Lloyd's Rep 255, para 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 para 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 Corpnv C Czarnikow Sugar Ltd  1 Lloyd's Rep 422 at para 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  BLR 496 at para 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 paras 12 and 17)."
There is a degree of overlap between the considerations relevant to whether there is an "issue" and whether it has been "put to" to the tribunal. It is clear that this does not require the issue to have been pleaded or included in a list of issues. It is necessary to consider the arbitration proceedings as a whole, including the pleadings and the written and oral submissions. Having done so, in general, what is required is that the tribunal's attention has been sufficiently clearly drawn to the issue, as one which it is required to determine, that it would reasonably be expected to deal with it.
"(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 paras 40-41); 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  2 Lloyd's Rep 181, para 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  2 Lloyd's Rep 508, para 10, World Trade Corporation, para 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  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 Corpn at para 45). The fact that the reasoning is wrong does not as such ground a complaint under section 68(2)(d) (Petro Ranger  2 Lloyd's Rep 348, Atkins v Secretary of State for Transport  EWHC 139 (TCC), para 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 para 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  EWHC 442 (Comm), para 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  CLC 277 and Atkins, para 36). The court can consider the pleadings and the written and oral submissions of the parties to the tribunal in this regard."
"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 irregularity set out in section 90(2)(a) and section 44(1)(a) is relied on by RAV in relation to the paragraph 10 ground.
"[T]he rules of natural justice do require … that matters which are likely to form the subject of decision, in so far as they are specific matters, should be exposed for the comments and submissions of the parties. If an arbitrator is impressed by a point that has never been raised by either side then it is his duty to put it to them so that they have an opportunity to comment. If he feels that the proper approach is one that has not been explored or advanced in evidence or submission then again it is his duty to give the parties a chance to comment. If he is to any extent relying on his own personal experience in a specific way then that again is something that he should mention so that it can be explored. It is not right that a decision should be based on specific matters which the parties have never had the chance to deal with, nor is it right that a party should first learn of adverse points in the decision against him."
The last point merits emphasis. An arbitrator will not have acted fairly if a party is learning for the first time in the award about findings and matters in the decision of the arbitrator which that party has not had the opportunity to address.
"the Tribunal went its own way to a conclusion which neither [party] had contended for and did so unheralded. That, in my judgment, was fundamentally unfair."
"What [the tribunal] could not do without breaching the section 33 duty was to proceed to assess damages in the manner set out … without having published an Award setting out its findings in relation to the breach issues and giving both parties the opportunity to adduce evidence and/or advance submissions as to what damages could be held recoverable for those breaches found proved. This was so because the award of damages for loss alleged to have been caused by particular breaches simply were not 'in play' in the sense that phrase is used in Reliance Industries Ltd v Union of India …"
"It is enough if the point is 'in play' or 'in the arena' in the proceedings, even if it is not precisely articulated. To use the language of Tomlinson J, as he then was, in ABB AG v Hochtief Airport  2 Lloyd's Rep 1 at , a party will usually have had a sufficient opportunity if the 'essential building blocks' of the tribunal's analysis and reasoning were in play in relation to an issue, even where the argument was not articulated in the way adopted by the tribunal. Ultimately the question which arises under section 33(a), whether there has been a reasonable opportunity to present or meet a case, is one of fairness and will always be one of fact and degree which is sensitive to the specific circumstances of each individual case."
"[This] raises a point that frequently arises: is an arbitral tribunal obliged to confront a party with a proposed finding when it is not one that a party has sought? Obviously the tribunal should inform the parties and invite submissions and further evidence before making an award if the finding is novel and was not part of the cases presented to the arbitral tribunal. On the other hand in many arbitrations, especially those in the construction industry, there are many findings other than those which the parties have invited the tribunal to make. Matters of quantification and valuation frequently lead to the tribunal taking a course which is not that put forward by either party, but which lies somewhere between. 'Doing the best one can on the material provided' almost inevitably produces such a result. Provided that the finding is not based on a proposition which the parties have not had an opportunity of dealing with the arbitral tribunal will not be in breach of its duties under section 33 … if it makes such a finding without giving the parties a chance of dealing with it. In many such cases the tribunal will have been appointed for its expertise so that in addition there would be no obligation to consult the parties…. In my judgment the arbitrator was entitled to arrive at his decisions that the agreed measurement did not cover gravel left behind and that there should be an adjustment of 770 m3 on that account, without specifically informing Weldon of his intentions and inviting submissions from it. There was no breach of section 33
"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".
It is therefore clear that, for there to be a serious irregularity both of these matters need to be established, since that is what a serious irregularity "means".
"Further, 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 (li) that the option clause was uncertain, illusory and unenforceable as it required the parties to agree the rents to apply to the renewal term."
"There was a serious irregularity in the determination of the award of general damages in that the award does not reflect that the Arbitrator considered the issue of whether Therapy could claim losses occurring not only in the remaining term of the Sakara Lease but also in the renewal period".
In finding that this issue was "central" to the determination of the award of damages Winder J was recognising that the failure to deal with it might well affect the outcome of the award and thereby cause substantial injustice.
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