The Commercial Court has confirmed that section 33 of the Arbitration Act 1996 does not necessarily oblige a tribunal to alert parties to potential arguments that may support their case.

The claimants challenged an arbitration award under section 68 of the Arbitration Act 1996 on grounds of serious irregularity. They alleged that the arbitrators, who were dealing with a charterparty demurrage dispute on the basis of documents only, had failed to enquire whether the claimants were advancing any argument based on a reported judgment (the Happy Day point). The tribunal's award noted that the claimants had not sought to rely on the Happy Day point and proceeded to make an award in the respondent's favour. Had the claimants successfully advanced the Happy Day point, no award would have been made against them and there might even have been a balance in their favour.

Teare J rejected the application, holding that the tribunal was not obliged to alert a party to an argument that it had not advanced. The tribunal was required to give each party "a reasonable opportunity of putting his case" (section 33). On the facts, the tribunal had discharged that obligation. The Act did not require the tribunal to go further, by offering an opportunity to put a case different from that which the party had chosen to put.

The decision is a good illustration of the limits of the obligations placed on the tribunal by section 33. As Teare J noted:

The case further illustrates the potential limitations of the documents-only procedure. An oral hearing would probably have resulted in a broader discussion of the issues at stake and the consequent ventilation of the Happy Day point. However, as Teare J noted, where the sums at stake are modest, the parties may prefer to keep costs down by opting for the more truncated documents-only procedure.

In support of their argument, the claimants relied on dicta in Bandwidth Shipping Corp v Intaari, The Magdalena Oldendorff [2007] EWCA Civ 998, in which Waller LJ stated that

They argued that, had the arbitration proceeded to an oral hearing, the tribunal would inevitably have raised the Happy Day point for the parties to comment on. The claimants should not be in a worse position as a result of having opted for documents-only arbitration.

Teare J disagreed with this analysis of The Magdalena Oldendorff. Waller LJ's comment was made in the context of a detailed point relating to an issue that had been raised and was, therefore, required to be dealt with. In the present case, due to concessions made by the claimants as to the effect of the relevant demurrage clause, there was no live issue to which the Happy Day point could have gone. Teare J explained that, where a party makes a concession and the tribunal realises that it is arguable that the concession need not have been made, the tribunal is under no duty to raise the argument so that the party can consider whether to withdraw the concession. Furthermore, in the context of a documents-only arbitration (where parties generally want to keep costs to a minimum), it was understandable that a tribunal would be reluctant to incur costs by raising new points of detail.

For further information about challenging awards under section 68, see Practice note, Challenging the award under section 68 of the English Arbitration Act 1996: serious irregularity.

Case: ED & F Man Sugar Ltd v Belmont Shipping Ltd [2011] EWHC 2992 (Comm).