Irish High Court refuses to set aside and remit arbitration award

Practical Law UK Legal Update 3-520-7065 (Approx. 4 pages)

Irish High Court refuses to set aside and remit arbitration award

by Practical Law

Background

Section 6 of the Arbitration Act 2010 provides that the UNCITRAL Model Law:

"shall have the force of law in the State and shall apply to arbitrations under arbitration agreements concerning:

(a) international commercial arbitration, or

(b) arbitrations which are not international commercial arbitrations."

Article 34 of the UNCITRAL Model Law deals with applications for setting aside an arbitral award. It provides:

"An arbitral award may be set aside by the court... only if:

(a) the party making the application furnishes proof that:

(i) a party to the arbitration agreement... was under come incapacity;...

(ii) the party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case."

Article 26 of the UNCITRAL Model Law provides that:

"(1) Unless otherwise agreed by the parties the arbitral tribunal

(a) may appoint one or more experts to report to it on specific issues to be determined by the arbitral tribunal;

(b) may require a party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

(2) Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put questions to him and to present expert witnesses in order to testify on the points at issue."

Article 18 of the UNCITRAL Model Law provides that "each party shall be given a full opportunity of presenting his case".

Facts

Diarmuid O'Cathain (DO'C) and his nephew, Ruairi O'Cathain (R'OC), entered into a partnership agreement on 20 April 2007 to set up a solicitors firm. In December 2008, a dispute arose under the partnership agreement. Legal proceedings were commenced by DO'C which resulted in Murphy J referring the matter, with the consent of the parties, to arbitration by order dated 13 July 2010.

On 13 January 2012, the arbitrator awarded DO'C the sum of €153,038.86, together with his costs of the arbitration to include the arbitrator's fees and experts' fees.

RO'C challenged the arbitral award, pursuant to section 6 of the Arbitration Act 2010 and Article 34 of the UNCITRAL Model Law, on the following grounds:

He was unable to present his case, as he was not given access to the full and complete accounts and financial records, which he required in order to prepare his defence.
The arbitrator had breached arbitration law and practice and acted ultra vires his power by employing an outside accountant, without the consent of the parties.
The arbitration hearing took place in his absence and the arbitrator was duty-bound to ensure that he had an opportunity to present evidence and arguments in support of his case.

Decision

Hedigan J rejected all of RO'C's complaints and refused to set aside or remit the arbitration award.

Applicant required information to present his case

The court rejected RO'C's complaint that he was not in a position to make his case fully. Hedigan J held that RO'C was offered all of the information that he could reasonably require to prepare his defence and counterclaim. He went on to state that "if there was any gap in his knowledge it seems to me that this was caused by himself".

Appointment of an expert

The court held that, pursuant to Article 26 of the UNCITRAL Model Law, unless otherwise agreed by the parties, the arbitrator may appoint one or more experts. There was no agreement to the contrary in this case. It was also open to RO'C to participate in the hearing and put questions to the expert but he chose not to do so. Therefore, the court held that the appointment of the accountant by the arbitrator was clearly within the arbitrator's remit.

Arbitration took place in the applicant's absence

In dealing with RO'C's complaint that the arbitrator was wrong to proceed in his absence, Hedigan J quoted from the judgment of Griffin J in the Irish Supreme Court case of Grangeford Structures Ltd v S.H LTD [1990] 2 IR 351, where Griffin J stated that:

"In my view it would make nonsense of arbitration proceedings if, reasonable notice having been given to the parties as to time limits for the presentation of claims and counterclaims, an arbitrator could not proceed because one party failed to carry out his reasonable requirements. It would mean that one party could frustrate the proceedings by mere inaction."

In considering this issue, the court had to balance the right of both RO'C and DO'C to fair procedures. The court in the Grangeford case held that the arbitrator had jurisdiction to continue an arbitration where one of the parties has walked out.

In this case, the court held that the arbitrator had given RO'C every opportunity to make his case and he had refused to do so, walking out of the arbitration.

Comment

There is no right of appeal from any determination of the High Court in respect of an application to set aside or remit an arbitration award, pursuant to the Arbitration Act 2010. Therefore, parties to arbitration should view this decision as a warning that the court will not look favourably on parties that refuse or fail to co-operate or participate as much as possible in the arbitration process.

Case

Ruairi O'Cathain v Diarmuid O'Cathain (2012) IEHC 223.

Irish High Court refuses to set aside and remit arbitration award | Practical Law