Section 68 of the Arbitration Act 1996 (the Act) provides for challenges to arbitration awards on the grounds of serious irregularity affecting the tribunal, the proceedings or the award which the court considers has caused or will cause substantial injustice to the challenging party. Section 68(2) defines "serious irregularity" as including:

For a further discussion of challenging awards pursuant to section 68, see Practice note, Challenging the award under s68 of the English Arbitration Act 1996: serious irregularity.

Article 29 of the ICC Arbitration Rules provides the tribunal with discretion to "correct a clerical, computational or typographical error, or any errors of a similar nature contained in an Award…"

For further discussion, see Practice note, ICC arbitration (1998 Rules): a step-by-step guide: Corrections and errors.

The claimant terminated an agreement with the defendant in January 2005, some three years prior to the expiry of the agreed term, and the defendant commenced ICC arbitration alleging wrongful termination. By a partial award rendered in July 2007, the arbitral tribunal held that the claimant was in repudiatory breach. A quantum hearing which took place the following October was therefore concerned with the loss of future profits for which the claimant was to be deemed liable to the defendant.

Both parties' experts accepted that the calculation of the loss of profit as at the date of termination should take account of: (i) an early-payment discount; and (ii) estimated values of other variables.

Arbitrator Anthony Boswood QC suggested that no discount was necessary given that, by the time of the hearing in October 2007, almost the entirety of the contract period would have expired. It would therefore be more appropriate to quantify the damages as at the date of actual assessment, as opposed to the date of breach of contract, following the well-established principle in Bwllfa and Merthyr Dare Steam Colleries 1891 Limited v Pontypridd Waterworks Company [1903] AC 426. The tribunal adopted this approach.

It was at this stage that the tribunal made what Burton J described as a "howler". In its award on quantum it only awarded interest accruing from the date of the award and not from the date the payments under the contract fell due, with the resulting shortfall to the defendant amounting to between £1.5 and 3 million. The defendant successfully applied to the tribunal for a correction to be made to the award in accordance with Article 29 of the ICC Rules.

The claimant challenged the award under section 68 of the Act on the grounds that, in making the correction, the tribunal had acted in excess of the powers conferred upon it by Article 29 of the ICC Rules (there was an additional challenge under section 67 of the Act as to the tribunal's substantive jurisdiction but this was disposed of quickly by Burton J).

Burton J held that whether or not the tribunal had the power under Article 29 to make the correction depended on whether the howler could be classed as a "clerical, computational or typographical error, or an error of a similar nature". He determined that the correction could not be classed in this way and that there was therefore no power to correct the howler under Article 29. He also determined that as the ICC Rules exclude the right to appeal on a point of law, there was no power whatsoever to correct the error.

Although the tribunal had exceeded its powers, it did not follow that the challenge to the award was successful. It was necessary for the claimant to demonstrate that the tribunal's howler had caused or would cause substantial injustice to it before any of the remedies set out in section 68 could be exercised. Burton J held that the extent to which the court should consider what might have happened if there had not been a particular procedural irregularity is a question of fact. The present facts were straightforward: not correcting the award would cause a substantial injustice to the defendant rather than the claimant as the defendant would not receive the interest it was entitled to.

Any correction made to an arbitral award in accordance with Article 29 of the ICC Rules must be submitted to the ICC Court for approval. It must therefore be supposed that the ICC Court took a broader view of the scope of a tribunal's powers under Article 29 when it examined the correction of the howler than that of Burton J.

It is also interesting to note that Burton J was of the view that the howler might have been avoided entirely had the tribunal heard oral submissions on the appropriateness or otherwise of following the Bwllfa principle (the question having only arisen at the hearing after written submissions had been served). This view is worth bearing in mind in practice for circumstances where the arguments at stake between the parties, for one reason or another (such as, in this instance, an arbitrator's suggestion), unexpectedly take a different direction.