Key takeaways
Serious irregularity leading to substantial injustice
Challenges to arbitration awards or proceedings on this ground are rarely successful.
Focus of s.68 challenge
The Court considers due process, not whether the tribunal’s decision was correct.
Failure to deal with an essential issue
If the tribunal does not deal with an issue on which the whole or part of the claim depends, this amounts to serious irregularity.
‘Indus Powertech Inc -v- Echjay Industries Private Limited [2026] EWHC 827 (Comm)’
There is a very high threshold for challenges to arbitration awards on the ground of serious irregularity leading to substantial injustice and as a result, such challenges in English law are rarely successful. This case is one of those where the Court upheld the challenge, finding that an arbitral tribunal had failed to deal with two essential issues that had been put to it.
The background facts
The claims arose out of a Master Supply Agreement (MSA) and a subsequent Memorandum of Understanding (MOU) between Indus Powertech Inc (Indus), a US company, and Echjay Industries Private Ltd (Echjay), an Indian company.
Indus supplied engineering components to North American manufacturers by sourcing them from India. Echjay manufactured forgings for automatic, non-automative and engineering applications.
Pursuant to the MSA, Echjay became the exclusive supplier of forgings to Indus and its customers. The MSA was governed by Indian law and provided for disputes to be submitted to arbitration under ICC Rules, with a London seat, with the result that the English Court was the supervisory court of the arbitration.
Disputes arose between the parties that led to Echjay issuing a notice of termination on various grounds. One issue that arose was whether Indus had breached clause 3 of the MSA, the non-compete/non-solicitation obligation, by sourcing forgings from another Indian supplier and, if so, what damages flowed from that breach.
The arbitration proceedings
In arbitration proceedings, the ICC Tribunal held that Indus was in breach of clause 3 of the MSA but that the clause was unenforceable after termination of the MSA. The horizon for awarding damages was limited to two years. The Tribunal awarded Echjay around US$ 4.1 million for lost profits for that two-year period. That total was made up of six individual damages calculations, two for shafts, two for gear pinions, and two for gear rings.
Indus sought to challenge the Award under s.68(2)(d) of the Arbitration Act 1996 (the 1996 Act) on the ground of serious irregularity leading to substantial injustice. Specifically, Indus contended that the Tribunal had failed to address two essential issues of causation that arose in respect of Echjay’s claims for loss of profits.
These two issues were said to be:
Whether Echjay had any available manufacturing capacity to manufacture Shafts 1 and 2.
Whether any required design and production validation process required for Echjay to manufacture the four gear rings and pinions could have been completed within the two-year horizon for damages identified by the Tribunal.
The Commercial Court decision
The analysis
In such cases, the Court has to consider:
whether the relevant point or argument was an 'issue'
whether the issue was 'put to' the tribunal
whether the tribunal failed to deal with it, and
if so, whether that failure had or would cause substantial prejudice to Indus.
Having considered the authorities, the Court stated that an “issue”' was a question which the tribunal had to resolve before it could fairly deal with the claim, or which fairness demanded be dealt with and not ignored or overlooked. If the whole or a substantial part of the claim depended on the answer to a question, it was likely to be an issue. Furthermore, the fact that a question could be characterised as a 'sub-issue' to a wider issue did not prevent it engaging s.68(2)(d).
As to the extent to which a tribunal should be given the benefit of the doubt when deciding whether it could be said to have failed to deal with an issue:
The award should be read in a fair, commercial and commonsense way, expecting that no substantial fault will be found with it and hence that all of the issues will have been dealt with.
The Court should not be hypercritical in determining whether the issue has been dealt with by the arbitrators.
The focus of the enquiry under s.68 is due process and not the correctness of the tribunal's decision.
If the tribunal has dealt with the issue in any way, that is the end of the enquiry. It does not matter that the tribunal has dealt with it well, badly or indifferently. The fact that the reasoning is wrong or involves the tribunal misdirecting themselves on the facts is not a failure to deal with the issue.
The award should not be interpreted in a vacuum, but by taking into account the way in which the issues were presented in the parties' submissions.
A failure to provide reasons is not the same as failing to deal with an issue.
Issues do not need to be dealt with one by one; they can be dealt with in a composite or compendious way. It is up to the tribunal to decide how to structure the disposal of the dispute referred to it.
On the other hand:
It needs to be made apparent to the parties that the issue has indeed been determined. The parties should not be left to guess whether it has been dealt with or overlooked. They should not be required to speculate about what was in the tribunal's heart.
While it could always be said of an issue which would impact the relief granted, that the tribunal 'must' have rejected party X's argument, given the relief that has ultimately been awarded to party Y, something more is required before that inference can be drawn, even if the award contains references to the parties' arguments.
Therefore, while an award does not have to state expressly that an issue has been identified and answered, it is not enough to say that the tribunal appears to have been aware of the issue so they must have decided it. In other words, it cannot be inferred that the tribunal has rejected a point where it does not refer to it in its analysis at all, still less provide any reasons for its rejection.
If it is not clear from the words of the award that the issue has been decided, then one looks for signs that the arbitrators were engaging with the issue by evaluating the evidence, or analysing the submissions, relevant to that issue. However, the Court should not be drawn into any assessment of the evidence or submissions.
As to substantial injustice, the Court expressed the view that where there has been a failure to deal with an issue, that is likely to result in substantial injustice. If an 'issue' is a question which fairness demands be dealt with and not ignored or overlooked, it is inherently likely that substantial injustice would have occurred.
The conclusion
On the two points raised by Indus in its s.68 challenge, namely (i) Echjay's capacity to manufacture Shafts 1 and 2 and (ii) the lead time for Echjay starting commercial manufacture of the gear rings and pinions, the Court concluded that something had gone wrong with the Award.
Both questions were properly to be described as an 'issue' in the arbitration, and both issues were 'put' to the Tribunal. Unfortunately, the Tribunal did not deal with them.
That was a serious irregularity and one which had caused serious prejudice to Indus. Those issues must therefore be remitted to the Tribunal for their decision, together with any other issues (such as awards in respect of interest or costs) which were consequential upon the Tribunal's decisions on the quantum of those claims.
Comment
The latest available statistics from the English High Court on arbitration appeals, published in March 2026, state that for the 2024-2025 year no appeals pursuant to s.68 of the 1996 Act had been successful. That was equally for case for s.69 appeals on a point of law.
The English Court is reluctant to overturn the findings of an arbitral tribunal particularly where, as with the ICC, the award is final and unappealable on issues of law. It is, therefore, only rarely that the Court will uphold a claim of serious irregularity.
Where the Court concludes that there has been serious irregularity, the award, as in this case, is remitted back to the arbitrators. A remission does not necessarily mean that the arbitrators will reach a different decision ultimately, but rather that they must address the issues they have been directed to consider.
Because of its rarity and because of the principles set out above in relation to arbitral issues, this decision will be of interest to all those involved in international arbitration.
Our International Arbitration team helps our clients to resolve disputes efficiently and effectively across jurisdictions. Find out how our specialists can support you.
