Key takeaways
Serious irregularity in arbitration
Must cause substantial injustice if challenge is to succeed.
High threshold for successful challenge
Question is whether tribunal followed due process, not whether it came to right conclusion.
Issues essential to claim
Must be properly pleaded and argued before the tribunal if it is expected to deal with them.
STN -v- POR [2026] EWHC 2585 (Comm)
This case highlights the high threshold for a successful challenge to an arbitration award on the ground of serious irregularity that has caused substantial injustice. The focus is on due process, not the correctness of the decision reached.
It provides a useful reminder that essential issues must be properly pleaded and argued in the arbitration. The Court distinguishes between an issue that has been put to the tribunal and which the tribunal was required to deal with, as opposed to ‘arguments’ or ‘lines of reasoning.’
A matter will constitute such an 'issue' where the applicant's claim could have depended upon how it was resolved and a failure to deal with the issue results in unfairness to the applicant. However, a failure to provide any or sufficient reasons for a decision is not the same as failing to deal with an issue.
The Court will apply a commercial and commonsensical approach to its reading of an award to decide whether there has been any failure by the tribunal to comply with its general duties under s.33 of the Arbitration Act 1996 (1996 Act) to act fairly and impartially between the parties and to give each party the chance to put its case forward.
The background facts
The claimant is a professional footballer. The defendant was his agent.
Disputes arose between the parties that were referred to arbitration pursuant to Rule K of the FA Rules. The tribunal comprised a sole arbitrator (the Arbitrator).
In the arbitration, the defendant claimed a principal sum of approximately £110,000 as unpaid commission in respect of the claimant's transfer from Club 1 to Club 2 in the summer of 2022.
The claimant denied that claim and counterclaimed for what he alleged had been breaches of contract and fiduciary duty by the defendant, and sought orders for the taking of an account, an account of profits and/or equitable compensation, and further ancillary orders.
A hearing took place before the Arbitrator in February 2025. In his Partial Final Award, the Arbitrator found that the defendant's claim succeeded, and that the claimant's counterclaim did not.
The claimant sought to challenge the Award under s.68 of the 1996 Act for serious irregularity leading to substantial injustice. His key complaints were as follows:
The Arbitrator had failed to deal with the second limb of his counterclaim.
The Arbitrator had failed to comply with his general duty under s.33 of the 1996 Act in relying on his own private knowledge and experience, without giving the parties a proper opportunity of addressing him on an alleged mandate agreement between the defendant and a third party. The arbitrator had also allegedly adopted a line of reasoning which had not been pleaded.
The Arbitrator had failed to give the claimant the opportunity to put his case on a payment that was alleged to be an undisclosed secret profit.
The Commercial Court decision
The Court accepted only argument no. 1, that the Arbitrator had failed to deal with one limb of the counterclaim, rejecting the remaining bases of challenge. However, it did not set aside the Award. Instead, it remitted it to the Arbitrator to reconsider the second limb of the counterclaim and whether this had any effect on the overall Conclusion of the Award.
In essence, the Court found as follows:
Second limb of counterclaim
The defendant argued that the Arbitrator had dealt with the relevant issue but that even if he had not, the claimant should have sought correction of the Award under s.57 of the 1996 Act or the making of a new award. As he had not done so, the defendant argued that the claimant was barred by s.70(2) from bringing the s.68 challenge because he had not first exhausted any available recourse under s.57(3)(a).
Alternatively, the defendant contended that the Court could order the Arbitrator to state his reasons for rejecting the second aspect of the counterclaim, rather than setting aside the Award.
The Court referred to Rule K.10.2 of the FA Rules which provides that:
’Subject to the provisions of sections 67 and 68 of the Arbitration Act 1996, the Award shall be final and binding on the parties from the date that it is made, who shall be deemed to have waived irrevocably any right to appeal, review or recourse to a court of law, arbitral body or any other body of any nature.’
The Court said this provision automatically precluded any application to the Tribunal for the correction of the Award or the making of a new award. A process of “recourse” did not have to involve another tribunal or body. Furthermore, the wording of Rule K 10.2 was wide enough to encompass the Tribunal itself.
Consequently, the claimant was not barred by s.70(2) from bringing his s.68 challenge. Even if the Court was wrong in its reading of K 10.2, it stated that s.57(3)(a) was directed at cases where there was genuine ambiguity or uncertainty on the terms of the award as to whether a particular issue had been dealt with.
The mere fact that the terms of an award would have been different had the issue been determined in the s.68 applicant's favour was not itself enough to create an ambiguity, nor should the Court try to find ambiguity when, objectively, the award simply did not address the issue.
The Court did, however, find that there had been a failure by the Arbitrator to deal with all the issues put to him. There was a substantial injustice in his not having done so because if he had dealt with all the issues, the result might have been different.
Mandate Agreement
The Court did not think that the Arbitrator’s treatment of this issue in the Award had relied on any case or legal theory that was not covered by the pleadings and which had not been advanced by the defendant in the arbitration.
The claimant had had an adequate opportunity to deal with the arguments put forward by the defendant. Insofar as the claimant was in reality arguing that the Arbitrator had come to the wrong legal conclusion, any s.69 appeal for error of law was precluded by the FA Rules.
Furthermore, on the Court’s reading of the relevant paragraphs of the Award, it did not think that the Arbitrator had made some improper use of his own knowledge and experience. What he did was use his experience to evaluate the witness evidence. Even if he had improperly used his knowledge and experience, this had not caused any injustice.
General duty under s.33 of the 1996 Act
The Arbitrator did not breach his s.33 duty in the way he handled matters. The matter of the payment to the defendant that was alleged to be a secret profit was not pleaded and was not put forward to the Arbitrator as an issue that he was required to determine.
Applying a fair, commercial and commonsense approach, and given the pleadings and the way the arbitration progressed, the Arbitrator could not be said to have failed to deal with an issue put to him for decision in relation to said payment.
Comment
The decision reflects the policy of the English Court to limit their interference in arbitration proceedings and to intervene only where something has gone so wrong that fairness requires the Court to step in.
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