Key takeaways
Challenge to an arbitration award for serious irregularity
This will normally fail if there is no substantial injustice to the complaining party.
Issues in dispute in an arbitration
Parties should address these early on in the proceedings in order to avoid later arguments about consent, acquiescence or waiver. Related to that, they should avoid raising new arguments late in the day.
Arguments raised by arbitrating parties
So long as it appears, or can be inferred, that the Tribunal considered all relevant arguments, it does not have to expressly address them in its arbitral award.
Seacrest Group Ltd (in provisional liquidation in Bermuda -v- BCPR Pte Ltd & another [2025] EWHC 3266 (Comm)
This decision provides a useful reminder that an arbitral tribunal is not obliged to expressly address every argument made by the parties when it makes its award. The Court will not lightly find that a tribunal has overlooked submissions made by a party, rather the more likely conclusion is that the tribunal considered the relevant submissions but dismissed them.
The background facts
The dispute arose out of an English law investment agreement dated 30 November 2018 (Investment Agreement) between, amongst other parties, Seacrest Group Ltd (Seacrest) and BCPR Pte Ltd (BCP).
The Investment Agreement was concerned with the acquisition by BCP of an interest in OKEA AS, a Norwegian company owned by an affiliate of Seacrest. Article 4 of the Investment Agreement dealt with the calculation of the deferred compensation payment (DCP) which Seacrest was to receive from BCP for the acquisition of its interest in OKEA and provided contractual mechanisms for doing so.
The parties subsequently fell out over the quantum of the DCP and the amount of Seacrest’s entitlement to compensation.
The principal issue was whether the calculation should have been carried out in Norwegian Krone (NOK), which is what Seacrest argued, or whether the inputs naturally denominated in NOK should then have been converted into USD, as contended by BCP.
In its pleadings, BCP proposed what it considered to be the applicable exchange rate and produced the relevant figure in USD. Seacrest did not, however, plead any applicable exchange rate in the event it was wrong on its case that the calculation should remain in NOK, nor did it challenge the exchange rate used by BCP. BCP took this to mean that the applicable exchange rate was not disputed.
The Tribunal did, however, ask the parties to clarify in their written closing submissions the issue of the rate of exchange, including the applicable date on which it should be applied. The Tribunal proposed that the parties might agree a table or similar.
Seacrest addressed the exchange rate issue for the first time in its closing submissions. It also argued that BCP’s closing submissions amounted to an abandonment of their previous position regarding the conversion/exchange rate. In Seacrest’s view, BCP was agreeing with Seacrest’s position. These arguments formed paras. 114 to 117 of Seacrest’s closing submissions.
The arbitral award
In its final award dated 27 September 2024, the Tribunal found for BCP on the question of whether the currency of account was NOK or USD. On the exchange rate issue, it concluded that BCP's original pleaded case was correct, although it did so on the basis that the correct answer was common ground. In a footnote to the award, the Tribunal referred to those parts of the parties’ memorials that addressed the point (but did not refer to paras. 114 to 117 of Seacrest’s closing submissions).
Seacrest made a request under Article 38 of the UNCITRAL Rules, asking the Tribunal to correct the award. The Article 38 Request was made on the basis that the Tribunal's failure to make any finding as to what exchange rate should be used amounted to an omission that could be corrected under Article 38. Seacrest made this Request in order to avoid an argument that it was not entitled to appeal or challenge the award until it had exhausted all available arbitral processes of appeal or review (s.70(2) of the 1996 Act).
BCP objected to any correction of the award, arguing that the Tribunal did not have the power to do so and that, in any event, there was no error requiring correction.
The Tribunal refused the Article 38 Request. It held primarily that:
There was no pleaded dispute as to the basis upon which the exchange rate should be calculated.
The Tribunal had made clear that no new issues were to be raised in the written closing submissions. It had merely requested that the parties use the written closing submissions to clarify certain existing issues based on the materials before the Tribunal.
If Seacrest had wished to change its case so as to advance the new allegations made in paras. 114 to 117 of its written closing submissions, it should have applied to the Tribunal for permission to do so.
In the absence of any dispute raised by Seacrest prior to its written closing submissions as to the basis for the calculation of the deemed sale price and the applicable exchange rate, the Tribunal was entitled to treat this issue as being common ground.
Even if the reference to the issue being common ground was wrong, the Tribunal was entitled to and did consider the appropriate rate of exchange to be applied. It would have, therefore, decided against any correction because this would not have had any material effect on the award.
The Tribunal then made a costs order in relation to the Article 38 Request in favour of BCP. Seacrest applied to the Court under s.68 of the 1996 Act, alleging that the Tribunal’s handling of the Article 38 Request constituted a serious irregularity that caused it substantial injustice because it had to pay BCP costs of almost US$56,000.
The Commercial Court decision
The Court acknowledged, as contended by Seacrest, that the Tribunal had not expressly engaged with the submissions in paras. 114 to 117 of its written closing submissions in the sense that the points made in those paragraphs as to the exchange rate issue were not referred to in the award and the contrary was said to be common ground.
However, that did not mean that the Tribunal had not considered whether it should take into account any new points which were being raised in relation to the exchange rate issue for the first time. It was consistent for the Tribunal to have refused to allow Seacrest to raise a new issue in written closings, but also to have read the relevant part of Seacrest's written closings and been unpersuaded by what was said.
The context in which the Tribunal declined to articulate a response to the submissions made by Seacrest was all-important. The Tribunal had already determined that no new issues were to be raised in the parties' closing submissions and that was a decision which continued to be effective, including in relation to any new point on the exchange rate issue, unless and until Seacrest applied to amend.
The Presiding Arbitrator had made clear on Day 1 of the arbitration that the parties should put their cards on the table from the outset. The Tribunal was alive to the undesirability that one of the parties might spring a new and unpleaded case on the other side.
Seacrest’s real complaint appeared to be that before it issued the Award, the Tribunal should have raised with the parties that it regarded the exchange rate issue as a new issue with which it did not propose to engage in the absence of an application for permission to amend. Seacrest thought that the Tribunal should have explained to the parties that it was proposing to take that course on the grounds that it was an unpleaded new issue and was inconsistent with the parties' positions on the memorials. If that had happened, Seacrest argued it would have applied to amend and would have succeeded on that application.
The Court acknowledged that this was a course the Tribunal might have chosen to take. That it did not do so did not, however, amount to serious irregularity. Seacrest had had a reasonable opportunity to advance its new case on the exchange rate issue by complying with the procedural directions that had been given. There was nothing unfair or irregular about the course which the Tribunal took, leaving it as they did to the parties to apply to amend if they wished to advance a new case, but otherwise proceeding on the basis of the case set out in the memorials.
The Court added that even if this were wrong and there had been serious irregularity, there was no substantial injustice to Seacrest because the Tribunal would have reached the same conclusion in any event.
Finally, the Court dismissed Seacrest’s contention that the Article 38 Decision was not binding on them because it was not an award. In the Court’s view, the Article 38 Decision had legal effect as a decision reached pursuant to a process agreed by the parties in accordance with the UNCITRAL Rules applicable to the arbitration even though the product of the process does not form part of the award.
Comment
This decision reflects the high threshold for successfully challenging an arbitral award on the ground of serious irregularity leading to substantial injustice.
Parties to an arbitration should make sure that they adequately address all issues in dispute early on in the arbitral proceedings and should avoid raising new arguments late in the day.
