ReSolution Issue 16, February 2018 | Page 28

- United Kingdom -

Stinging judicial criticism, loss of confidence and errors of law not sufficient to set aside an award

Tim hardy & Stephanie Woods

In 2002 a dispute started when a partner left a firm of accountants to set up his own practice. Numerous disputes arose between the firm and the partner relating to the balance in the former partner’s current account, payment of his pension and repurchase of his shares. In 2008 an accountant was appointed to arbitrate the dispute in England under the CIArb Rules. Nine years later that dispute is still running.
In April 2016 the arbitrator issued his fifth award dealing with the issue as to which party should bear the costs related to the dispute concerning repurchase of the retiring partner’s shares. In the award the arbitrator decided that, as the retired partner "was substantially more successful than the claimant firm”, the firm should pay the costs of the retired partner. The firm applied for permission to challenge that award under section 69 Arbitration Act 1996 on grounds that it was based on an error of law. Additionally, and this is the most interesting aspect of the case, the firm applied for the award to be set aside, rather than remitted to the arbitrator for reconsideration, because of ‘stinging’ judicial criticism of the arbitrator, his errors of law and their lack of confidence in his ability given his mistakes.
Maurice J Bushell & Co v Graham Irving Born [2017] EWHC 2227 (Ch)

Reasons for permitting a challenge
In July 2016 the firm was granted permission by Snowdon J to challenge the award as he was satisfied that the arbitrator had erred in law when reaching his decision that the former partner was ‘substantially more successful’. Snowdon J found that the arbitrator had erred in two respects. His first error was to take into account the fact that in another dispute, not involved in the arbitration and including other parties, the former partner had received a favourable settlement from the firm. It was an express term of that settlement that it was not and should not be construed as an admission of liability or wrong doing on the part of any of the parties. His second error was that a substantial aspect of the dispute had not yet been dealt with so he was premature in concluding that overall the retired partner was substantially more successful than the firm.
The remedy - set aside or remission?
At the appeal hearing Rosen J agreed with Snowdon J that the arbitrator had erred in law. In the circumstances, the principle issue to be decided was what was the correct remedy. Section 69(7) Arbitration Act 1996 provides that on an appeal on a point of law the court may:

● Confirm the award;
● Vary the award;
● Remit the award to the arbitrator in whole or in part; or
● Set aside the award in whole or in part.