In the arbitration, the claimant (HB) had sought a declaration that the defendant (RJ) was bound by deed to accept delivery of shares from HB (and for specific performance thereof), alternatively for damages for breach of the deed. HB's position was therefore that RJ had not taken the shareholding as intended, and had "wrongfully set his face against doing so". RJ did not dispute that it had failed to take the shareholding; indeed it no longer wanted to. Its position though was that its failure to complete the transaction did not involve any breach of contract, and it denied that specific performance should be given. The parties were therefore in agreement that RJ had no ownership interest in the shares. In the award however, the arbitrator found that RJ was the beneficial owner of the shares. RJ challenged the award under s.68 on the basis that the arbitrator granted relief that HB had never sought and which was significantly different to anything any of the parties argued for; further that the arbitrator had done so without any notice to the parties, thus depriving them of the opportunity to address any such case. On the following points, Mr Justice Andrew Baker decided: • Serious irregularity -"arbitrators are not restricted to choosing between whatever rival contentions are developed by the parties; but if they are to contemplate determining a dispute on some rival basis, fairness dictates, and so the arbitrators' general duty of fairness under s.33 of the Act requires, that the parties be given notice and a proper opportunity to consider and respond to the new point." The arbitrator had decided the dispute in a way which had not been brought by HB, suggested by RJ, or raised by the arbitrator with the parties, and nothing in the proceedings put the parties on notice that the arbitrator was thinking of deciding the dispute in this way. Baker J was satisfied there was therefore a procedural irregularity. • Substantial injustice- the effect of the award was that RJ was declared beneficially to own a shareholding he did not want, for which
he did not have a regulatory approval, and his ownership of which exposed him to a real risk of financial penalties imposed by the regulator. Baker J had no doubt it was a substantial injustice for RJ to be put in that position without having had an opportunity to address the possibility before the arbitrator. • What to do with the award? -The default option in cases of irregularity is to remit the decision to the arbitrator, but Baker J considered it was essential in this case that those parts of the award affected by the arbitrator's reasoning be set aside to be considered afresh. • Can the court remove an arbitrator for serious irregularity? On the facts of this case, the question of removal did not arise - the arbitrator was "a very senior English QC, well known and highly regarded in the world of international commercial arbitration, who was jointly nominated by the parties", and whose honesty and integrity was not impugned. Baker J had no doubt that the arbitrator would take on board this judgment and that he would be able to "approach the question