Commercial court considers challenge to arbitral award

In Union Marine Classification Services LLC v The Government of the Union of Comoros [2015] EWHC 508 (Comm) the Commercial Court gave judgment on whether a section 67 Arbitration Act 1996 (AA 1996) application was the appropriate vehicle to challenge an arbitration award.

Union Marine had entered into an outsourcing contract with the Government of Comoros, which authorised Union Marine to “accomplish… all acts and functions relating to the maritime administration of Comoros.” This included the registration of vessels for which Union Marine was to pay the Government of Comoros 50% of all taxes and other income generated from the registration of each vessel. Five years into the term of the agreement the Government of Comoros purported to terminate the outsourcing contract.

Arbitration was commenced and an award given. Following an application to the arbitrator by the Government of Comoros, the arbitrator amended his award. As a result of this Union Marine made an application to the High Court pursuant to section 67(1) of the AA 1996 stating that the arbitrator lacked the substantive jurisdiction to change his award in the manner that he had.

The court held that the requirements which needed to be shown for a successful s67 application were not present in this case. Section 67 was appropriate when issues in dispute were those such as: whether there was a valid arbitration agreement; whether the tribunal was properly constituted; and whether the matters submitted to arbitration is in accordance with the arbitration agreement. Union Marine’s challenge should have been based on section 68(2)(b) of the AA 1996, which deals with a serious irregularity where the tribunal has exceeded its powers.

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