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England and Wales High Court (Commercial Court) Decisions


You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> CNH Global NV v PGN Logistics Ltd & Ors [2009] EWHC 977 (Comm) (26 February, 2009)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2009/977.html
Cite as: [2009] 1 CLC 807, [2009] EWHC 977 (Comm)

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Neutral Citation Number: [2009] EWHC 977 (Comm)

                                                      Claim No. 2008 Folio 716 and 802
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

                                                                 Royal Courts of Justice
                                                            Strand, London, WC2A 2LL

                                                     Date: Thursday, 26th February, 2009

                                       Before:

                           MR. JUSTICE BURTON
                          ---------------------
               IN THE MATTER OF THE ARBITRATION ACT 1996
                  AND IN THE MATTER OF AN ARBITRATION

                                       Between:

                                   CNH GLOBAL N.V.                            Claimant

                                          - and -
                                                                            Defendants
                             (1) PGN LOGISTICS LIMITED
                                   (2) GRAGLIA SRL
                       (3) WINCANTON TRANS EUROPEAN LTD.

                                    And Between:

                               PGN LOGISTICS LIMITED                          Claimant

                                        - and -
                                   CNH GLOBAL N.V.                           Defendant

                            ---------------------
                            ---------------------
    MR. P. KEY (instructed by Allen & Overy LLP) for the Claimant CNH Global.
  MR. J. TEMMINK (instructed by Cripps Harries Hall) for the Defendant PGN Logistics.

                             ---------------------
                            Approved Judgment
                   Digital Transcription by Marten Walsh Cherer Ltd.,
                  th
                  6 Floor, 12-14 New Fetter Lane, London EC4A 1AG.
                 Telephone No: 020 7936 6000. Fax No: 020 7427 0093.



Mr. Justice Burton :

1.     This has been the hearing of an application and a cross-application under s.68 of the
       Arbitration Act 1996 ("the 1996 Act"). It arises out of a substantial dispute between
       the parties, which was the subject of ICC arbitration relating to a Services Agreement
       between the Claimant, CNH Global NV (as it now is) and the Defendant PGN
       Logistics Ltd. ("PGN"), and other parties who are not relevant to these applications.

2.     The Services Agreement was terminated by the Claimant in circumstances which the
       Defendant alleged to be wrongful on 12th January, 2005. ICC arbitration was
       commenced by the Defendant on 9th February, 2005. There was a partial award on
       issues of liability on 31st July, 2007 by virtue of which the arbitrators who were Ms.
       Yves Fortier, CC. QC as Chairman, Mr. Anthony Boswood, QC, and Judge Paul
       Hammond. The award was delivered on 31st July, 2007. By that partial award the
       arbitrators concluded that the Claimant was in repudiatory breach of the Services
       Agreement by virtue of its termination. The result would be that there would be a
       substantial damages claim by the Defendant against the Claimant. That would form
       the subject matter of a further hearing by the arbitrators on quantum. That took place
       on 8th and 9th October, 2007.

3.     The issue which has resulted in this application before me related to only one of the
       heads of claim by the Defendant against the Claimant said to result from the
       repudiatory breach by the Claimant - namely, loss of what were called future profits.
       As a result of the termination, the Services Agreement did not continue in force after
       January 2005; had it continued in force, transportation obligations, taken on by the
       Defendant for the Claimant, in relation to certain items of equipment would have
       continued until December 2005, and in respect of other items of equipment would
       have continued for f3 years until December 2007. The Services Agreement involved
       effectively the total involvement of the Defendant's manpower with the Claimant.
       They were in substance the Defendant's only customer, and there was a substantial
       turnover between the two companies under the Services Agreement - hence the loss of
       profits that were claimed were also very substantial.

4.     There were experts instructed on both sides. The way that the experts, in the early
       stages, argued the point was by reference to a calculation of the loss of profit as at the
       date of termination. Both experts accepted in that case that there would be required to
       be a discount from the total amount of the lost profit as formulated. In the case of the
       Defendant's expert, the expert accepted that that would be the case by virtue of early
       payment of the loss of profits over the notional three year period, if they were to be
       assessed as at January 2005. Both experts opined that, in addition, there would need
       to be taken into account, in respect of the calculation of the loss of profits, estimated
       variables. So far as the Defendant was concerned, the Defendant would have argued
       that had the Defendant remained in control under the Services Agreement, more profit
       might have been made; the business might have been more successful or more
       satisfactorily conducted than it was once they were dismissed. So far as the Claimant
       was concerned, they submitted that there were uncertainties, as at January 2005, by
       way of whether the business would continue, whether the Defendant was in a position
       to continue the business and whether it would have continued profitable. Hence,
       whereas both parties looked at the documents that were disclosed in relation to how
       business went on after the termination of the contract in the hands, no doubt, of a

 

       successor or successors, neither side rested their calculations exactly on the precise
       events that occurred afterwards, for the reasons that I have just given.

5.     It appears to have been in the course of the hearing that Mr. Boswood, Q.C. came up
       with the suggestion that there would not be any necessity for any discount, given that
       by the time of that hearing, in October 2007, almost the entirety of the run-off period
       (if I can call it that), under what would otherwise have been the agreement, would
       have expired. Hence, he suggested, would it not be more sensible to follow the
       principle adumbrated by the House of Lords in Golden Strait Corporation -v- Nippon
       Yusen Kubishiki Kaisha [2007] 2AC 353 by reference to the old and well-established
       House of Lords authority of Bwllfa and Merthyr Dare Steam Collieries 1891 Ltd v
       Pontypridd Waterworks Company (1903) AC 426? Although there does not appear to
       have been full consideration in the course of discussion in front of the Tribunal of
       either of those cases - and, in particular, Golden Strait would then have been a very
       recent decision - there appears to have been full understanding of the well-known
       words of Lord McNaghten in Bwllfa at 431 (cited in Golden Strait at p.392G),
       namely:

              "Why should he listen to conjecture on a matter which has
              become an accomplished fact? Why should he guess when he
              can calculate? With the light before him, why should he shut
              his eyes and grope in the dark?"

       In the event the award was not delivered until 4th February, 2008, by which time the
       run-off period had totally terminated.

6.     Shortly after this intervention by Mr. Boswood, Q.C., there was cross-examination of
       the Claimant's expert, Mr. Caldwell, who continued to assert that there ought to be at
       any rate some discount, although he appears, in the course of cross-examination by
       Mr. Peter Ralls, Q.C. for the Defendant, to have slowly moved away from that
       position, until he seems to have concluded simply by saying, "There has to be some
       discount to reflect the fact that there is no certainty of those figures".

7.     There is no doubt that both parties appreciated that if the damages were assessed as at
       January 2005 there would need to be a discount. Of course, if they were assessed as at
       January 2005 interest on any award would run as from January 2005. It is difficult to
       see on what basis, if the damages were not assessed at January 2005, but at the date
       when the monies would otherwise have been received during the course of the three
       year contract, there would be room for any such discount as Mr. Caldwell remained
       contending for, albeit in a rather half-hearted way, by the end of his cross-
       examination.

8.     In any event, the arbitrators did not accept that there should be any discount, and fully
       adopted the Bwllfa argument. In the Final Award (Quantum) the Arbitrators recorded
       their decision in this regard.

              "205. After deliberation the Tribunal agrees with the
              Respondents that no discounting is appropriate in the
              circumstances. The Tribunal in this regard relies on the
              reasoning of the House of Lords in the case of Golden Strait
              Corporation -v- Nippon Yusen Kubishika Kaisha [2007] 2 WLR 691, where it was found that in certain circumstances, such as
              these, it may be appropriate to quantify damages as at the date
              of actual assessment" [and I shall return to those words] "as
              opposed to the date of breach of contract. In so doing, the
              majority (per Lord Carswell) cited an earlier case which aptly
              highlights the relevance of hindsight when one is required to
              rule on the quantification of damages. The Tribunal adopts the
              wording of Lord McNaghten in that decision ...

              206. Thus given that the Services Agreement would have
              expired a mere few days from the date of the present award, the
              Tribunal's assessment of lost profits resulting from the
              termination thereof need not be discounted and the Tribunal so
              find".

       In the following paragraphs, the Tribunal made no uplift either, as had been sought by
       the Defendant. Consequently they based themselves wholly on the actual figures by
       way of turnover in respect of transportation after January 2005 under the new
       arrangements which no longer included the Defendant.

9.     The Tribunal dealt with interest in paragraphs 233 ff of its Award. It recited the
       Claimant's position on the issue of interest from its written submissions, including a
       paragraph 103 which said,

              "In this context it should be noted that there is a fundamental
              link between (i) the use of a discount rate when calculating [the
              Defendant's] future losses and (ii) the award of interest on
              future losses. The only reason that an award of interest on lost
              future profits is appropriate is because a discount rate has been
              applied when calculating future losses. If the parties had not
              applied a discount rate when calculating [the Defendant's]
              future losses, interest on those future losses would not accrue
              from 12th January, 2005 or at all".

       Mr. Temmink, who has appeared today for the Defendant, has pointed out that that
       actually is not a correct statement, because the choice of 12th January "or at all" is not
       an exclusive choice.

10.    The Tribunal further recites the next paragraph, 104, in the Claimant's closing
       submissions, indicating that they had already effectively made an interim payment in
       respect of future loss, which had included interest on that future loss. Although it is
       not spelt out in that paragraph, it is in fact the case that they had made that payment
       after applying the discount for which they were then contending. Having recited that
       argument from the closing submissions of the Claimant which had been made, of
       course, before they knew that the arbitrators were in the event going to decide that
       there should be no discount, the arbitrators continued very shortly, and without
       reasoning, to set out their conclusion in paragraph 238 as to interest on damages for
       lost profits. They concluded that it should be,


              "-- payable at the equivalent rates from 14 days after the date of
              the present Award, compounded quarterly until the date of
              payment".

11.    The result was that the Tribunal concluded that damages should be assessed on the
       basis that there should be no discount, and that the Defendant should receive them in
       accordance with how they would have been paid out and, consequently, they would
       have received such profits had the contract continued, i.e. during the years 2005,
       2006, and 2007, but without receiving any interest on that sum at all.

12.    There were several criticisms, or complaints, that both sides had of the award, none of
       which are relevant to this application. But the major one, and that which has formed
       the basis of this hearing, is the deprivation, as the Defendants see it, of any interest on
       a very substantial sum by way of damages which had been awarded to them. It is
       common ground between the parties that the interest that would thus fall not to be
       paid by the Claimant to the Defendant if that decision stands is somewhere between
       £1.5 million and £3 million.

13.    An application was made to the Arbitrators consequently to correct the award - inter
       alia to correct the fact that interest was awarded only as from the date of the award,
       and thus not on the damages from the dates when the sums would otherwise have
       fallen due. The relevant Article for the purposes of making such an application, under
       the ICC Rules of Arbitration in force as from 1st January 1998 is Article 29, headed
       'Correction and Interpretation of the Award'.

              "(1) On its own initiative the Arbitral Tribunal may correct a
              clerical, computational or typographical error, or any errors of
              similar nature contained in an Award provided such correction
              is submitted for approval to the court within thirty days of the
              date of such Award ----"

       Then at (2) there can be an application by a party for the correction of an error of that
       kind, with time limits for doing so.

14.    Written submissions were put in by both parties in support of the various positions
       and in opposition to the other party's position. The arbitrators issued a document
       pursuant to those submissions, and after considering them. The document is called
       "Addendum". It was issued on 10th June, 2008. The part of the Addendum which is
       relevant to what I have been considering is paragraph 13. There is a cross-reference to
       paragraph 13 in paragraph 10. It is common ground that, if paragraph 13 fell away,
       that cross-reference would become pointless. But, the challenge which I shall
       describe is not directed specifically to paragraph 10. It is to paragraph 13, which is the
       paragraph which has been in issue before me. It reads as follows:

              "The Tribunal accedes to the application by the First to Third
              Respondents that the second sentence of para. 238 and the third
              sentence of para. 249(9) of the Award should be amended in
              the terms sought. In the Tribunal's opinion, those sentences
              contain a "clerical, computational or typographical error, or an
              error of a similar nature". The Tribunal did not intend that the
              First Respondent should be deprived of interest on its claims



              for loss of profits which it would have earned during periods of
              time which had expired prior to the making of the Award.
              Liability for such interest had already been conceded by the
              Claimant and substantial amounts paid by the Claimant in
              respect thereof. In the last sentence of para. 238, the Tribunal
              recognised such fact and provided that the Claimant should get
              credit for the amounts so paid. The said sentences are therefore
              amended to read as follows:

                 'Interest on damages for lost profits is payable at the
                 equivalent rate from 1st July in each year in which such
                 profits would have been earned, compounded quarter until
                 the date of payment'".

15.    It may be that this error arose by virtue of the passage that I have quoted earlier from
       their Award at paragraph 205, when, in relation to their acceptance of the Bwllfa
       principle, they referred to intending not to give damages at the date of breach, but at
       the date when they were assessed. That may have carried them forward erroneously to
       their award of damages only as from the date of award. But, one thing that is clear,
       however it may have occurred, is that this error by the Arbitrators which they, by this
       Addendum, admit, would not in my judgment have occurred if only they had followed
       what seems to me to be the sensible course of allowing some short opportunity for
       oral submissions after the service of written submissions. Very sensibly in this case
       the Arbitrators directed written submissions. In this case they were by exchange. This
       was, of course, in the context that it was only at the hearing itself that the situation
       had changed from one in which both sides were arguing for a discount to one in which
       it was now entirely possible that there would be no discount. Had this been explored
       in a half a day, or less, set aside for oral submissions by the parties, once both written
       submissions had been served, I suspect that any misunderstanding on all sides would
       have been speedily cleared up. However, it was not. This error occurred. I shall call it,
       for the purposes of this judgment, as I did in the course of the hearing, a 'howler' by
       the Arbitrators.

16.    The application by the Claimant in this case has therefore been to challenge that
       Addendum on the basis that the Arbitrators had no power to correct the arbitration
       award under Article 29. Two points can be cleared out of the way immediately. They
       are these: there was a suggestion at one stage that it would be contended that the
       Arbitrators were acting under s.57 of the Act in which there is a similar, but rather
       wider, correction provision. That is not pursued, and the only question before me is as
       to whether, given that this was an exercise of the arbitrators' powers under Article 29,
       it can be successfully challenged.

17.    The second point is that the challenge by Mr. Paul Key on behalf of the Claimant was
       put not only by reference to s.68 (to which I shall turn), but also by reference to s.67
       of the Act. Mr. Temmink, in his skeleton, put forward forceful submissions that s.67
       could not be relied upon in this case for such purpose. I accept that. S.67 reads as
       follows:

              "(1) A party to arbitral proceedings may ... apply to the court
              (a) challenging any award of the arbitral tribunal as to its
              substantive jurisdiction ...".

 
       The challenge by Mr. Key in this case, alleging that the arbitrators were acting
       without their powers under Article 29, was not, Mr. Temmink submitted, a challenge
       within s.67. Substantive jurisdiction is defined in s.82 of the Act as follows:

               "Substantive jurisdiction, in relation to an arbitral tribunal,
               refers to the matters specified in s.30(1) (a) to (c), and
               references to the tribunal exceeding its substantive jurisdiction
               shall be construed accordingly".

       Section 30 of the Act deals with the competence of a tribunal to rule on its own
       jurisdiction and it provides,

               "(1) Unless otherwise agreed by the parties the arbitral tribunal
               may rule on its own substantive jurisdiction, that is, as to

               (a) whether there is a valid arbitration agreement;

               (b) whether the tribunal is properly constituted; and

               (c) what matters have been submitted to arbitration in
               accordance with the Arbitration Agreement".

       There is provision for an objection that the arbitral tribunal lacks substantive
       jurisdiction in s.31 of the Act.

18.    S.68 (to which I will refer in a moment), which allows challenge by reference to
       serious irregularity, specifically provides in s.68(2)(b) that one of the grounds of
       challenge on the basis of serious irregularity is based upon the Tribunal exceeding its
       powers "(otherwise than by exceeding its substantive jurisdiction; see section 67)". I
       have no doubt whatever that s.67 relates to situations in which it is alleged that the
       arbitral tribunal lacks substantive jurisdiction, i.e. that there was in fact no arbitration
       clause at all, and no jurisdiction for the arbitrators to act at all at any rate in relation to
       the relevant dispute, and not to situations in which arbitrators properly appointed were
       alleged to have exceeded their powers.

19.    This is a conclusion which was reached by Morrison J (albeit at somewhat less length
       then I have just recited) in Lesotho Highlands Development Authority and Impregilo
       SpA & Ors. [2003] 1 All ER(Comm), 22 at 25. I agree with him.

20.    The other matter which I should clear out of the way at this stage is that, whereas the
       challenge under s.68 was put in his skeleton by Mr. Key by reference to sub-
       paragraphs (c) and (e) of s.68(2), I am entirely clear that the only sub-clause which is
       of relevance is s.68(2)(b), which has formed the basis of the argument before us,
       relating to exceeding of powers by a tribunal. S.68(2)(c) - "failure by the tribunal to
       conduct a proceedings in accordance with the procedure agreed by the parties" - is
       not, in my judgment relevant here; nor is s.68(2)(e) where it is "an arbitral or other
       institution or person vested by the parties with powers in relation to the proceedings
       other than the tribunal itself conducting the arbitration" (which is plainly dealt with in
       s.68(2)(b)). I shall only, therefore, read those passages of s.68 which remain relevant
       to the disputes which I have resolved.

 

              "(1) A party to arbitral proceedings may (upon notice to the
              other parties and to the tribunal) apply to the court challenging
              an award in the proceedings on the ground of serious
              irregularity affecting the tribunal, the proceedings, or the award
              ...

              2) Serious irregularity means an irregularity of one or more of
              the following kinds which the court considers has caused or
              will cause substantial injustice to the applicant ...

              (b) the tribunal exceeding its powers (otherwise than by
              exceeding its substantive jurisdiction; see s.67) ...

              (i) any irregularity in the conduct of the proceedings or in the
              award which is admitted by the tribunal or any arbitral or other
              institution or person vested by the parties with powers in
              relation to the proceedings or the award;

              (3) If there is shown to be serious irregularity affecting the
              tribunal, the proceedings or the award may:

              (a) remit the award to the tribunal in whole or in part for
              reconsideration;

              (b) set the award aside in whole or in part; or

              (c) declare the award to be of no effect in whole or in part.

              The court shall not exercise its power to set aside or to declare
              an award to be of no effect in whole or in part unless it is
              satisfied that it would be inappropriate to remit the matters in
              question to the tribunal for reconsideration".

21.    Two matters should be made clear - and Mr. Key, of course, heavily relied upon both
       - before I develop the matter further. The first is that arbitrations are intended to be
       considerably more final in their conclusions even than those of the courts. Where
       parties have agreed for disputes to be resolved by arbitrators, the court should be slow
       to intervene. In particular, of course, in relation to ICC arbitrations even the ordinary
       right of appeal to the court under s.69 of the Act has been excluded. Reference was
       made by Mr. Key to the words of Mustill and Boyd in the 2001 Companion Volume
       to the second edition of their book, Commercial Arbitration at p.341 when, by
       reference to the power to correct under s.57, the editors say,

              "Neither of these powers is intended to enable the arbitrator to
              change his mind on any matter which has been decided by the
              award, and attempts to use this section for this purpose should
              be firmly resisted".

22.    Secondly, Mr. Key rightly points out that the old power that there was, for the court
       under s.22 of the Arbitration Act 1950 to remit an award in its discretion to the
       arbitrators, which was, Mr. Key reminds me, heavily criticised for many years as

 

       giving the court too great a power to intervene in what was intended to be
       independent decision by arbitrators, has been abolished and there is no replacement
       for it in the new Act.

23.    The decision in the Addendum by the Arbitrators I have read. They firmly state that,

              "The Tribunal did not intend that the First Respondent should
              be deprived of interest on its claims for loss of profits which it
              would have earned during periods of time which had expired
              prior to the making of the award".

       That was the effect of the Award. They say they had not intended it. They asserted
       that the sentences which, incorrectly in those circumstances, limited interest to post-
       award interest, and thus deprived the Defendant of any interest on its losses, was said
       by the Arbitrators to be correctable, because the relevant sentences contained a
       "clerical, computational, or typographical error or an error of a similar nature".

24.    I am asked by Mr. Key to review that sentence, and to conclude that it is incorrect,
       and, if it is incorrect, then they are not acting within their powers under Article 29,
       which I have recited. Mr. Key submits that what occurred was not a clerical error.
       Mr. Temmink referred to the judgment of Mr. Evans-Lombe, Q.C. (as he then was) in
       Wordingham -v- Royal Exchange Trust Co. Ltd. & Anr. [1992] Ch. 412 at 419 ff. In
       that judgment Mr. Evans-Lombe Q.C. referred to a dissenting judgment in an
       Australian case in which Williams ACJ said,

              "A clerical error, I would think, occurs where a person either of
              his own volition or under the instructions of another intends to
              write something and by inadvertence either omits to write it or
              writes something different".

       Mr. Evans-Lombe, Q.C. concludes that,

              "The words 'clerical error' [at any rate as used in the Act which
              he was there dealing with], are to be construed as meaning an
              error made in the process of recording the intended words of
              the testator in the drafting or transcription of his will. That
              meaning is to be contrasted with an error made in carrying his
              intentions into effect by the drafter's choice of words and with a
              mistaken choice of words because of a failure to understand the
              testator's intentions".

       Mr. Temmink submits that in the light of what the arbitrators have said, that is what
       occurred here.

25.    Mr. Key, however, refers to two significant authorities. The first is Mutual Shipping
       Corporation v Bayshore Shipping Co. Ltd. ("The Montan") [1985] 1WLR, 625, CA,
       and [1984] 1 Lloyds Rep 389 (Hobhouse J). In that case there was discussion of error
       - an accidental slip and the slip rule - by reference to what was then s.22 of the
       Arbitration Act 1950, but also with an addressing of an alternative jurisdiction, with
       which I do not need to deal, under s.17 of that Act. The Court of Appeal in that case,
       to whose judgment I will return, concluded that there was in fact jurisdiction under
       one or other of those two sections to remit the award to the arbitrator for
       reconsideration, and upheld an order to that effect. It is plain, however, that they
       concluded that the error which had taken place in that case was not a clerical mistake.

26.    The other authority to which Mr. Key referred was Food Corporation of India and
       Marasro Cia Naviera Shareholders' Agreement (The "Trade Fortitude") [1986] 2
       Lloyd's Rep 209 at 216 in which Lloyd LJ felicitously expressed what is required,
       when adopting the words of Rowlatt J in Sutherland and Co. -v- Hannevig Bros. Ltd.
       [1921] 1 KB, 336 at 341. The error must "be an error affecting the expression the
       arbitrator's thought, not an error in the thought process itself".

27.    I am satisfied that it is not possible to say that this was a clerical error, even on the
       basis of the explanation by the Arbitrators themselves. I take into account that this
       Addendum has been put before, and approved by, the ICC, but that, as Sutherland and
       Co. -v- Hannevig Bros. Ltd. itself makes clear, cannot bind me, and I am entitled to
       look at the matter afresh. I do not conclude that what occurred here was an error
       affecting the expression of the arbitrator's thought. It seems to me that this was more
       like an error in the thought process itself, in the sense that it did not accurately express
       their intention, but it did so in clear words.

28.    Nor, in my judgment, can this be said to have been a computational error which
       would relate to an error of calculation, adding additional noughts or simply
       incorrectly adding up or subtracting or multiplying. Nor is it on any basis a
       typographical error. I am persuaded by Mr. Key's submission that the Roman law
       concept of ejusdem generis applies, as it has for so many years in the English courts,
       and that an error of a similar nature must be something close to clerical,
       computational or typographical, but not precisely falling within those categories. I do
       not conclude that it does.

29.    In those circumstances Mr. Temmink makes a broader submission - that is, effectively
       that although I am not bound (see Sutherland), and although changes of mind are
       disapproved of, this is a situation in which the arbitral tribunal thought that it had the
       power to make the correction and acted, on the face of it, in accordance with that
       power, in the way that I have recited. Clearly the Arbitrators were acting bona fide.
       Consequently, he submits that he is entitled to rely on the decision in the House of
       Lords in the appellate decision in Lesotho (to Morrison J's first instance judgment in
       which I have already referred) [2006] 1 AC 221, per Lord Steyn. In a speech of which
       the relevant parts were agreed by the rest of their Lordships, he addressed a similar
       argument to that which is now before me, where the arbitrators had incorrectly made
       an award in the wrong currency, in the sense that it was not an award which was
       permitted by the terms of the contract under which they were arbitrating. They had
       power under s.48(4) of the Act to award damages and s.49(3) to award interest. It was
       asserted that they had exceeded those powers by what they did. Their Lordships
       concluded that this was not an excessive power within s.68(2)(b), but an incorrect
       exercise of power under ss.48 and 49 which they did in fact have. Lord Steyn said
       this:

              "31, By its very terms, section 68(2)(b) assumes that the
              tribunal acted within its substantive jurisdiction. It is aimed at
              the tribunal exceeding its powers under the arbitration
              agreement, terms of reference or the 1996 Act. Section



              .68(2)(b) does not permit a challenge on the ground that the
              tribunal arrived at a wrong conclusion as a matter of law or
              fact. It is not apt to cover a mere error of law ...

              32. In order to decide whether section 68(2)(b) is engaged it
              will be necessary to focus intensely on the particular power
              under an arbitration agreement, the terms of reference, or the
              1996 Act which is involved, judged in all the circumstances of
              the case. In making this general observation it must always be
              borne in mind that the erroneous exercise of an available power
              cannot by itself amount to an excess of power. A mere error of
              law will not amount to an excess of power under section
              68(2)(b)".

       That, Mr. Temmink submits, must be seen in the context of a case in which there is in
       fact no right of appeal under s.69 against any error of law which the arbitrators may
       have made.

30.    In those circumstances I must consider whether Mr. Key is right that this is not a
       matter which falls within the error of law principle as indicated by Lord Steyn in
       Lesotho, i.e. an erroneous exercise of an available power, or whether it is, as he
       submits, an act which is without a power, now that I have concluded, that there was
       not in fact a clerical, computational or typographical error, or any similar error, which
       they were correcting, even if they purported to do so. I cannot accept that it is right,
       as Mr. Temmink would wish to assert, that in some way I am to be influenced, if not
       bound, by the way in which the arbitral tribunal expressed itself, or by the fact that the
       ICC has approved the course taken. Nor, in my judgment, can it be right for me to
       conclude that the fact that the Arbitrators were acting bona fide in expressing that
       view is relevant - otherwise there could never be any challenge to what arbitrators
       have done, and it must always be an valid exercise of their power provided that they
       say so and/or believe so, as they plainly did here.

31.    This was simply a howler which was sought to be corrected. It may have involved a
       change of mind. It may not. In my judgment this is not a correction which fell within
       Article 29. It was not the kind of exercise which is referred to by Lord Steyn in
       Lesotho. In Lesotho, on a proper construction, the arbitrators simply went wrong
       within their powers to award damages and/or interest, and got it wrong by reference to
       the terms of the contract or otherwise. In this case, the arbitrators simply did not have
       the power to correct at all. In my judgment there was consequently an irregularity
       falling within s.68(2)(b). It was an irregularity which was serious in its effect,
       because it had the result of transferring a position in which the Claimant did not have
       to pay a figure of between £1.5 million and £3 million into one in which they did.
       But, that is not the end of the story under s.68, because (as is clear from the terms of
       s.68, which I have already recited) a serious irregularity as defined by the Act is one
       which not only falls within one of the sub-sections (which this does), but which the
       court considers has caused, or will cause, substantial injustice to the applicant. What
       the arbitrators did was to correct the howler. It is one which, as I have indicated, was
       one which had a serious effect on the parties.

32.    Mr. Key makes two (if I can call them this) key submissions. First of all, he submits
       that the exercise of deciding whether I consider that the irregularity - the purported
       correction - has caused, or will cause, substantial injustice to his clients should not
       involve a re-opening, a re-trial of the arbitration or any kind of traversing over the
       issues: certainly not in this case because, he submits, if interest is to be looked at
       again then he would wish to look again at the issue of discount, and the date at which
       the damages ought to have been awarded. He has helpfully produced an unreported
       authority of the Court of Appeal in Warborough Investments Ltd. -v- S. Robinson &
       Sons (Holdings) Ltd. [2003] EWCA (Civ) 751 which itself cross-refers to an earlier
       Court of Appeal decision called Checkpoint -v- Strathclyde Pension Fund [2003] 14
       Estates Gazette, 124. In Checkpoint Ward LJ is cited by Jonathan Parker LJ to have
       concluded that,

               "In determining whether an irregularity in a rent review
               arbitration had caused substantial injustice to the applicant, the
               court should not attempt to decide what the award would have
               been had the irregularity not occurred because [as he put it] it is
               all too hypothetical for me".

       But, it is quite plain, as appears from the next part of Ward LJ's judgment, as cited by
       Jonathan Parker LJ, that that would not, and should not, involve, a full re-assessment
       of the pros and cons in the arbitration. Jonathan Parker LJ says at para. 58,

               "In the instant case I am not satisfied that the case which
               counsel would have put, had he been afforded the opportunity
               to submit a further report along the lines indicated in his
               witness statement, would have been so different as to justify the
               conclusion that the lack of that opportunity in itself caused a
               substantial injustice regardless of what the outcome of the
               arbitration would have been. Nor, for that matter, am I satisfied
               that the outcome in that event would have been materially
               different, so that as long as one does not need to go into great
               detail and become 'too hypothetical' it must be right, in my
               judgment, that the consequences have got to be looked at by a
               court in order to decide whether the irregularity has caused
               substantial injustice".

       I shall return to that.

33.    His second submission is that the exercise to be carried out under s.68 is a very
       simplistic one. It should only look at what the position was before the irregularity and
       what it was afterwards. In this case he submits that before the irregularity his client
       did not have to pay approximately £2 million of interest. After the irregularity it does
       have to pay £2 million worth of interest. That makes them £2 million worse off. That
       consequently is a substantial injustice to them.

34.    I address those two points. First, in order to decide whether there is a substantial
       injustice, I am not at all persuaded that it is simply a question of before and after. If it
       were, then the provisions of s.68 would say, if they said anything at all, an irregularity
       which has 'a substantial effect' or 'has had a substantial effect on the applying party
       (the applicant)' - just enough to drive away matters which are de minimis. That is quite
       plainly not what is provided by s.68. It is my judgment that the cap on the exercise of
       s.68 powers is not simply one by reference to triviality, but is also so that there will

 

       not be an intervention by the court in respect of s.l68 unless it is satisfied that the
       irregularity has caused substantial injustice to the applicant.

35.    As for the degree to which this involves re-visiting the arbitration, that will be a
       question of fact. There will be many occasions on which the court will simply not
       begin to be interested, as Ward LJ plainly concluded he should not be, in re-arguing
       or re-fighting the arbitration, and considering what might have happened if there had
       not been a particular procedural irregularity. The case here is a very straightforward
       one. I have been content to look at the history - and done so at the invitation of Mr.
       Key - because it is, as I have summarised it earlier in this judgment, not a complicated
       one. The existence of the discount depended entirely upon the date on which the
       damages fell to be assessed. If they fell to be assessed at 1st January, 2005 then there
       would be, on the one hand, arguably a discount - certainly one for early payment -
       possibly for other reasons; on the other hand, perhaps a mark-up or reconsideration to
       take into account the arguments of the Claimant. If, on the other hand, the damages
       were calculated by reference, as Mr. Boswood Q.C. in the end drove the argument,
       simply to looking (the period of time having expired, or nearly expired) at what sums
       would, on the balance of probabilities, have fallen due to the Defendant, as things in
       fact occurred, then there would be no room for discount, even the kind of tiny
       suggested discount which Mr. Caldwell in the end was holding out for. Leaving aside
       discount, there would be no room whatever for any intervention in respect of interest.
       Interest, of course, is a matter of discretion. But, that discretion has to be exercised
       judicially. Mr. Temmink has referred - and Mr. Key did not in any challenge the
       proposition - to one of the many commercial authorities which indicate that in
       ordinary course interest will be payable on commercial debts. The case which Mr.
       Temmink particularly relied upon is the well-known case of Panchand Freres SA v R.
       Pagnan & Fratelli [1974] 1 Lloyd's Rep 394, and in particular the words of Lord
       Denning MR at 411:

              "In a commercial transaction, if the plaintiff has been out of his
              money for a period, the usual order is that the Defendant should
              pay interest for the time for which the sum has been
              outstanding".

36.    No reason for not awarding interest in this case has been suggested by anyone - not by
       the Arbitrators, who, the minute the error was pointed out to them, explained that it
       was a wholly unintended error, and, indeed, contrary to their intention; and not today
       by Mr. Key. I conclude that there is no basis whatever in which, but for the howler,
       the Arbitrators would have done anything other than award interest exactly as they did
       do once the error was pointed out to them leading up to the Addendum. A decision
       not to award interest was simply wrong, unjust, and unthought. If there were an
       appeal available - which there is not - then albeit that the award of interest is within
       the discretion of arbitrators, I cannot conceive that there would not have been a
       successful appeal under s.69 by the Defendant as appellant in respect of what
       occurred here. Of course, we do not need to speculate, because the Arbitrators have
       told us that that was not what they intended. We also do not need to speculate as to
       what would have occurred had the error not taken place, because we know.

37.    In those circumstances there is no difficulty, such as was foreseen by Ward LJ in
       Checkpoint, in analysing what has occurred here and what would have happened at
       the various stages. But for the original howler, this error which causes substantial



       injustice to the Defendant by depriving them of approximately £2 million, would not
       have occurred.

38.    I come to the second proposition of Mr. Key, what he calls the straightforward
       syllogism, that all that is required is to reverse the procedural irregularity. A reversal
       of this procedural irregularity would then cause that substantial injustice - namely, the
       substantial injustice which was itself caused by the howler. In my judgment it cannot
       be possibly arguable that it would cause substantial injustice to the Claimant if the
       procedural irregularity were reversed and the correction of the howler prevented, if
       doing so would cause, on the one hand, a substantial injustice to the Defendant and,
       on the other, a wholly undeserved windfall to the Claimant.

39.    Mr. Temmink drew my attention to two interesting cases in which the same very
       experienced commercial Judge was involved, both of them relating to applications to
       correct and remit under s.22 of the 1950 Act, now gone, as I described earlier in this
       judgment. The first is Fuga A.G. -v- Bunge A.G. [1975] 2 Lloyd's Rep 192 in front of
       Donaldson J (as he then was) in the Commercial Court. He said this, in relation to a
       case in which there had been a serious error by the arbitrators (at 194):

              "In the present case if the award is not remitted, the gravest
              injustice will be occasioned to Fuga. It would have cost them
              some $30,000. This will arise from no fault upon the part of
              Fuga. It will arise from a bona fide slip by the arbitrators and
              by a refusal by Bunge to allow them to put it right. If it is
              remitted, the only prejudice to be suffered by Bunge will be
              that they will be deprived of the fruits of that refusal. As I have
              already said, I am astonished at Bunge's attitude, which has
              absolutely nothing to commend it. I should be sorry if the day
              ever came when a court was unable to intervene in such
              circumstances. Happily, I am satisfied that that day is a very
              long way off".

40.    The other passage is in the judgment of Sir John Donaldson, M.R. (as he had now
       become) in The Montan (already referred to) in the Court of Appeal, where he said (at
       632B):

              "In the instant case the arbitrator has accidentally made a major
              error which, if uncorrected, would lead to the charterers paying
              the owners, when it is the owners who should be paying the
              charterers. No court could lend the power of the state to the
              enforcement of such an award, and no court should stand by
              when it has power to correct such an accidental error. I stress
              the word 'accidental'. The only matter which has caused me any
              surprise or concern - and surprise is an understatement - is that
              the owners have sought desperately to take advantage of this
              accidental error in order to secure a windfall profit to which
              they have no claim whatsoever in law or justice. Such conduct
              does them no credit whatsoever".

41.    As Mr. Key naturally points out, both those two cases were decided when the powers
       of the court were much wider, under s.22. Like Sir John Donaldson, however, I would
       be depressed if this court did not have the power to act in such a circumstance and am
       concerned that a court should not lend itself to the perpetuation of a position which
       would lead to such injustice. Fortunately, as I said earlier in the judgment, when s.22
       went there was a provision retained in s.68 - the reference to substantial injustice -
       which is a trammel upon the automatic use of s.68, as I have described.

42.    There was commentary on the Arbitration Bill by the Departmental Advisory
       Committee on Arbitration Law, chaired by Saville LJ (as he then was) in February
       1996, which discussed and emphasised the substantial change to the law which was
       intended by s.68. But, in the extract from that report which is included in Mustill and
       Boyd's Companion Volume, to which I have earlier referred at p.441, the Committee
       said as follows at para.280:

               "Having chosen arbitration the parties cannot validly complain
               of substantial injustice unless what has happened simply cannot
               on any view be defended as an acceptable consequence of that
               choice. In short, Clause 68 is really designed as a long stop
               only available in extreme cases where the tribunal has gone so
               wrong in its conduct of the arbitration that justice calls out or it
               to be corrected."

       In this case justice called out to the arbitrators for it to be corrected and
       they willingly succumbed to its call, as I have described.

43.    I have no doubt whatever that this case falls slap within the limit of s.68, that limit
       being that the court will not intervene to set aside what would otherwise be a
       procedural irregularity, where such irregularity has not caused substantial injustice to
       the applicant because to remove it would cause substantial injustice to the other party.
       I therefore dismiss this application by the Claimant under s.68.

44.    In those circumstances I do not need to deal with the cross-application by the
       Defendant under s.68, because it is entirely responsive. Its basis is that if the
       application by the Claimant were successful, and paragraph 13 of the Addendum were
       set aside, then the original award containing the howler would stand, and it is that
       award which would then be challenged by reference to s.68.

45.    But, because there has been some argument on it by Mr. Key, I shall say something of
       it, even though obiter. The first point I should make clear is that, although a point
       was taken by the Claimant that the Defendant's application was out of time, that was,
       in my judgment, plainly unarguable. The background is that a challenge under s.70(2)
       by way of s.68 must be brought only after any available arbitral processes of appeal or
       review are exhausted. In this case there was an arbitral process of review, albeit that
       in this case it was successful so far as the Defendant is concerned. S.70(3) provides
       that:

                 "Any application or appeal must be brought within twenty-eight days of the
                 date of the award, or, if there has been any arbitral process of appeal or
                 review, of the date when the applicant or appellant was notified of the result
                 of that process".

46.    It was the Claimant who, having lost the review, was entitled to, and did, complain by
       way of challenge, as we know - unsuccessfully as it turns out. The Defendant had no
       need to challenge the result of the review, because it had successfully eliminated the
       complaint that it would otherwise have been making in relation to the award. Once the
       application was made by the Claimant, then the Defendant needed to put in its own
       cross-challenge. It did so promptly. Strictly speaking, it was more than twenty-eight
       days after the date of review, for the reasons I have given - namely, that it was only
       once a timeously application by way of challenge had been made by the Claimant that
       the Defendant needed to put in its own challenge to the original award. There is power
       to extend time, as is made clear in the decision of Aoot Kalmneft -v- Glencore
       International A.G. & Anr. [2002] 1 Lloyd's Rep, 128 and Nagusina Naviera -v- Allied
       Maritime Inc. [2002] EWCA Civ 1147 CA. In the event, Mr. Keys did not pursue his
       objection to the grant of extension of time to the Defendant, and in any event I would
       have granted it, and I do.

47.    So far as that cross-application is concerned, it was, as I have described, a challenge
       to the award if it had not been corrected - that is, if the Claimant's application had
       failed.

48.    There was reference made to s.68(2)(f) of the Act by Mr. Temmink, but I asked him
       whether it was pursued, and he indicated that it was not.

49.    The only basis upon which this application has been pursued today is by reference to
       s.68(2)(i) (irregularity admitted by the Tribunal) which I have already read. Mr. Key
       submitted that it would do him no good if he were to be successful, because it only
       arises if he had been unsuccessful in resisting the setting aside of the Addendum at the
       hands of the Claimant. But I do not agree. If and insofar as the original Award stands,
       so far as the award of interest is concerned, if there were shown to be serious
       irregularity in that respect, then I am empowered by s.68(3) to set aside the Award in
       part - that is, that part which relates to the interest - and to remit it, in part, to the
       Tribunal for reconsideration. So, even though the Tribunal may not have had power
       to correct, I could have directed them to reconsider.

50.    But the more powerful argument that Mr. Key puts forward is that the howler does not
       constitute a serious irregularity within s.68(2). His first submission was, effectively,
       that the word 'irregularity in s.68(2)(i) must be construed by reference to the other
       irregularities in s. 68(2). Although it appeared to me to be suggested in his skeleton
       argument that s.68(2)(i) should be construed ejusdem generis, he did not pursue that
       argument, which in my judgment could not be supported, for the obvious reason that
       s.68(2) as a totality is certainly an exclusive definition of serious irregularity, but (a)
       to (h) plainly set out examples of irregularities which can stand on their own, and (i)
       is then any irregularity which is admitted by the Tribunal. It must, by definition, not
       be identical to those under (a) to (h), or the admission by the Tribunal would not
       elevate it into a separate irregularity or be necessary. It must by definition be an
       irregularity other than those defined in (a) to (h), which falls within s.68(2) because of
       the admission by the Tribunal. The admission here is contained in what would then be
       a purported correction in the Addendum and, in particular, in the words of paragraph
       13 which, even if the correction was set aside, would still stand as being the statement
       by the Arbitrators.

 

51.    So, the issue for me to decide, if this application required to be decided, would be
       whether the howler, the serious error, which had an impact on some £2 million worth
       of interest, one way or the other, admitted by the Tribunal, was or was not an
       irregularity in the conduct of the proceedings. On the one hand, Mr. Key submits
       that, although there is no authority on the section, there is enough emphasis in the
       cases in the textbooks that, particularly where there is no appeal available against an
       arbitrator's decision, what is in fact an error of law cannot be challenged. It would be
       strange if it could be challenged simply because the Tribunal admitted to it. On the
       other hand, Mr. Temmink submits that, given that all the ordinary kinds of irregularity
       are defined in the other sub-paragraphs, this must be something other than those. One
       could hardly think of a more serious matter than a serious error of fact accepted by the
       Tribunal and of substantial effect.

52.    Given that this is entirely free of authority and that any opinion I expressed as to it
       would be obiter and unnecessary in the light of my decision, I shall leave this for
       another occasion. In those circumstances I make no decision in respect of the cross-
       application and limit myself to finding in favour of the Defendant on today's
       proceedings. I shall make an order giving leave to enforce the award as corrected, as
       both parties now accept I should, in terms which I understand will be agreed and
       which will not include any express figures.

       I want to thank both counsel for their argument and both parties for the excellent way
       in which the papers have been prepared.

MR. TEMMINK: My Lord, thank you. I am asking for my costs, both of the claim
      advanced by CNH and also of what I think your Lordship described as my 'necessary
      cross-application'.

MR. JUSTICE BURTON: Are they different, the two sets of costs? Probably they have
      been put in different schedules, but looked at in the round.

MR. TEMMINK: They have been put in different schedules by my solicitors. A slightly
      artificial exercise has been undertaken in splitting the schedules by my solicitors.
      Allen & Overy, for CNH, have not split their schedules. They just say, "Here are our
      costs of today" essentially. I say it is a slightly artificial exercise because, for
      instance, my brief fee has been split putatively half and half between the two
      applications. I think it was a recognition that theoretically it was possible to win on
      one application and lose on the other - probably lose on one and win on the other. In
      any event, I ask for my costs of today.

MR. JUSTICE BURTON: You have won on the day

MR. TEMMINK: I have, yes.

MR. JUSTICE BURTON: Mr. Key, what do you say? We are not talking about assessment
      at this stage. Just in terms of the principle?

MR. KEY: My Lord, quite clearly PGN, as Defendant, must have the vast majority of its
     costs, having succeeded on CNH's application. I have a few points to make. Let me
     deal with the points of principle first ... (indistinguishable) ... That is on that
     application. A slightly different point arises in relation to the PGN cross-application
     because although we accept that the intent behind it was reactive to the CNH
     application, and therefore the argument is that if the CNH application had not been
     made, the PGN cross-application would never have been made -- Of course, we
     maintain our position that it was bound to fail. Now of course, we have heard the
     judgment. That position is still open. We say certainly that it would be wrong just to
     give complete wholesale costs in relation to the cross-application against that
     background. That is the broad position, my Lord.

MR. JUSTICE BURTON: Do you want to say anything?

MR. TEMMINK: Yes. My Lord, our application was entirely reactive. Had it not been for
      CNH's application ----

MR. JUSTICE BURTON: I suppose you did not need to make it.

MR. TEMMINK: I could have put all my eggs in one basket and hoped that your Lordship
      would find against their application. That would have been brave. The fact is that their
      application was ill-conceived, mis-conceived, or at least your Lordship found against
      them. In those circumstance had they not brought it, we would never have had to start
      our application. So, I say, "Look, the reason we produced our application was
      because you started yours and so having lost that, we should be entitled to ours".

MR. JUSTICE BURTON: Thank you.

53.    The order I shall make is that the costs of the two sets of proceedings should be
       treated together. I am sure they would be on any assessment. I shall order that the
       Claimant pay the Defendant three-quarters of the total cost of the proceedings. It
       seems to me that (a) the vast majority of the costs would have been incurred in any
       event, and were really incurred on the main application, but that it was not absolutely
       necessary for the Defendant to have brought their own application. Insofar as they
       did, they did not actually win on it, although they did not lose. So, although I
       certainly shall not order any costs in favour of the Claimant it is appropriate for me to
       say that three-quarters of the total costs of the Claimants are to be paid by the
       Defendant and the rest, of course, will lie where they fall.

MR. TEMMINK: My Lord, is it your intention to assess those costs now?

MR. JUSTICE BURTON: I am wholly hostile to summary assessment because I think
      everybody always loses out, either getting too much or too little. The whole exercise
      of nods, winks and 'but, say' is just totally counter-productive in relation to substantial
      sums of money. However, I am an enthusiast for interim orders. Now you put in
      two schedules - one for £38,000 and one for £23,000. Am I right?

MR. TEMMINK:          Yes. I think the total of my costs are £62,100.

MR. JUSTICE BURTON: I had a look somewhere at the other side's costs.

MR. TEMMINK: They come to a very reasonable, they would say, nearly £129,000. So,
      double ours.

MR. JUSTICE BURTON:           Yes. So, £61,000 is pretty good, is it not?



MR. TEMMINK: Well, on the basis that Allen & Overy put forward their costs as being a
      reasonable estimate of the costs incurred in running this case it seems hardly a good
      basis on which to resist.

MR. JUSTICE BURTON: Mr. Key, what do you say about the £61,000? It is half yours.
      You had a lot more to do.

MR. KEY: We had more to do, my Lord, but I think realistically it is very difficult for me
     to say that £61,000 is not a right starting point.

MR. JUSTICE BURTON: Is there any point in my saying an interim of £50,000 and the
      balance to be assessed if not agreed? Is it not more sensible, given that it is wholly
      unlikely you are going to be able to get anywhere on the £61,000 for me simply to
      summarily assess them at £61,000? I am really rather in your hands. But, given what
      I declared as my own normal position, it is just rather different when it is so clear that
      the other side's costs are so much more.

MR. KEY: Yes. If I may just take ten seconds, my Lord? I have been handed something
     which may explain it.

MR. JUSTICE BURTON: Yes, of course.

MR. KEY: (Pause whilst taking instructions): My Lord, it is a point which I do not think
     affects the ultimate decision: simply those behind me want it rightly to be known that
     ultimately the hours that everybody has spent -- If you stripped out the preparation of
     the bundle, the hours are almost the same on both sides. It is an hourly rate which
     leads to the big difference in the preparation of the bundles. That does not affect the
     underlying point which your Lordship and I were discussing. We are broadly content
     with the way forward which your Lordship was suggesting - which would be that
     there is a sum which is summarily assessed to be by way of an interim payment
     leaving the balance of whatever to be challenged by way of an assessment
     proceedings if necessary. Of course, that interim payment figure -- We have not yet
     taken account of the three-quarters part.

MR. JUSTICE BURTON: You are absolutely right.

MR. KEY: So, we start with £61,000. We multiply that by three-quarters ----

MR. TEMMINK: No. No. No. Before we get misled into the wrong maths -- I think your
      Lordship ordered that three-quarters of our claim should be paid. So, it is not £61,000
      which is the total of both claims ----

MR. JUSTICE BURTON: No. I have said three-quarters of everything.

SPEAKER: Total of cost of proceedings.

MR. TEMMINK:          I see.

MR. JUSTICE BURTON: You are doing yourself down.

 

MR. TEMMINK: In that case, I misunderstood. I thought you had given me all of my costs
      of defending their claim because I had won on all of that, and three-quarters of the
      cost of ----

MR. JUSTICE BURTON: No. I said to take the whole lot together. I was of the view that
      the bulk of the costs would have been -- In fact, if anything, I had forgotten about the
      £38,000/£23,000. I am more favourable, am I not, to take three-quarters?

MR. TEMMINK: I will have to do the maths!

MR. JUSTICE BURTON: I am giving you £45,000 instead of £38,000.

MR. TEMMINK: Yes. I am instructed that if you are minded to assess costs summarily at
      £45,000, then that would be ----

MR. JUSTICE BURTON: If it were summarily assessed it would assessed as £45,000. If I
      was to make an interim payment, it would be a little less than that.

MR. TEMMINK:          Yes, I understand that.

MR. JUSTICE BURTON: Anything else either of you want to say? (After a pause): I am
      going to make a summary assessment of £45,000.

            The next question is the Judgment. Is there anything that shivers your timbers in
       the Judgment?

MR. KEY: Speaking purely as an individual counsel here, there is nothing which concerns
     me greatly. Of course, that does not mean that our client's position would change.

MR. JUSTICE BURTON: Nothing has been said about whether it was good or bad to have
      terminated the contract. I have recited facts which are going to be in the public
      domain. I think only once have I named the companies. It puts people to a lot of
      trouble in terms of anonymising. I do not think there is any ground for it

MR. KEY: I think ultimately our position, my Lord, would be reflected in saying that we do
     not oppose whatever your Lordship decides.

MR. JUSTICE BURTON: I think it should be made public.

MR. KEY: The only point which is being noted to me is the issue of the wrongful
     termination finding is not, as far as we are aware, in the public domain. Whether that
     is something which could be ----

MR. JUSTICE BURTON: I think it is bound to be in the public domain, is it not? The fact
      that there is an award for damages for repudiatory breach of contract -- Anyway, I do
      not see that there is any potential sensitivity in relation to that.

MR. KEY:     We have nothing further to say, my Lord.

MR. JUSTICE BURTON: Thank you. Apart from anything else, enforcement of the
      Award goes into the High Court office. It will be known.

MR. KEY: My Lord, one final point - at least on our side - is the question of permission to
     appeal. I can address that briefly. Significantly, of course, as your Lordship will
     undoubtedly recall, the only opportunity an unsuccessful Claimant has to get
     permission is before a High Court Judge.

MR. JUSTICE BURTON:           Yes. What I say is final, yes.

MR. KEY: I will not repeat the arguments - your Lordship has already heard them. But, we
     do ask for permission to appeal on the point in relation to the meaning of substantial
     injustice. That is the point upon which we ask for permission to appeal, which would
     preserve both arguments, but majoring principally upon the comparator argument
     which I articulated.

MR. JUSTICE BURTON: Can you formulate it? That I erred in law in concluding that --
      What?

MR. KEY: That when one is assessing whether a Claimant has suffered substantial injustice
     by virtue of a procedural irregularity, one compares (1) the position which exists by
     reason of the irregularity with (2) the position which would have existed if the
     irregularity had not occurred.

MR. JUSTICE BURTON: I must not consider whether the effect of undoing the procedural
      irregularity would cause substantial injustice to the Defendant and therefore
      substantial benefit to the Claimant. Mr. Temmink?

MR. TEMMINK: My Lord, I have nothing to say about the matter. You have made your
      findings in the matter.

MR. KEY: My Lord, the position remains as I described. We do ask for that permission to
     appeal. I say that generally it is in terms of what I call the substantial injustice point -
     the point upon which your Lordship has found against the Claimant. I have
     highlighted the particular point which we say is perhaps strongest. But, all points we
     say are relevant.

MR. JUSTICE BURTON: No, I shall not grant permission to appeal. I am quite conscious
      of the fact that this means the end of the road for the Claimant and that a good deal of
      money is at stake in relation to my Judgment. But, Mr. Key, as you have said
      yourself in the course of argument, the intention of arbitrations is normally intended
      to be finite and not to be re-litigated. Consequently, if there is an intended express
      limitation on the right of appeal therefore it is not every case in which leave to appeal
      would be given - otherwise the limitation of leave would not exist. I therefore have to
      look at this entirely on its own merits without regard to the fact that my decision is
      final.

       I am satisfied, not least because I am acting in accordance with the wishes of
       experienced arbitrators, as opposed to in any way overturning them, that my decision
       is correct. I would think it to be extraordinary if, in judging whether a procedural
       irregularity has caused substantial injustice, it is not a necessary part of that
       conclusion to consider whether there would be substantial injustice to the other party
       if the irregularity in question were set aside and/or that substantial injustice would be
       done if that course were taken.

       I therefore refuse leave to appeal. Thank you.



                                       __________


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