![LM-2024-000175 - [2025] EWHC 2497 (Comm)](https://backend.juristeca.com/files/emisores/logo_WAai98v.png){kind=logo}
Analysis
Analysis
It is self-evident from the Award that the Arbitrator had turned his mind to every fact presented to him and every submission made: he recorded all of them, including the arguments made by each party regarding whether the two-year period was reasonable or not. When he came to expressing his conclusion on reasonableness, it is certainly the case that he did so very shortly: he stated at paragraph 292 of the Award that his conclusion on the question was a matter for his discretion and then simply said at paragraph 293 what his conclusion was.
If the Arbitrator had articulated the factors he had taken into account when reaching his conclusion as to reasonableness and supported it with a list of those factors, then I do not see how the current application could have been made. The indisputable fact is, however, that he certainly did make a determination on the issue put before him and he clearly had considered the arguments made to him.
What the Arbitrator said in paragraph 295, in my judgment, was an explanation as to why he was not accepting the case made by the LLP that the duration of any of the restrictions was reasonable:
He seems to me to have considered that the duration of the period of restriction in the Carmichael case supported his conclusions regarding the two-year period in the instant case: he expressly mentioned that case and expressly noted that the period there was 15 months.
He stated that each party had expressed different views on whether client relationships were, to use his phrase, “sticky”. In this, he was correct: see paragraphs 16 to 18 above.
His statement “I am unable to decide that the 2 year Restrictions are reasonable on that basis, with the burden being, as agreed on the Claimant to establish that the Restrictions are reasonable” seems to me to mean that he was unpersuaded by the LLP’s evidence that the period was reasonable because there was evidence from the Defendant that went in the opposite direction and he was not prepared to conclude that the LLP’s evidence – which was, after all, mainly argument and opinion in any event – gave a safe enough basis for concluding that the two-year period was reasonable to protect the LLP’s interests.
I do not accept that the Arbitrator’s phrase “I am unable to decide” can reasonably be read as amounting to an acknowledgment that he was declining to adjudicate upon a conflict of evidence. If the Arbitrator had wanted to say that he was unable to reach a decision at all, then he would have said so; but he was actually saying that he was not prepared to accept the LLP’s evidence as decisive of the reasonableness of the two-year period.
His statement that “it is said that the Claimant and HWAEM are different firms, but, on the evidence before me, I am unable to make that distinction” seems to me to mean that he remained “baffled” by the contention that the Claimant needed one year to organise an audit whereas the Defendant’s new firm, HWAEM, could organise an audit in a far shorter period. As I understand it from the context I have reviewed above, what the Arbitrator was saying here was that he could not accept arranging an audit could take so long.
Although the Arbitrator’s observations about the lack of difference between the LLP and HWAEM are couched in terms of rejecting the LLP’s contentions to the effect that there was such a difference, it is clear that he was not persuaded there was any relevant difference that would explain why HWAEM could prepare for an audit in a few weeks and yet the LLP required an entire year. If there was no relevant difference between the LLP and HWAEM in this respect, it would also follow that there was no need for a two-year restriction to prevent the Defendant from soliciting or dealing with the LLP’s clients after he had ceased to be a member of the LLP: the Arbitrator was effectively rejecting the LLP’s case that it needed a year to prepare for audits and thus rejecting one of the building blocks of its case that it needed the protection of a two-year restriction on the Defendant’s post-membership dealings with clients of the LLP.
In my judgment, the LLP’s contentions regarding what the Arbitrator said in the Award were simply wrong. The Arbitrator was asked by the parties to proceed at speed to reach a conclusion on the questions put to him and he gave a clear answer: the duration of the restrictions was not reasonable in all the circumstances.
It could be said that it is not clear from the Arbitrator’s approach of looking at the two-year period contained in each Covenant compendiously, rather than on a Covenant-by-Covenant basis, whether he had in fact determined that the two-year period in each Covenant was not reasonable. It seems to me clear from the Award that he intended to say the two-year period in each and all of the Covenants was unreasonable; and to the extent that there might be questions regarding any particular Covenant, these could have been made as part of a request for clarification.
In my judgment, the LLP could legitimately have asked the Arbitrator to unpack further his conclusion that the two-year period in the Covenants was not reasonably necessary to protect the LLP’s legitimate interests. I consider that the LLP’s assertion in the unamended Claim Form that it had no available recourse under Section 57 of the Act was wrong. That assertion is predicated on the contention made in the witness statement in support of this application to the effect that “the irregularity is fundamental to the decision reached”; but that is not a relevant consideration in assessing whether the Award could be clarified, with the possible result that any perceived irregularity would be cleared up by further explanation. The assertion that there was an irregularity at all flows from the LLP’s interpretation of what the Arbitrator said; but if clarification had been sought and provided, then the assertion of irregularity could not have been made.
Furthermore, even if the Arbitrator had made his decision as to reasonableness entirely on the basis that the LLP had failed to prove its case, such a decision would be open to challenge not under Section 68 of the Act but under Section 69. A decision to proceed in a certain way regarding the weight to be placed on evidence is a judicial decision, as the cases cited by the Claimant show (Re A (Children) (Care Proceedings: Burden of Proof) [2018] EWCA Civ 1718, [2018] 4 WLR 117; Stephens v Cannon [2005] EWCA Civ 222). In the event the Arbitrator had made the decision he is accused of making he would not have been failing to comply with his duty under Section 33 of the Act; he would have been loyally complying with it but, arguably, getting the law wrong.