LM-2024-000175 - [2025] EWHC 2497 (Comm)

The restrictions referred to in Sections 70(2) are as follows:

“(2)

An application or appeal may not be brought if the applicant or appellant has not first exhausted—

(a)

any available arbitral process of appeal or review, and

(b)

any available recourse under section 57 (correction of award or additional award).”

Section 57 provides, in relevant part:

“Correction of award or additional award.

(1)

The parties are free to agree on the powers of the tribunal to correct an award or make an additional award.

(2)

If or to the extent there is no such agreement, the following provisions apply.

(3)

The tribunal may on its own initiative or on the application of a party—

(a)

correct an award so as to remove any clerical mistake or error arising from an accidental slip or omission or clarify or remove any ambiguity in the award, or

(b)

make an additional award in respect of any claim (including a claim for interest or costs) which was presented to the tribunal but was not dealt with in the award.

These powers shall not be exercised without first affording the other parties a reasonable opportunity to make representations to the tribunal.”

The LLP did not apply to the Arbitrator to clarify or remove any ambiguity in the Award. As noted above, it issued the claim form in these proceedings within 28 days of the Award being issued, stating in the claim form that it had “no available recourse pursuant to Section 57” of the Act. The LLP’s solicitor said in her witness statement in support of the current application that “the irregularity in issue in this application is fundamental to the decision reached in the Award and is accordingly not capable of correction under s 57 AA 1996”.

The Defendant’s immediate response to the LLP’s application was to apply for an order that the claim be dismissed without a hearing. Technical defects in that application led His Honour Judge Pelling KC to dismiss it on 14 October 2024, with the costs of the application being reserved to the conclusion of the claim; but even though the application was dismissed, it can be seen from it that the Defendant not only vigorously resisted the suggestion that there is any irregularity, let alone a serious one, but also insisted that the LLP has simply misread or misunderstood the Award. The Defendant maintained that position at the hearing before me.

Although the Defendant has never formally invited the Court to consider whether the LLP had any available recourse under Section 57 of the Act; and although the LLP declared in its Claim Form and supporting evidence that it had no available recourse under Section 57, it nevertheless seems to me that, in view of the contentions made by the Defendant to the effect that the LLP has simply misread or misunderstood the Award, I am obliged to consider that question as part of ascertaining whether I have jurisdiction to consider the LLP’s application under Section 68.

It is well established that if an award contains an inadequate rationale or incomplete reasons, then it is likely to be ambiguous or to require clarification; a state of affairs which falls precisely within the ambit of Section 57(3)(a) of the Act: see Al-Hadha Trading v Tradigrain [2002] 2 Lloyd’s Rep 512 per HHJ Havelock-Allen QC at [70] and [71] and Torch Offshore LLC v Cable Shipping Inc [2004] EWHC 787 (Comm) per Cooke J at [26] and in particular at [28]:

“… It seems to me that section 57(3)(a) can be used to request further reasons from the arbitrator or reasons where none exist. The policy which underlies the Act is one of enabling the arbitral process to correct itself where possible, without the intervention of the Court. Torch contended that it was clear the arbitrator had not decided the issue and that therefore there was no ambiguity in the award which required clarification, but the very existence of a genuine dispute on this question militates against that argument. If there was unarguably a clear failure to deal with an issue, it could be said that there was no ambiguity in the award, but as set out in Al-Hadha at paragraph 70, an award which contains inadequate rationale or incomplete reasons for a decision is likely to be ambiguous or need clarification.”

I have set out already above at paragraph 14 the LLP’s basis for making this application under Section 68, but the key phrases bear repeating:

“7.

The reasonableness of the duration of the restrictions was the key issue in the claim and the basis upon which the claim was decided in the Defendant’s favour. It is dealt with at §§ 209 – 295 of the Award…

8.

There are two sentences in the Award provided by way of analysis in support of that conclusion, at § 295…

9.

The Award was vitiated by serious irregularity in that… (i) The Tribunal… declined to adjudicate upon the key conflict in the evidence led by the parties as to the reasonableness of the duration of the Restrictions relating to client solicitation, interference and dealing [and] (ii) There was no engagement with or conclusion reached as to the evidence justifying the duration of the restrictions relating to staff”

It seems to me that the wording of the Claim Form itself suggests that the complaint is actually that the Award lacked sufficient reasons for the key decision: the complaint appears to be that there were only two sentences provided by way of analysis. The case made on the Section 68 application, however, is that the said two sentences themselves evidence a fundamental dereliction of duty on the part of their author, and I accordingly postpone reaching a final conclusion on the question whether the LLP could have had recourse under Section 57 until I have considered the application under Section 68, to which I now turn.