Supreme Court of Ireland Decisions

Judgment Title: Galway City Council -v- Samuel Kingston Construction Ltd & anor

Neutral Citation: [2010] IESC 18

Supreme Court Record Number: 414/08

High Court Record Number: 2008 6 MCA

Date of Delivery: 25/03/2010

Court: Supreme Court

Geoghegan, J.
Fennelly, J.
O’Donnell, J.




IN THE MATTER OF THE ARBITRATION ACTS 1954-1998


AND IN THE MATTER OF AN ARBITRATION







Between:


GALWAY CITY COUNCIL

-and-



MR GEOFFREY F HAWKER

Judgment delivered by O’Donnell, J. on the 25th day of March 2010.




INTRODUCTION


The realisation, in the words of Lord Simon of Glaisdale in the Amptill Peerage Case [1977] AC 547, that litigation, while certainly preferable to personal violence is not in itself an intrinsically desirable activity, has encouraged the search for other methods of dispute resolution each of which has attracted it adherents and enthusiasts. One of the oldest and best established of these systems is that of arbitration, and there are now well understood rules governing both domestic and international arbitrations, and a well established regime that regulates the system of arbitration and its interaction with the courts system. However, as this case illustrates all too clearly, no system can by itself guarantee a correct, or even an acceptable outcome. In this case the parties already incurred the stress, inconvenience and considerable expense involved in eight days of hearing before the second named defendant Arbitrator, three days in the High Court, and a further two days in this Court and will, in the event, now have to return for a full hearing before another arbitrator, if they wish their dispute to be resolved to a final binding determination. That is a result which I cannot contemplate with any enthusiasm, but which is I believe regrettably unavoidable.


THE FACTS
The facts of the case have already been set out in the careful and comprehensive judgment of the High Court (McMahon, J). The Appellant Galway City Council (“the Council” or “GCC”) decided to redevelop Galway’s famous Eyre Square, and entered into a contract dated the 5th April 2004, with the Respondent Contractor, Samuel Kingston Construction Limited (“the Contractor” or “SKC”), to carry out certain works for a contract sum of €6.326 million and for that purpose the parties adopted, with certain amendments, the standard form of contract published by the Institute of Engineers in Ireland (“the IEI ”) containing conditions which incorporate an arbitration clause.

Work had already commenced in February of that year, with a contract period of seventy-eight weeks and was thus due to complete in August 2005. There appears to have been an understandable desire on the part of GCC to ensure that all works were completed in a timely fashion and in particular, that the disruption to the public and to businesses, which was inevitably involved in the works, would be limited. As the contract proceeded, and delays occurred, the Council considered that it would be particularly unacceptable, that there should be a second Christmas period during which the public and businesses should be subject to the inconvenience and disruption created by the works. On the other hand, it also seems clear, that SKC was in a difficult financial position almost throughout the course of the contract. The Arbitrator, who is the second named Defendant in these proceedings, was critical of the Council for not seeking a specific provision guaranteeing completion before the Christmas period of 2005 although he also considered that such a provision would have been prohibitively expensive. For my part I do not think it was necessarily unreasonable to expect the building contract with a completion date of August 2005 to have been completed by December of that year but in any event it is not necessary to resolve this. The significance of these matters is rather, that when matters occurred giving rise to further delays from the point of view the Council, and increasing expense from the point of view of the Contractor, both parties were particularly unhappy, and perhaps less tolerant than they otherwise might have been.

The parties discussed the problems in early 2006 and came to a conclusion which in principle made considerable sense. They came to an understanding that the work would be accelerated and the previous extensions of time granted to the Contractor rescinded, and that the Contractor would be paid more money in return. Unfortunately, indeed it is not excessive to say catastrophically, that agreement was never reduced to writing, so that when, almost inevitably, further disputes arose, there was further disagreement as to the terms of the agreement, the nature of the agreement, (and in particular whether it was a separate freestanding agreement, or rather an agreed variation of the April 2004 agreement), and indeed as to whether there was any binding agreement.

It was and is common case, that under what has been described as the acceleration agreement (and leaving to one side the precise legal status of that agreement) that there was provision for the payment to the contractor of a lump sum of €130,000 and a further sum of €6,802.69 per week to be paid monthly, albeit that the precise basis for such payments was in dispute between the parties at the Arbitration. Whether there was any obligation on the Contractor to provide extra resources and if so the quantum and nature of such resources was also in dispute. However, once again delays were encountered which certainly made it difficult if not impossible that the contract itself would be concluded before Christmas 2005. In the words of the learned trial judge:


“On the 17th May 2005, a site meeting took place between the parties in which the parties appeared to have agreed that the acceleration agreement, as originally scheduled, was not longer achievable. Attempts to renegotiate failed. On the 4th June 2005 Mr. Frampton of GCC issued Certificate number 16 which withdrew all sums previously paid under the acceleration agreement. On the 27th June 2005, SKC ceased work on the site and returned the site keys to the Engineer. On the same day, GCC’s engineer issued a certificate under Clause 63 of the IEI conditions which allowed entry onto the site and expulsion of the contractor in certain circumstances such as bankruptcy or abandonment. Clause 63(6) of the IEI conditions provided termination rights under Clause 63 “shall not be exercised unreasonably”.”

This succinctly encapsulates the factual matters giving rise to the dispute between the parties. The Contractor then gave notice of a dispute which he required to be referred to arbitration. The President of the IEI appointed the second named Defendant as Arbitrator on the 9th July 2006. At a preliminary meeting the Arbitrator directed that the arbitration would be conducted under the IEI Arbitration Procedure 2000 and that the hearing would take place with a liability phase followed by a hearing on quantum. It does not appear that any issue was taken at this stage with the jurisdiction of the Arbitrator to resolve any dispute under the acceleration agreement if indeed that agreement was a separate contract. Whether the acceleration agreement was indeed a variation of the original agreement (in which case the original arbitration clause would capture any dispute in relation to the variations), or whether the machinery of the original contract was to be read into the separate acceleration agreement by implication, or whether the parties were simply consenting to the arbitrator having jurisdiction as a matter of simple practicality, was not addressed and does not appear to have troubled the parties or the Arbitrator.

The hearing of the arbitration took place over eight days in early July 2007 at the Irish Management Institute premises. On the 8th October 2007 the Arbitrator published an award running to 19 pages, holding quite briskly that there was a separate acceleration agreement; that it did not contain an obligation on the Contractor to provide specific additional resources; that the acceleration agreement had been repudiated by the Council, and that the Council had invalidly invoked Clause 63.1, because the Arbitrator considered first that the Contractor had not been insolvent as of the 27th of June 2005, and second, (in an error later corrected by him) that the Engineer had not issued a Certificate of Abandonment permitting the invocation of Clause 63.1. Significantly the Arbitrator further held that in any event the Council had acted unreasonably in exercising, or purporting to exercise its rights under Clause 63 and thus was in breach of Clause 63(6).

While this was a comprehensive victory for the Contractor, it is necessary to say at this point that this was not the precise analysis offered by the Contractor whose principal case had been that the acceleration agreement had varied the original Contract, and that the Council’s action in acting on Certificate 16 had repudiated the entire Contract.

The parties then engaged in a process under Rule 21(3) of the IEI Procedures where they sought to correct what they contended were “errors” in the award. Section 27 of the Arbitration Act 1954 provides that arbitration awards are final, subject only to certain limited exceptions (which are unfortunately the subject matter of this case). There is an obvious practical benefit in being able to address further argument to an arbitrator after an award has been delivered when there is such limited scope for appeal. The question of the scope of the Arbitrator’s powers under Rule 21(3) was debated in the High Court because the Council (although having itself made copious, though not particularly successful, submissions to the Arbitrator under the procedure) challenged the legality of the single, though undoubtedly significant alteration to the award made by the Arbitrator at the request of the Contractor.

The learned High Court judge subjected the provisions of s.27 and s.28 of the Arbitration Act 1924, and Rule 21(3) of the IEI Procedures to a close textual analysis before concluding that the word “error” in Rule 21(3) was not limited to a textual or clerical error akin to the range of a slip rule but could, potentially at least, include any error in the award. The issue giving rise to this analysis was not pursued on this appeal and accordingly it is neither necessary nor desirable to express a view upon the scope of Rule 21(3). I would accordingly expressly reserve for another day the question of whether such an extensive reading of Rule 21(3) whatever its practical advantages, can be reconciled with the provisions of s.28 of the Arbitration Act. For present purposes, the significance of this procedure is that the parties appear to have accepted that the procedure was limited to changes which could be made within the format of the original award.

On the 8th December 2007 the Arbitrator published his amended award accompanied by an extensive “Note of Explanation” expressed to be for the assistance of the parties and not to form part of the award. While the essential conclusion of the award remained the same, the Arbitrator now accepted there had been an abandonment by the Contractor properly certified by the engineer entitling the Council to invoke Clause 63(1) but that the Council’s behaviour was still unreasonable under Clause 63(6). It was perhaps a sign that all was not well within the arbitration process, that the Arbitrator had to make significant changes to the body of the award, and to accompany them with a Note of Explanation, a document which while undoubtedly helpful in the present proceedings, does not appear to have been contemplated in either the Arbitration Act or the IEI Procedures.

The Council brought proceedings in the High Court to set the Arbitrator’s award. In the High Court, the Council contended that there were ten defects in the award amounting to misconduct or constituting errors of law on the face of the record. The Council also contended that in any event, the matter should not be remitted to the second named Defendant but that a new arbitrator should be appointed. The High Court rejected the Council’s claim in its entirety. On this appeal, the Council limited itself to four grounds of alleged misconduct or error, and two instances upon which it relied in contending that the Arbitrator should be replaced.


THE LAW


There was little if any dispute before this Court as to the circumstances in which a court may interfere with an arbitration award whether by setting aside the award or remitting the matter to the Arbitrator, or both. Subject to certain comments therefore, I would accept as correct, the passage in the learned High Court judge’s judgment under the heading “Legal Principles on which Arbitral Awards can be Challenged”. That passage states:


“Both parties accept that an arbitral award can only be challenged in limited circumstances and there is broad agreement as to the principles governing such a challenge, which may be based on sections 38 and 36 of the Arbitration Act 1954 (‘Act of 1954’) or the court’s common law jurisdiction.

First, section 38 of the Act of 1954 provides for the setting aside of an award where “an arbitrator or umpire has misconducted himself or the proceedings, or an arbitration or award has been improperly procured…”. The term ‘misconduct’ has a special meaning in this context. As explained by Jenkins L.J. in London Export Corporation Ltd. v. Jubilee Coffee Roasting Co. Ltd. [1958] 1 W.L.R. 661 at p. 665, misconduct is “used in the technical sense in which it is familiar in the law relating to arbitrations as denoting irregularity, and not any moral turpitude or anything of that sort”. Similarly, Atkin J., in Williams v. Wallis and Cox [1914] 2 KB 478 stated, at p. 485, that the expression “does not necessarily involve personal turpitude on the part of the arbitrator” and that it “does not really amount to much more than such a mishandling of the arbitration as is likely to amount to some substantial miscarriage of justice”. This passage was recently cited by Fennelly J. in McCarthy v. Keane [2004] 3 IR 617, who went on to say, at p. 627, that “the standard or test of misconduct … would be something substantial, something that smacks of injustice or unfairness”. Examples of misconduct from the case law include refusing to hear evidence on a material issue, adopting procedures placing a party or parties at a clear disadvantage, acting with clear favouritism towards one party, deciding a case on a point not put to the parties or failure to resolve an issue in the proceedings. However, in order to provide the basis for a successful challenge to the arbitral award, the misconduct must reach the high threshold set out above.

Secondly, section 36 of the Act of 1954 provides that, in all cases of reference to arbitration, the Court “may from time to time remit the matters referred or any of them to the reconsideration of the arbitrator or umpire”. According to McCarthy J. in Keenan v. Shield Insurance Co. Ltd. [1988] I.R. 89 at p. 95:-

“[s]ection 36 would appear to be the procedure appropriate, for example, to a case of a patent mistake, in monetary calculation, in the giving or not giving of a particular credit, in an award that is on its face ambiguous or uncertain”.
In Portsmouth Arms Hotel Ltd. v. Enniscorthy U.D.C. (Unreported, High Court, 14th October, 1994), O’Hanlon J., in a passage later approved by the Supreme Court in Tobin & Twomey Services Ltd. v. Kerry Foods Ltd. & Kerry Group plc [1996] 2 I.L.R.M. 1, listed four grounds upon which the court was generally considered to be entitled to intervene under this provision: the existence of some defect or error patent on the face of the award, the existence of a mistake admitted by the Arbitrator which he desires to have remitted for correction, the availability of material evidence which could not with reasonable diligence have been discovered before the award was made, and finally misconduct on the part of the Arbitrator, understood to include a situation where there are errors of law on the face of the award. Courts have also remitted awards where there is a “procedural mishap” resulting in unfairness to the parties: thus, for example, in McCarrick v. The Gaiety (Sligo) Ltd. [2002] 1 ILRM 55, Herbert J. remitted an award because the subject of the reference had been ruled upon without the benefit of submissions from both sides and it would have been inequitable to allow the award to stand.

Thirdly, the court has a common law jurisdiction to set aside or remit an award for an error of law on the face of the record. In Church & General Insurance Co. v. Connolly & McLoughlin (Unreported, High Court, 7th May, 1981), Costello J. stated that “there is no doubt that at common law the Court can either remit or set aside an award if there is an error of law on its face”. This jurisdiction, according to McCarthy J. in Keenan at p. 96, is limited to “an error of law so fundamental that the courts cannot stand aside and allow it to remain unchallenged”. In McStay v. Assicurazioni Generali SPA & Anor [1991] 2 I.L.R.M. 237, Finlay C.J. stated at p. 243 that, where an Arbitrator decides a question of law in respect of which the general issue in dispute, but not the precise question of law, is submitted to him, the court “may in its discretion and in particular cases where the decision so expressed is clearly wrong on its face, intervene by way of remitting the matter or otherwise in the interests of justice”. Thus, as noted by Clarke J. in Limerick City Council v. Uniform Construction Ltd. [2007] 1 IR 30 at p.43, the jurisdiction is “limited and arises only where the error is ‘so fundamental’ that it cannot be allowed to stand (Keenan v. Shield Insurance Company Ltd.) or ‘clearly wrong’ (McStay v. Assicurazione Generali SPA & Anor)”.


In view of the fact that this statement of principle was accepted by both parties in this Court, it is perhaps sufficient for the resolution of the case. However, these matters rarely reach this Court, and the law may come to be considered in circumstances which never become the subject of litigation. Accordingly, and with some diffidence, I would make some further observations.

First, it might be noted that the concept of “procedural mishap” falls short of misconduct. This ground which was relied upon by Herbert, J. in McCarrick v The Gaiety (Sligo) Ltd [2002] 1 ILRM 55, was considered in the judgment of Fennelly, J. (with whom Murray, C.J. and Geoghegan, J. agreed) in McCarthy v Keane [2004] 3 IR 617 where he observed that:


“It would be inimical to the autonomy and certainty of the arbitral process if the notion of procedural mishap were to become an additional ground of complaint”.

In the event it was not necessary to decide the issue in McCarthy, but at a minimum, it cannot be taken that procedural mishap is an established independent ground of review of an arbitral award.

Second, it will be noted that there is a degree of overlap between the respective categories. It is suggested for example that misconduct while itself a ground for setting aside an award under s.38, is also a ground for remittal under s.36. Furthermore it is stated that error of law on the face of the record which at common law is a ground for setting aside the award, is also a ground permitting the remittal to the Arbitrator under s.36. It is also noteworthy that s.36 of the Act 1954 does not itself specify any ground for the remittal of an award: it simply provides a statutory mechanism for a remittal. The identification of grounds for such remittal is not an exercise in statutory interpretation: the words of the section give no clue as to the grounds upon which the machinery may be exercised. Those matters were dealt with by common law which was in existence prior to the enactment of the 1954 Act, and s.36 might be seen therefore as simply permitting a mechanism for the exercise of the existing jurisdiction.

If the grounds for remittal are matters of common law, then a number of consequences follow. First, the grounds may at least in theory be capable of expansion, as indeed was recognised by Fennelly, J. in McCarthy. By the same token however, the existing grounds can also be developed and if considered appropriate, made more rigorous. Indeed, this in my view is how recent Irish case law should be understood.

In Keenan, McCarthy, J. stated in unmistakeable and trenchant terms the policy considerations that he considered should guide the Court particularly in the aftermath of the Arbitration Act 1980, and perhaps more generally in the light of the development of arbitration both domestic and international. At page 96 of the judgment he stated:


“Arbitration is the significant feature of modern commercial life; there is an International of Institute of Arbitration and the field of international arbitration is an ever expanding one. It ill becomes the courts to show any readiness to interfere in such a process; if policy considerations are appropriate as I believe they are in a matter of this kind, then every such consideration points to the desirability of making an arbitration final in every sense of the term. Church and General Insurance Company v Conolly & McLoughlin (Unreported, High Court, Costello, J., 7th May, 1981) itself is an example of the type of fine-combing exercise which courts should not perform when it is not to review an arbitration award.”

Applying this test, he concluded that:

“There may be instances in which an award which shows on its face an error of law so fundamental that the courts cannot stand aside and allow it to remain unchallenged.”

This it should be noted is a very significant adjustment (and restriction) of the test which had previously applied, which, as McCarthy, J. himself identified it on the preceding page was merely that “there was an error of law appearing on the face of the award”. The same process of adjustment (and restriction) is detectable in the judgment of Finlay, C.J. in McStay v. Assicurazioni Generali SPA & Anor [1991] 2 ILRM 237 where he suggested that an arbitration award could be set aside where “the decision is clearly wrong on its face” (emphasis added). Similarly in McCarthy v Keane [2004] 3 IR 617 Fennelly, J. considered that the judgment of McCarthy, J. in Keenan “set the tone for the correct judicial approach to arbitral awards” in general, and thus considered, that while s.38 of the 1954 Act permitted the court to set aside an award for “misconduct” that the standard or test of misconduct should require “something substantial, something that smacks of injustice or unfairness”.

The position has thus been reached where this approach can and should be taken to each of the grounds for remittal (and in indeed any new or extended ground), namely that it is not enough that there should be an error or misconduct, or new evidence etc, but that the factor must reach the level of being so serious and so substantial, or so fundamental, that it smacks of injustice and the court cannot permit it to remain unchallenged.

It is also useful in my opinion to compare these developments with the law relating to certiorari. It is I think apparent that as a matter of history the grounds upon which a court would set aside an arbitral award were similar to those upon which it would quash the decision of any inferior tribunal. Thus, the misconduct identified in, In Re An Arbitration between Brien v Brien [1910] 2 IR 84 was also considered conduct justifying an order of certiorari in the leading case of State (Hegarty) v Winters [1956] IR 320 which established the general principle in the public law field that there should be no ex parte communication with, or reception of evidence by, a decision maker. Similarly the ground of error of law on the face of the record was as a matter of history, an established ground for certiorari, albeit almost forgotten in England until revived in R v Northumberland Compensation Appeal Tribunal ex p. Shaw [1952] 1K.B. 338 a decision that per Lord Lowry L.C.J in R v Belfast Recorder ex p. Kelly [1992] N.I. 217, “ came as a surprise to the bench and Bar in Ireland , both north and south, since the weapon had never become rusty, but in this country continued to be wielded vigorously throughout the period in question”. The revived interest in this ground for certiorari has had a significant effect on the development of the law of judicial review. However, while the grounds of judicial review have expanded consistently, and so for example the category of documents which constitute a “record” has widened both as a matter of fact and law, that process of expansion marks a significant divergence from the law of review of arbitral awards, where the grounds of review have become more narrow and demanding . Accordingly, authorities and approaches from the public law field, while superficially applicable to review of arbitral awards, must, in my view, now be treated with some caution.

While it may only be a matter of semantics, I do not think that it is particularly helpful to describe the modern approach of the Irish Courts to the review of arbitral awards as “deference” or at least “curial deference” a phrase which has become popular in the public law field in the last 15 years. If there is deference, it is not to the arbitrator, but to the parties’ choice of a process which values certainty and speed above technical correctness, and which recognises that correctness is itself the matter upon which courts and judges might reasonably differ. The scheme thus created (and chosen by the parties) has a relatively high tolerance for matters which upon close inspection might be revealed to be errors of procedure, fact, evidence or law.

However, if there is now a general approach which requires not just that there be an error, but the error be so serious and fundamental as to justify remittal or setting aside, it is I think necessary also to recognise the difficulty of the application of any such test which is essentially qualitative, and necessarily subjective. The identification of an error of law may involve a process of sometimes precise analysis of legal reasoning with which Courts and lawyers are familiar. That reasoning process is, or ought to be, readily accessible so as to persuade the parties and the observer of its correctness, or at least to facilitate reasoned analysis and criticism. The determination of whether any such error is so fundamental as to necessitate remittal is a different exercise which may in any particular case be unsatisfactorily opaque. It is easy to state the test – and there are other similar examples elsewhere in the law – but it is more difficult to apply it in particular circumstances and even more difficult to explain its application. Counsel for the Appellant suggested in argument that it was ultimately simply a matter for intuition. Lawyers could look at any particular award and agree that it was so wrong and so fundamentally in error that it could not be allowed to stand. This summons up a picture of comforting collegial agreement, which is not in my view sufficient. It is decidedly unsatisfactory for the losing party to be told that the reason of the decision was simply the intuition of the judge or perhaps a majority of judges. Decision making that does not explain and cannot be interrogated, but is simply announced as the product of lawyerly intuition, is apt to slide imperceptibly into arbitrariness. Furthermore, if the decision is essentially subjective then the test may well become counter-productive. The inevitable uncertainty and unpredictability of such a subjective test will encourage challenges to awards especially when significant sums of money are involved, rather than discourage all but the most serious challenges, which the policy considerations identified in Keenan would suggest. Uncertainty and unpredictability coupled with the inevitable delay created by proceedings creates an incentive to launch challenges in the hope of forcing a settlement. This is the very antithesis of the policy identified in Keenan. Accordingly I would suggest that it is important that the Courts in considering challenges to arbitral awards should firstly remind themselves of the high tolerance that the system of arbitral review has for arbitral error and furthermore should seek to articulate as fully as possible the consideration of law and policy, and the analysis of the individual proceedings, which lead the Court to conclude that in any given case a substantial error has or has not been established which is so fundamental that the proceedings cannot be allowed to stand .

All of this may be no more than a more elaborate, and perhaps less helpful, repetition of the principles set out in the judgment of the High Court. However there is one distinct matter of law upon which I would respectfully differ from the judgment below. Under the heading “General Comments” which precedes the analysis of the law set out above and just discussed, the High Court judge cited with approval the following observations of Clarke, J. in the recent case of Limerick City Council v Uniform Construction Ltd [2007] 1 IR 30 as follows:


“Furthermore I am satisfied that the arbitration in this case can properly be described as being of the specialist category towards which, the jurisprudence of the court requires, a particular deference should be shown. Henry Denny and Sons (Ireland) Limited v. Minister for Social Welfare [1988] 1 I.R. 34; Carrickdale Hotel v. Controller of Patents [2004] 3 IR 410.”

One of the distinctive features of Irish legal practice is the number of different areas of law which practitioners and courts must perforce consider in the course of practice, and the breadth of experience thus created. There are many occasions where analysis of one area of law can benefit substantially from consideration and developments in another area. Legal analysis is neither so unique or arcane that consideration of particular areas of law has to be conducted by reference to hermetically sealed, self referential systems of jurisprudence. However, it does seem to me that the cross-fertilisation implicit in the quotation set out above is something which should be carefully scrutinised.

There are many areas where specialist arbitrators enjoy considerable advantages over reviewing courts and it is correct that courts should acknowledge this and approach the determination of such arbitrators with something which can I think, properly be called deference. That normally occurs however where proceedings necessarily touch on an area within the arbitrators specialist expertise, and not where, as here, issues of law are involved.

Furthermore, the issue in cases such as the Carrickdale Hotel involve the Court in seeking to interpret a statutory provision which permits an “appeal” from a decision of a specialist decision maker (in that case the controller of patents), without specifying the nature of the appeal. An appellant in such circumstances will almost always seek to argue for the widest type of appeal, often one that involves reconsideration of the merits. In a series of cases such as M &J Gleeson v Competition Authority [1999] 1 ILRM 401, Orange v ODTR (No.2) [2000 4 IR 159], and Carrickdale Hotel Controller of Industrial and Commercial Property & Anor [2004] 3 IR 410, the Irish Courts have observed that given the respective expertise of the decision maker appealed against, and the Court to which appeal is brought, that it must follow, that a more limited form of appeal was intended, one in which only substantial errors going to the heart of the decision would justify a successful appeal. That is the approach which was first described in this country and described as “curial deference” in M&J Gleeson. While there may be obvious points of comparison with the approach to arbitral awards it does seem to me that it would be a mistake to apply both approaches, as the passage from Limerick City Council v Uniform Construction Ltd suggests, and thereby to add a further layer of deference to the tolerance of the error already described above. That would risk wrapping the decision in so many layers of insulating deference, that the decision might never be the subject of any penetrating scrutiny by the Court.

This may be illustrated by the facts of this case. The arbitration was not itself of a particularly specialist category – it was essentially a building contract – but more particularly the issues which arose in the arbitration were in the words of the Respondent Contractor “matters of law”. At paragraph 5.15 of their written submissions to this Court, it is stated:


“It is important to know that for the most part in the arbitral hearing there was no dispute on the facts of this case; on the contrary, the principal issues concerned the legal consequences of those facts.”

Self evidently if this was correct, then there should be no question of a court deferring to the Arbitrator’s analysis of the law.

Whatever the issues in the arbitration, the issues in the Court proceedings are, almost by definition, pure issues of law. As it happens we do not know anything about the expertise of the Arbitrator to whom we are asked to defer. We do not know anything about his experience of building projects in Ireland or elsewhere, or more importantly his familiarity with Irish law which governed the contract and was the subject of the arbitration. In circumstances where the issues before the Court were issues of law (whether alleged errors of law, or issues of fair procedures) it would in my opinion be taking judicial humility to excessive lengths to add to the approach already identified in Keenan and McCarthy, a further layer of insulation labelled “deference”.

This is not just a conceptual issue; it may in particular circumstances have significant practical consequences. In this case it is plain that the High Court judge was troubled by a number of significant errors which he detected in the Arbitrator’s decision, but on each occasion he concluded that he should not set aside or remit the award concluding more than once that this was consistent with what he understood to be a general principle of “deference”. It seems possible that he was influenced in this approach and thus led to the conclusions which have been the subject matter of this appeal, by the cross-fertilisation of the principles in Keenan and Carrickdale Hotel.

I will now turn to consider the grounds relied on by the Appellant.


DECIDING THE ISSUE OF DELAY WITHOUT HEARING EVIDENCE OF GCC’s EXPERT PROGRAMMER.


As already set out in this judgment the one thing that was not in dispute was that the project had experienced significant delays both before and after the March 2005 acceleration agreement. In preparation for the arbitration hearing the Council had retained the services of an expert witness, a Mr. Johnson, who had prepared an 80 page report on these delays. The report had been delivered a short time before the hearing and there had been significant disputes as to the admissibility of the evidence and whether the issues referred to in the report had been pleaded. Mr. Johnson’s report and the evidence he might give was therefore the subject of some contention. On Day One of the arbitration the solicitor for the Council had referred to the fact that the Contractor did not wish to deal with the Johnson report in that tranche of the hearing. Perhaps significantly in the light of subsequent events, the Arbitrator raised the possibility of Mr. Johnson’s report being “available to the Tribunal without bringing Mr. Johnson along” on the basis he said, that Mr. Johnson was not a witness of fact but an expert. Later in the exchange the solicitor for the Council said:


“I don’t think there should be any doubt about Mr. Johnson. We sought and were given leave to [call] Mr. Johnson. We intend to call Mr. Johnson… the only issue …”

Mr. Johnson’s involvement surfaced again on Day Seven. At that point the hearing was drawing to a close, and there was an exchange between the solicitors as to what the Arbitrator described as the “problem of Mr. Johnson”. The solicitor for the Council stated:

“As far as Mr. Johnson is concerned we agreed to postpone Mr. Johnson’s evidence at the request of [ the solicitor for the contractor]. I am not sure what his proposal is as to what we do next but clearly we won’t be dealing with him this week …”

The Arbitrator speculated as to the import of the evidence to be given by Mr. Johnson and the solicitor for the Council observed:

“There was an issue of relevance raised…. It may ultimately not be terribly important but the Respondent has to be given the opportunity to respond to the claimant’s claim.”

The solicitor for the Council wondered aloud if there was a “ way of moving forward without dealing with it I would be open to any suggestion … if we have to come back to Mr. Johnson before we can move towards an [a]ward then we have another hearing to fix. We are all busy and that is not going to be easy”. He invited the solicitor for the Contractor to intervene. The solicitor for the Contractor then acknowledged that he had suggested that Mr. Johnson be put back. He indicated that he would have had “several objections to Mr. Johnson’s report based on pleadings saying that matters that Mr. Johnson addressed weren’t actually pleaded, points that he makes weren’t pleaded that certain issues that he would be estopped from pursuing”.

He then continued :


“In the overall what I would be suggesting that what we do is that we make closing submissions to you after this hearing. I will be saying to you, in the closing submissions, that there is nothing in the Johnson report that even if Mr. Johnson gave evidence and sustained his evidence that there is nothing in the report which would affect or should affect your decision on liability [the solicitor for the Council] will presumably be saying otherwise. If when you come to consider the issue of liability you agree with him rather than me, then before your award on liability we would have to deal with the Johnson issue. That is the way I propose we would deal with it. That I would make my submission as to why it wouldn’t affect matters. [The solicitor for the Council] makes his submission as to why is it should affect matters and then you decide whether or not it would or it could.”

The Arbitrator then said, “yes I see”. In ordinary conversation this is a phrase which suggests comprehension. Often however it transpires that the speaker has not necessarily understood everything said to him or her; so I think it proved here. The arrangement itself was unclear and there is room to doubt that even the parties were absolutely in agreement as to what was to ensue .

After a further submission the Arbitrator observed that it looked as if Mr. Johnson could be back for further attention. Again, it does not appear that the Arbitrator was fully on the same wavelength as the parties. This solicitor for the Council then described the Contractor’s proposal as a sensible practical proposal which would avoid the expense involved in a delay to closing submissions. He then expressed his understanding as follows:


“I think what [the solicitor for the Contractor] is saying is that he is content that we make a closing submission so we can make reference to Mr. Johnson’s report, and he can equally say ‘actually you should disregard it ……’. … at least it allows us to summarise what has happened in the hearing and allow us to do that work. If we leave it for a month then it is going to cost everyone a lot more.”

In the event, when the Arbitrator came to issue his award he did not refer to the agreement or understanding identified in the exchange on Day Seven. Nor did he refer to Mr Johnson’s evidence. He did however refer to the issue of delay, (to which, of course Mr Johnson’s proposed evidence was directed) and made a finding:

“I conclude therefore that much of the delay and disruption experienced during this period was beyond SKC’s control and it is not surprising that the … resources then committed fell below what Mr. Turner, at least, hoped to see.” (emphasis added)

In the immediate aftermath of the original award, the Council by letter of the 24th October 2007 raised a number of matters pursuant to the procedure under Rule 23(1) of the IEI procedures, including this finding in relation to the matter of delay. The Council referred the Arbitrator to the exchange in relation to the evidence of Mr Johnson which had occurred on Day One of the transcript, but as it happened, did not refer to the proceedings at Day Seven. Nevertheless the Council clearly made the point that the Arbitrator had been wrong to reach conclusions on the matter of delay without first giving the Respondent the opportunity to present the evidence of Mr Johnson. In accordance with understood rubric of the Rule 23(1) procedure it invited the Arbitrator to delete paragraph 20. The Arbitrator did not do so. Instead, in his Note of Explanation he pointed out, correctly though somewhat irrelevantly, that he had not found that GCC was responsible, merely that much of the delay was beyond SKC’s control. He continued that his “conclusion was reached in the light of the evidence given by Mr. Kingston, Mr. Frampton and Mr. O’Flaherty, all of whom were actively involved in the Works in the period March to June 2005 and had first-hand knowledge of what was happening. Conversely Mr. Johnson was not even instructed until 2007 and could therefore have no personal knowledge of events some three years earlier”.

He then went on to make in a somewhat surprising observation that since paragraph 20 did not deal with liability “there seems to be no reason to “correct” it”.

The Council now contend that the Arbitrator’s approach in this case was both a clear example of misconduct justifying the setting aside of the award under s.38, and also an error of law on the face of the record, since the purported explanation for disregarding Mr Johnson’s report is itself plainly wrong. Every expert comes to a dispute after the fact. The fact that an expert has no personal involvement in a dispute is normally regarded as a requirement of qualification as an expert in the particular case. It could not be a basis for excluding the evidence although of course an arbitrator would be free to prefer evidence of witnesses of fact to that of an expert in an appropriate case. On the issue of misconduct the Council say that the Arbitrator’s award plainly made a finding in relation to delay. Accordingly the evidence of Mr Johnson was equally plainly relevant, and its exclusion was misconduct.

The trial judge was clearly troubled by this point. He observed, correctly, that the explanation given by the Arbitrator was “misconceived and even erroneous”. However he pointed out that arbitrators have considerable latitude in determining issues of admissibility and were not bound by the strict rules of evidence. On that basis, and because he considered that there was an element of what he described as “backtracking” in the Council’s approach when having appeared to leave the issue to the Arbitrator, and it sought to challenge his determination, he considered that although the Arbitrator was in error, this is not an error which is “so fundamental” as to justify the setting aside of the award thus raising acutely the issue discussed earlier in this judgment.

With great respect, I cannot agree. First, this was an issue of alleged misconduct. A normal and fundamental component of a fair hearing, is that one party is given the same opportunity and facility to make his or her case, as their opponent has been afforded. Classic examples of misconduct leading to the setting aside of an award are where one party is excluded from the hearing, or is prevented from calling a witness, or is limited to written evidence, when the other side are permitted to call oral evidence. The understandable sense of injustice a party will feel in such circumstances can only be compounded if the reasons given for the exclusion of evidence the party wished to call, are plainly erroneous.

Nor do I think that this approach can be excused on the grounds that arbitrators have greater latitude relating to the rules of evidence. The law of evidence is often stigmatised as being unduly constrained by nineteenth century precedent, but at its heart are issues of fundamental fairness, the teachings of experience, and the application of matters of basic logic. The exclusion of evidence on the ground of whether it is not relevant (which was the fundamental objection raised to Mr Johnson’s evidence) is not some piece of Victorian arcana which an arbitrator would be well justified in ignoring, but is rather an exercise in simple logic: evidence is relevant to an issue when if accepted it would tend to prove or disprove it. If the Arbitrator was going to make a finding on an issue of delay, then Mr Johnson’s evidence was clearly relevant to that issue. Accordingly, I cannot excuse the Arbitrator’s conduct on this basis.

In this Court counsel for the Contractor laid more stress on the point which in the High Court was described as “back-tracking” by GCC. He argues, with some considerable force, that this is no more than an example of the practice of after the fact fine-combing of arbitral decisions in the hope of finding some error of law which can justify a challenge, a practice which the Courts rightly deprecate. In this case, he points out that the Council made closing submissions which in written form (including appendices) ran to more than 230 pages. At the very outset of those submissions the Council identified matters which it contended were “not relevant” to the arbitration and which accordingly were to be relegated to the appendices. The only mention of delay it is said, in those submissions, is indeed in the limited content of delay after the acceleration agreement, a topic which is contained in an appendix and thus, labelled as irrelevant by the Contractor itself. Furthermore, the only references to Mr Johnson’s report in that appendix were slight on their own terms, and certainly so in comparison to the voluminous detail contained elsewhere in the submissions. From this it is said on behalf of the Contractor, the Council did not really press the question of Mr Johnson’s oral evidence at the time, and that the issue is now assuming a completely disproportionate importance in circumstances where the Council seeks to utilise it as a way of escaping from an adverse and embarrassing award. The fact that the Council did not itself consider delay to be relevant at the time, it is said, sits reasonably well with the Council’s conduct at the arbitration even as illustrated in the extracts set out above. Had the Council believed with any conviction that Mr. Johnson’s evidence was significant, it would have insisted on its admission rather than acquiescing in the rather half-hearted procedure which was followed.

There is I think much force in these submissions. The Council’s solicitor himself described the issue regarding Mr Johnson as “not terribly important”. However the issue is not simply what the Council may have considered or contended was relevant at any given point, but rather what the Arbitrator considered relevant. In this regard, it is I think important to recall that the Arbitrator did not accept either side’s principal argument, but rather based his finding against the Council on the conclusion that he considered the Council had acted unreasonably under Clause 63(6). It is I think clear from the award, that the Arbitrator’s view of the delay was directly relevant to that finding, and indeed was part and parcel of the Arbitrator’s conclusion in favour of the Contractor and against the Council. As we have seen, the Arbitrator made a specific finding in relation to delay that was beyond SKC’s control. For the reasons already set out I do not think that this finding could be treated as irrelevant or peripheral.

Furthermore, I am also impressed by the fact that on any version of the exchange on Day Seven something was left to the Arbitrator to decide in relation to Mr. Johnson’s evidence, the outcome of which would determine whether or not Mr Johnson was to be called to give evidence. However the Arbitrator made no determination of any kind whether on the issue of pleading, estoppel or relevance, all of which had been referred to and raised. Indeed in his original award, he made no reference whatsoever to what he had previously himself described as the “problem of Mr. Johnson”. It is all the more disturbing therefore, that when challenged that he had determined an issue without hearing an important witness (a fundamental and easily understood objection) he responded with a justification which did not directly address the argument, and which itself could only make sense if Mr. Johnson’s evidence had been admitted, in which the Arbitrator could then consider that he was entitled to prefer one piece of evidence over another.

It is true that as with many other aspects of this case, the conduct of the parties was unclear and at best ambiguous, and contributed to the considerable confusion which ensued. It is not merely the wisdom of hindsight that suggests that if Mr Johnson’s evidence was considered at all important, then the position in relation to it ought to have been made absolutely clear to everyone concerned. Furthermore, if there were disputes as to admissibility, then there were really only two courses open: either to determine the objection for or against admissibility then and there, or alternatively to admit the evidence de bene esse and allow the Arbitrator to rule on admissibility in the context of the award. In the event, the parties adopted an intermediate course which involved Mr Johnson’s report being handed in, witnesses being questioned in relation to it, and, as we have seen, references being made to it in the closing submissions. It is by no means as surprising therefore, that there was considerable confusion as to the status of Mr Johnson’s evidence. However, I have no doubt that in the end the arbitration was misconducted in this regard, and went significantly awry in this respect, and that it would certainly smack of injustice to allow the award to stand. The exclusion of a relevant witness, without addressing the admissibility of that evidence, and the maintenance of that position on a basis that did not even address the substance of the complaint, is so far removed from the basic procedural fairness that a party is entitled to expect that the decision must be set aside.

In many ways, this resolves the proceedings. Since the award is being set aside on grounds of misconduct (in the narrow and technical sense set out earlier) that itself is a sufficient ground for removing the Arbitrator. Furthermore if the award is set aside, then there is no need to remit any particular issue to the Arbitrator. Since however, the other matters were argued in detail, and since some of them may arise either in the arbitration or elsewhere, it is necessary to address the arguments made.

The Council also contends that the ruling of the Arbitrator in relation to Mr Johnson’s evidence also constituted an error of law on the face of the record, which was in itself is a ground for remitting the award. It is true that the explanation given by the Arbitrator was, as the High Court judge found, impossible to reconcile with the law and practice relating to expert evidence. However, it appears to me that there are difficulties in characterising this as an error of law on the face of the record so fundamental that the Court cannot permit the decision to stand. First, the relevant law is not really that relating to evidence, but rather that relating to fair procedures and, in the context of arbitral awards, misconduct. Second, there is difficulty in characterising the error as one appearing on the face of the record. There is nothing in the award about this matter. Therefore, to find that there was an error on the face of the record will involve determining that the Note of Explanation which the Arbitrator himself expressed not to be part of any award, was nevertheless part of the record for the purposes of the rule. Even more problematic is the fact that the error is one which cannot be said to be patent on any document. The award itself at paragraph 20 is unremarkable in its own terms. The subsequent explanation taken on its own terms and without cross- reference to the submissions made, would again be unremarkable, because it suggests that the Arbitrator had merely preferred one piece of evidence to another on a basis which is itself not irrational. It is not apparent, or in the language of the cases, patent, from the Note of Explanation that Mr Johnson had not given evidence at all. That fact, which is crucial to the issue emerges only from the transcript, and indeed from the evidence contained in the affidavits in this case. There may be cases in which a court is entitled to treat an error detectable only in this way, as one appearing on the face of the record, and certainly in the field of certiorari courts have from time to time given an expansive interpretation to the concept of the record, but particularly given the difficulties adverted to above as to reconciling the law of certiorari with the modern approach to arbitral awards, I would prefer to leave that matter to be decided in a case in which it is squarely raised, and central to the court’s decision. In my view the complaint here is more properly analysed under the heading “Misconduct”, and in that context is well made.




THE CONCLUSION THAT SKC’S WITHDRAWAL WAS NOT A REPUDIATORY BREACH


This issue arises because GCC contend that the Contractor’s conduct in walking off the site, removing equipment and returning the keys on the 27th June 2005 was a repudiatory breach on the part of the Contractor. The Arbitrator disagreed. Once again the reasoning of the Arbitrator on this issue is laconic to a point well beyond any admirable brevity. At paragraph 36 of the award he found :


“That although prepared to continue with the original contract (with a completion date after Christmas 2005) and while not then insolvent, the claimant felt compelled to withdraw from the site on 27th June 2005.”

“Accordingly” the Arbitrator concluded at paragraph 36(7):

“That the claimant’s withdrawal from the site on the 27th June 2005 was a breach of the original Contract, but not a fundamental breach or repudiation, and at that date the claimant was not insolvent, albeit at risk of trading while insolvent if it continued with the works …”

It is to be inferred that the basis of this conclusion is a prior finding at paragraph 28(b) that the withdrawal from site “was motivated only by a risk that, if SKC continued with the works, it might in due course find itself trading while insolvent” and the conclusion at paragraph 29 that “Mr. Kingston did not want to abandon the original contract but felt himself forced to suspend operations where the wrongful withdrawal of funds and certificate number 16, and that it was open to GCC … after the 27th June 2005 withdrawal to negotiate a revised acceleration agreement – which Mr. Kingston was trying to do – or to allow the works to proceed under the original contract by paying SKC the monies called for by the now aborted acceleration agreement.”

Although the Arbitrator recorded that he had been addressed “at length” by both sides on the law of repudiation, there is no discussion of the submissions on that point in the award. Indeed, and surprisingly, there is no reference to any case or textbook from any jurisdiction in any part of the award.

The Council argues that the conclusion of the Arbitrator was simply wrong as a matter of law. The abandonment of the site and the removal of equipment and the handing back of keys constitutes literally a text book example of repudiatory breach of contract entitling the other party to accept the breaches terminating the contract. The Council refers “…to the two leading textbooks”. In Hudson’s Building and Engineering (11th Ed.) it is stated at paragraph 4.209 that:


“Abandonment of the site by a contractor or removal of plant or site offices and huts will prima facie be a clear fundamental breach, in the absence of some very special explanation.”

Keating on Construction Contracts (7th Ed.) states under the heading “Repudiation by a Contractor”:

“Refusal or abandonment. An absolute refusal to carry out the work or an abandonment of the work before it is substantially completing without any lawful excuse, is a repudiation.”

To this, the Contractor responded with an argument that was accepted in the High Court. The Contractor points out that the passages set out above do not identify an absolute rule, but rather admit exceptions. Here the Arbitrator had found in the facts of the case that in effect, this case was just such an exceptional case. The Arbitrator found the Contractor had wished to perform the contract and had withdrawn only because of a fear of trading while insolvent, and furthermore had sought to negotiate a new acceleration agreement. This was a finding which was open to the Arbitrator on the facts. Once the law admitted of the exceptions, it was a matter for the individual decision maker to consider whether there was such an exception made out. This was the application of an established test to the facts of a case, an area in which the Arbitrator enjoyed considerable latitude and the Court should not interfere with his decision in that regard.

It should be noted that it is agreed that in one respect at least the judgment on those issues is incorrect. The High Court judgment stated that the Council had not pleaded a repudiatory breach of the law or relied on any such repudiation at the time of the abandonment, and furthermore that the Arbitrator had not been asked to rule upon the issue and would not have been entitled to do so. However, as we have just seen, the Arbitrator did rule on the issue at paragraph 36(7), and furthermore, it is also apparent that the issue was pleaded by the Council. However, the evidence in relation to reliance on repudiation at the relevant time by the Council was more complex, and less satisfactory.

At the hearing of the appeal a letter was handed in dated the 13th June 2005 some three days after the abandonment by the Contractor, and the issuance of the Council’s Clause 63(1) notice. The letter notified the Contractor that its actions in attending at the site and removing machines and the offices, and by handing back the keys amounted to a repudiation of the contract at common law. We were informed however, that this letter had not been pleaded, had not been referred to in the arbitration, and had not been included in the papers for the High Court but had been handed into the High Court during the hearing. This is a good deal less than satisfactory. However at a minimum it is clear that the issue was pleaded and relied upon before the Arbitrator, even if this specific letter of the 30th June 2005, which put the matter beyond doubt, was not in evidence in the Arbitration.

The Council argues that even if every other part of the Contractor’s argument were correct, it still would not justify the finding of the Arbitrator. The Council argues, that what is contemplated in the passages from Hudson and Keating is “some very special explanation” which justifies something which otherwise would be a breach. It is argued that there is no authority for the idea, embraced by the Arbitrator, that circumstances can reduce a fundamental repudiatory breach to a mere breach sounding, presumably, in damages only.

For myself I see very considerable force in this argument. Repudiatory breach is not so much concerned with the manner in which a breach is carried out, as with the significance of the obligation breached. It is difficult to conceive those circumstances where it could be said that notwithstanding abandonment of the site a contract still existed so that the employer must continue to perform it and would be left to its remedy in damages. I would not like to add further uncertainty to the area of building contracts by endorsing the suggestion that abandonment of the site can be either a repudiatory breach or a mere breach depending on the circumstances some of which may not be known at the time and can only be determined after the fact by an arbitrator. However, it is not necessary, or perhaps desirable, to preclude all possible argument on this matter. That is because even assuming for the moment that such an intermediate type breach by abandonment could exist, it seems to me clear the Contractor still cannot succeed in this argument.

First, I note that if this case was an example of abandonment creating a mere breach, but not amounting to a repudiatory breach, then it would be something quite novel, which in itself would merit attention in the textbooks and considerable debate. Yet the Arbitrator’s award seems oblivious to the ground breaking and exceptional nature of the determination made. Certainly there is no discussion of the textbooks, or indeed any other authority. If indeed therefore the Arbitrator did arrive at a novel but correct conclusion of law, then it was little short of a fluke.

In any event in my view the matters relied on by the Contractor could not on any view amount to a lawful excuse either justifying the breach or reducing it, as the Arbitrator seems to have held, to a non repudiatory breach. In my view, the Arbitrator’s conclusion, and indeed the Contractor’s evidence, confused motive with intention, and the subjective views of one party to a contract with the objective conclusion to which the other party is entitled to come. The fact that the Contractor feared insolvency or trading while insolvent is, it seems to me, frankly irrelevant. He claimed he intended to remove the equipment and to abandon the site and not to continue to perform the contract. Performance of the contract was the very trading which he feared. If anything this was not some intention different from an intention not to perform the contract: it was the reason why the Contractor intended not to perform. The question in any event is what the other party was to understand from the Contractor’s actions, since it is that party which must decide whether or not to accept the repudiatory breach as terminating the contract. This decision cannot depend upon subjective considerations and motivations on the part of the other party.

The Contractor did seek to rely on certain actions evidencing it was said his desire to perform the contract and in particular the fact that he had professed himself willing to negotiate a new acceleration agreement as objective evidence of his intention not to repudiate the contract. In my view this cannot assist him. First, most of the attempts at negotiation relied upon post dated the 27th June 2005 the abandonment of the site and the Council’s Clause 63 notice. Furthermore, willingness to negotiate a fresh agreement is in one sense the antithesis of a present intention to perform the existing agreement. A suggestion that the Contractor was willing to perform the main contract but only if a fresh acceleration agreement is made, is also a plain intention not to perform the contract on its own terms. In my view therefore, the conclusion of the Arbitrator that the action of the Contractor in abandoning the site amounted to a non repudiatory breach of the contract, was a clear error of law which was apparent on the face of the award. It is also in my view, so fundamental that it cannot be permitted to stand not just because of its likely heretical conclusions as a matter of contract law, but more importantly because it was fundamental to the structure of the award. Not only was it an important finding in its own right and a rejection of a significant argument made by the Council, it also had an inevitable impact on the conclusion to which the Arbitrator came since for example the finding that the Council had acted unreasonably under Clause 63(6) would lose much of its significance if the abandonment also constituted a repudiatory breach accepted by the Council as terminating the contract.


THE RELATIONSHIP BETWEEN CLAUSE 63 AND THE COMMON LAW RIGHT TO TERMINATE


A closely related argument is that the Arbitrator made a further error of law in concluding at paragraph 27 of the award that he did not “need to consider the general law of repudiation, since IEI clause 63 provides the means for handling that situation”. This the Council says is a further error, since it argues Clause 63 provides a machinery for managing a situation, but does not itself supersede or exclude the common law.

Once again, the trial judge did not accept the Council’s argument. At page 43 of the judgment he concluded:


“Even if GCC had a right to repudiate, which was not determined, properly in my view, in opting for its remedy under clause 63, GCC made a binding election which would have prevented it from later resorting to the repudiatory remedy even if it were available.”

It is noteworthy, that this conclusion does sit entirely comfortably with the Arbitrator’s determination. The Arbitrator’s view was – or appeared to be – that Clause 63 excluded the common law right by providing the parties own remedy for the situation. The trial judge seems to have considered that the common law remedy existed, but that it was an alternative to Clause 63, and the employer was obliged to make an election between them which prevented later resort to the other.

Once again the parties have in this Court deployed an impressive range of arguments and have resorted to recent editions (and supplements) of text books and recent authority. This in itself raises its own questions about the award. There is a disproportion between a single and somewhat throwaway sentence in the award and the sophisticated analysis deployed to defend it and to contend that the Arbitrator was, almost unwittingly, correct in law or at least not so wrong as to require the Award to be set aside .

The Council argues, relying on an extract from Hudson that a contractual termination clause (or as Clause 63(1) is described a forfeiture clause) does not itself exclude common law rights. The passage states as follows:


“These various factors will mean that, in the absence of express provision, contractual determinations by either party are not intended as substitute for, or to exclude, the common law rights to rescind. While some standard form of determination clauses contain express “without prejudice to other rights or remedies” wording, this is not in fact necessary, and it is submitted that in the context of construction contracts generally neither owners’ nor contractors’ determination clauses should be treated as implied excluding the parties common law rights.”

Keating is, as the Council acknowledges, more equivocal suggesting that in the absence of a “without prejudice to the parties rights” clause “the position is not clear”.

In response, the Contractor made a number of arguments some of which are no longer available on the facts such as the argument that the Council did not purport to invoke its right to treat the abandonment as a repudiation at common law, and others which are no longer available on the law for example, that the issue is moot in the light of the Arbitrator’s determination that the abandonment was not in any event a repudiatory breach.

The fundamental line of defence raised by the Contractor, is, to adapt a phrase, to suggest that the Arbitrator was right if not for the wrong reason, then either for no reason, or for a reason of which he was unaware or at any rate did not articulate. The Contractor points out that the passage in Keating goes rather further and suggests that:


“In logic the operation of the contractual determination provision, prima facie operates as an affirmation of the contract, which is inconsistent with accepting the event in question as a repudiatory breach … however it has been held that a party may, prima facie, rely on both his contractual and common law rights, without thereby affirming the contract. However, where a Notice of Determination makes express reference to the contractual right of determination and that contractual right is inconsistent with the common law rights and remedies that the Notice cannot operate as a common law acceptance of a repudiatory breach.”

The Contractor also relies on the statement of Judge Humphrey Lloyd QC in Laing Management Ltd & Anor v Aegon Insurance Company (UK) Ltd (1997) 86 BLR:

“… It is difficult to see how the exercise of a power to terminate could be anything other than an implementation of the contractual terms and as such an affirmation in legal terms.”

The Contractor also relies on Dalkia Utility Services Plc v Celtech International Ltd (2006) EWM 3 63 in which Christopher Clarke, J., held that:

“The fact that service of contractual Notice of Determination is not inconsistent with the acceptance of a repudiation does not, however, mean that in all cases such a Notice amounts to such an acceptance.”

The Contractor also points out, that the text in Hudson predates both Dalkia and Laing, albeit that it does not appear to me that Dalkia is particularly apposite here, since it is not contended that the Notice of Determination itself was also an acceptance of repudiation. On the contrary, as we have seen, a separate letter was written three days after the Notice purporting to identify the abandonment as a repudiation.

First, it should be said that all of this is somewhat tenuous, and some distance from the Award. There does not appear to be any authority supporting the brief conclusion to which the Arbitrator appears to have come namely that the mere existence of Clause 63 in some sense supersedes the common law and excludes any right to treat conduct identified in Clause 63 as a repudiation of the contract.

Second, the issue which persuaded the High Court judge that the Arbitrator had reached the correct result, namely that the exercise of a right of termination/forfeiture would preclude reliance on the same acts as constituting repudiation is more difficult. It is accepted that this ultimately involves an interpretation of the contract, and more particularly the relevant clause. This is something which has not been attempted either by the Arbitrator or by the High Court or indeed the parties in this Court, the Contractor effectively arguing that if such an interpretation was on which was possible as a matter of law then the Arbitrator could not be said to have committed a fundamental error in so concluding as a matter of fact. The difficulty with this argument, even on its own terms, is that the Arbitrator did not construe the contract, or suggest that his view was dependent on an interpretation of the clause. This argument also highlights a difficulty with the practical operation of a test which requires not just error but error so fundamental that the decision cannot be permitted to stand. It is no longer enough for an appellant to show that there is an error of law: if the respondent can show that the decision can be supported on other grounds then, the argument runs, it cannot be said that the error is fundamental or so fundamental that the decision must be set aside. Ultimately this approach leads to an unattractive style of argument which argues that if there was any basis which could be hypothesised for the award then it must stand. In my view this type of argument strains tolerance, and deference, to breaking point and beyond.

I would be reluctant to attempt to resolve the issue as to the true interpretation of this contract and particularly Clause 63, were it not for the fact that this form of contract is in regular use within the industry in Ireland, and that different views have already been expressed as to the operation and effect of Clause 63 both in the Arbitrator’s award and the High Court judgment.

Clause 63 does not appear to have been drafted in the manner which leads to precise internal consistency. As already observed, clause 63(1) is headed “Forfeiture”, Clause 63(3) refers to “expulsion”, Clause 63(4) refers again to payment after “forfeiture”. On the other hand Clause 63(5) which deals with the Contractor’s rights refers to the right of the contractor “to terminate the employment of the contractor under the contract”. Finally, as already noted Clause 63(6) is headed “Use of Termination Rights” and states in relation to the employers or contractors right of termination i.e. those rights under Clause 63, that “such right shall not be exercised unreasonably”. It seems from this to be intended that the rights conferred on the contractor under Clause 63(5) and the rights conferred on an employer under Clause 63(1) are to be treated as essentially similar, and no significance is to be attached therefore to the difference in terminology between the two sub-clauses.

This suggests, however, a less than rigorous approach to the language of the clause and furthermore suggests that a common sense interpretation should be adopted. It is noteworthy that Clause 63(1) makes it clear that the exercise of the right is at least in some respects without prejudice to other rights and remedies; thus the right to enter and expel the contractor takes effect by avoiding the contractor at least in the contractor’s, and any other obligations or liabilities of the contract or affecting the rights and powers conferred on the employer or the engineer by the contract. It is true that the clause does not expressly state the exercise of the right does not affect rights and powers at common law, but in my view it would be wrong to read the provision as implying the contrary. It must be said that more explicit language is used is relation to Clause 63(5)(a)(3):


“The contractor shall be entitled without prejudice to any other rights or remedies to terminate the employment of the contractor under the contract by giving seven days notice in writing to the employer.”

Clause 63(5)(d) states explicitly:

“Nothing in this clause ………… shall … if the right of the contractor to exercise either in lieu or in addition to the rights and remedies in this Clause specified any other rights or remedies to which the contractor may be entitled.”

Applying the approach in Keating to this provision, it seems clear that at a minimum in respect of the contractor’s rights under Clause 63(5), the exercise of the power under Clause 63 does not prevent reliance on the right at common law to treat such matters as amounting to a repudiation of the contract.

Of course, it might be said that adopting a literal interpretation, and perhaps by application of the expressio unius exclusio alterius rule of construction, that the express reference in Clause 63(5) precludes any such interpretation of Clause 63(1) from which such words are absent.

However in my view this would be an unreasonable approach to the interpretation of the clause when the language and structure of both provisions is significantly different. Fundamentally, I do not think that the authors of the contract intended an exclusion of common law rights to be merely divined by the absence of more words from Clause 63(1). Nothing in the contract would suggest such a distinction between the rights of the employer and the contractor and indeed, the structure of Clause 63 as a whole suggests an essential symmetry of rights between the parties. Indeed had such a marked distinction between the rights of an employer and a contractor been intended, then it would have been more natural to express that positively, rather than leave it to be deduced from the absence of certain phrases in Clause 63(1). Accordingly I would not interpret Clause 63, whether on its own, or once invoked as excluding the right to treat conduct falling within it as constituting, where appropriate , a repudiatory breach of the contract .

It is however necessary to consider whether this error was so fundamental as to require the remittal of the award. In the light of the view I have taken of the first two issues, this may be of little practical effect, and indeed it would be confusing and unhelpful if the matter was remitted to the Arbitrator with the conclusion on this issue that there was an error but not itself an error requiring remittal. If the Arbitrator in this case had addressed the matter in the same way as the High Court judge, I would have interpreted the statement in the award as merely part of a finding on the facts that there had been no repudiation, it would have been more difficult to remit on this point albeit that the issue would then have become bound up the Court’s determination that the Arbitrator was in error in that regard as well. Had the Arbitrator taken the view advanced by the Respondent Contractor in this Court and concluded that on the interpretation of the particular contract the exercise of Clause 63 was an election which precluded the Council from treating the Contractor’s action as repudiation, I would have even more difficulty, since the interpretation of Clause 63, is a matter on which different adjudicators might readily and reasonably differ. But the Arbitrator did none of these things. Instead, and without recourse either to the law, or to the text of the contract, he concluded, somewhat dismissively, that he did not need to consider the law of repudiation since Clause 63 covered the situation. This was in my view another error. Again the Arbitrator went on to hold that in any event there was no repudiation, and had this been itself correct, then the error would not have been fundamental. However it seems plain to me that the entire of the Arbitrator’s analysis of this issue was both inadequate and flawed and furthermore was all a part of the conclusion in favour of the contractor. Accordingly, it is a matter which I think was so fundamental it should be remitted to the Arbitrator.


THE CONCLUSON THAT THE GCC WAS IN BREACH OF THE CONTRACT WHEN IT ACTED IN ACCORDANCE WITH THE CERTIFICATE ENGINEER


The issue raised under this heading has gone through a number of versions in the course of the case. It is clear that the Arbitrator took a poor view (as he was entitled to do) of the conduct of the engineer when the engineer purported to certify the deduction of sums previously certified and paid under the acceleration agreement. It is also clear that the Arbitrator considered that the engineer had done this “at the behest” of the Council. That conclusion underlay his determination that the withdrawal of the monies was:


“A breach of the agreement so serious as to strike at the root of the agreement and thus amounted to an act of repudiation for which, as both the engineer and Mr. Turner were its agents, GCC must bear the consequences.”

When this matter was then raised by the Council under the Rule 21(3) procedure and it was pointed out that this was (as indeed the High Court subsequently held) a clear error (since a client could only be liable for the acts of an engineer under the IEI Contract if there had been fraud, collusion or undue influence) the Arbitrator changed tack, and in his Note of Explanation stated that:

“There is an implied warranty by the employer to the contractor that the engineer will perform his duties under the contract consciously and independently. The employer is thus vicariously liable to the contractor for the engineer’s mistakes and has, in principle a right of action against the engineer for any losses thereby incurred – but this last is not a matter for the Arbitrator.”

Again, the High Court held that this was a legal non sequitur, and that the statement was both “confused and wrong in law”. However the High Court did not remit this issue because in the view of the High Court, the employer had “ratified the action of the engineer when it proceeded to move on foot of the Certificate”.

I am afraid I cannot accept this analysis. Ratification normally only arises when an agent has acted outside of or in excess of the scope of his or her authority. It cannot be utilised to impose liability on a client for acting on foot of the Certificate issued within authority. If it were otherwise, the rule that a client incurs no liability merely by acting on foot of the Certificate, would be meaningless.

Faced with these difficulties the Contractor advanced a fourth argument in this Court. It pointed out, that on the findings of the Arbitrator, the acceleration agreement was extremely simple, and merely required the payment of fixed sums by the Council to the Contractor on certain specified dates. The acceleration agreement thus found by the Arbitrator contained no provision, or indeed need, for an engineer. If therefore an engineer issued a certificate, he was not acting under the main contract, and the law relating to the independence of such an engineer, and the limitations of liability of clients for acting on foot of such a certificate, simply did not apply.

This argument was audacious, since if correct, it raised an even more fundamental question touched on at the outset of this judgment, as to the jurisdiction of the Arbitrator to deal with any matter under the acceleration agreement. If the machinery of the main contract was to be imported into the acceleration agreement to permit arbitration, then the certification procedure with all its legal consequences would similarly have to be inferred. Furthermore, the parties clearly acted on the assumption that an engineer’s certificate was required for payments under the acceleration agreement. In any event it appears that the critical certificate, Certificate Number 16, was in fact issued at least in part under the main contract since it was designed to permit the deduction of the sums previously certified from amounts otherwise payable under that contract. Accordingly, it does not seem possible even by this route to support the conclusion of the Arbitrator. It also seems clear to me that the Arbitrator’s statement at paragraph 26 of his Award, and paragraph 7.3 of his Note of Explanation, were both errors of law, and can properly be described as not only fundamental but so fundamental that the matter should be remitted, because they resulted in a finding of liability against the Council on this issue. It seems to me entirely appropriate that this issue should also be remitted to the arbitration which would allow all the legal consequences of the controversial issuance of Certificate 16 to be considered afresh .


GROUNDS ADVANCED BY THE PLAINTIFF FOR THE REMOVAL OF THE ARBITRATOR


This issue was refined significantly during the court proceedings. The Appellant limited its application to one for removal of the Arbitrator for any future part of the arbitration. The Council therefore does not seek to set aside the award itself on this ground. Furthermore, on this appeal the Council has restricted itself to two issues, the allegation that the Arbitrator was asleep during the arbitration, and the further allegation that the Arbitrator had made inappropriate ex parte contact with the parties, when he requested the Contractor’s solicitor to enter an Appearance on his behalf in these proceedings. In the light of the High Court judgment, the Council was also prepared to accept that the Court was entitled to take the view that either of these events on their own would not necessarily justify removal, but made the case that taken together they did.

I must say that the assertion that an award should be set aside – or even that the Arbitrator should be removed from future conduct of the arbitration – on grounds that at some stage he or she had fallen asleep, is one which should I think be viewed with some distaste. Taking the extreme situation of an award which is otherwise unimpeachable, a claim that the award should nevertheless be set aside on the grounds of an allegation that the Arbitrator was momentarily but undeniably asleep, is one which manages to combine the maximum of harm with the minimum of merit. In such a hypothetical situation the claim would be without much merit, because most fair minded people will know a momentary drowsiness is something which can occur. It is also an allegation however which is in some respects unfair, since human experience also shows that being awake is no guarantee that the listener is alert. The eyes may be open, but the mind may be far away or even closed. The primary test of the adequacy of performance of a decision maker’s function, should normally be the quality of the decision itself.

The allegation also has the potential to cause maximum damage both to the decision maker and to the process of decision making, because it has an almost tabloid capacity for immediate impact. It is capable of being grasped immediately by a person who pays even fleeting attention to the issue, and it holds the decision maker up to the prospect of immediate ridicule which, in an internet age will forever attach to his or her name, whatever the outcome of the proceedings. This can be immensely unfair and irretrievably damaging to a reputation, perhaps carefully and painstakingly acquired over many years. Furthermore the entire business of the forensic consideration of questions of whether and for how long a decision maker was asleep, is itself a vivid illustration of the cruel though accurate observation that if you are explaining you are losing. Finally, at a human level it is I believe still unattractive to seek to exploit the human frailties of age, health, worry, overwork or distraction which can contribute to momentary drowsiness, when the decision is itself unimpeachable and no other ground of substance can be advanced.

None of this however means the fact that an arbitrator, decision maker or judge falls asleep repeatedly is not a serious issue, and one which should be carefully scrutinised, and which in an appropriate case, should lead to the immediate removal of the decision maker and the quashing of the decision. This is not so much because it necessarily demonstrates any lack of capacity in the decision maker, but rather because it is corrosive of the confidence which is the minimum which parties are entitled to expect from the system of decision making. It is bad enough that a losing party should be required to accept a decision by a person who they may feel has not fully understood their case, but a party should not be required to accept a decision by a person who has demonstrably not been paying full attention to a significant part of the matter. Still less should a party be required to submit further disputes to an arbitrator where that party has justifiably lost faith in their capacity to determine them. The High Court therefore took this complaint seriously, and in my view was entirely correct to do so.

However it must also be said, that the issue was raised in these proceedings in a very unsatisfactory way. It appears – and for reasons I will address later this cannot be said with any greater certainty – that in the early days of the arbitration, the Arbitrator fell asleep and that the event was sufficiently significant to lead the parties to discuss the matter, and to agree a regime of greater ventilation of the hearing room, and the provision of more coffee breaks. It is suggested by the Council that it was also agreed, that anything done in this regard would be without prejudice to future complaints. This is not squarely contradicted by the solicitor for the Contractor and it is fair to say that while the solicitor for the Contractor does not deny that there were occasions on which the Arbitrator fell asleep, the thrust of his affidavit is to seek to downplay the significance and extent of any such incident.

It does not seem to me satisfactory that this matter was not addressed at the time with the Arbitrator himself, if possible in a discreet and tactful way. There may have been reasons for this, including the simple human unwillingness to confront an embarrassing issue, and perhaps a less elevated concern that to raise the issue would antagonise an arbitrator while he or she was still deciding the case. But in my view, if the matter had reached a sufficiently important level that it required to be addressed by the parties, then it is normally desirable if not indeed essential to address the matter with the Arbitrator. Indeed to do so may have a number of forensic benefits in that at a human level it is to be expected that a conscientious decision maker will normally be apologetic and eager to ensure that the matter will be remedied and will be alert to avoid repetition. That would be the most effective remedy for both parties. At a most basic and self interested level the raising of the matter would also strengthen the hand of any party who subsequently sought to rely on it. For example if the decision maker was to deny an incident which could be proved to have occurred, or if having been alerted to the problem, there were further serious recurrences, an application for removal would be strengthened. By contrast, if the parties decide to muddle on in the hearing through a mixture of diffidence and a desire to avoid disruption and cost, they must expect that they will be bound by that choice and will not be entitled to revive the complaint about the conduct of the arbitrator when they discover that the decision is adverse .

The difficulty created by the conduct of the arbitration is compounded in my view by the manner in which the issue is dealt with in these proceedings. Detailed and careful affidavits were sworn. However notwithstanding clear differences of emphasis and in some cases detail, there was no cross-examination in the High Court in order to resolve, or seek to resolve, these issues. It was thus left to the High Court judge to read the affidavits and seek to read between the lines and come to his own conclusion as best he could.

In this Court we were invited by the Council to somehow defer to the High Court’s judgment in this regard and accept it, but since the High Court had only the same material as was available to this Court, we must approach this on the basis of the materials put before us. By contrast, the Contractor argued, that in the absence of cross-examination the Court was obliged to accept the lowest common denominator and in a sense that only such evidence which was accepted by both parties could be acted upon by the Court. In this case that would in effect mean the account offered by the Contractor’s solicitor. In this regard I must say that I am also troubled by the fact that the Arbitrator although served with these proceedings has taken no part in them other than the unfortunate incident in relation to the entry of an Appearance. It might be entirely understandable that an arbitrator would seek to avoid an exposure to significant costs by declining to participate in the proceedings proper, and would leave those to the contesting parties. But where an arbitrator’s personal conduct is involved, it would I think certainly be helpful if the arbitrator had indicated his position on the issues of fact, whether by letter or by affidavit, and then indicated that he wished to take no part either in the argument in relation to that issue, (if he did not wish to do so) and in the proceedings proper.

What then can be said about the matter? The Contractor’s counsel deployed a number of arguments to support the judgment. First it is said that there was a full overnight transcript. Somewhat paradoxically, in a case where the issue has been raised, however politely, with the Arbitrator, the existence of an overnight transcript can provide an additional assurance to the parties, if for example the arbitrator were to undertake to review the transcripts or any particular part of them with particular care. But where, as here, the arbitrator has no awareness of the concerns of the parties, and where ex hypothesi at least one of the parties has lost confidence in the arbitrator, I do not think the existence of an overnight transcript is either as a matter of law or on the facts of this case, necessarily sufficient to allay the concerns which have arisen. If it is correct to say that one of the significant problems of this area is the loss of trust by a party in the decision maker’s capacities which has occurred by reason of what the arbitrator has done in public, then that damage cannot readily be repaired by requiring the party to undertake an act of faith in what the arbitrator might have done in private. Undoubtedly, there may be some cases which, like some football matches, are better viewed by reading the text rather than viewing the reality, but by and large, transcripts are likely to have a more soporific effect than oral proceedings. In any event, the point is particularly weak in this case since both the Arbitrator’s Award, and his Note of Explanation, are entirely devoid of any reference to the transcript. This is not necessarily to say that it was inappropriate of the Arbitrator to take the brisk and generalised view he did take of the evidence, as shown by the Award. What it does mean is that it is difficult to rely on the existence of transcripts, and the assumption that they will have been carefully perused by the Arbitrator, to overcome any concern created by the sleeping incidents.

Second, the Contractor’s counsel relies on the case of R v Betson [2004] EWCA Crim 254, where, as the High Court judge observed, the facts were extreme and on one occasion the judge was awoken by the sound of his own snoring but where nevertheless the Court of Criminal Appeal of England and Wales rejected this ground of appeal. Significantly in that case the judge very properly acknowledged the incident when the matter was raised in the appeal.

The Court of Criminal Appeal observed that “Because the appearance as well as the actuality of justice being done is important, no judge ought, in any circumstances, to fall asleep during any stage of a criminal trial”. In my view this observation applies with equal force to civil and arbitral proceedings. However, the Court also observed that it does not necessarily follow that any trial is thereby unfair stating that “It is the effect, not the fact, of such inattention which is crucial”. In that case, the Court was satisfied that the falling asleep could not be shown to have any impact on any issue in the particular trial.

The Contractor sought to rely on the same reasoning here. First, as the High Court judge pointed out, it may be more difficult to make this argument in a civil case, where the judge is the decision maker, rather than by reference to a criminal case, where the judge’s obligation is to preside, and where the decisions of fact are made by the jury. Second in any event, this is something of a double edged sword in this case . It cannot be the case, that to succeed in this complaint, a party must point to a precise time in the transcript when the arbitrator fell asleep and then cross-refer that to a defect in the award. There is no doubt that if the award is impeccable this complaint loses much force. However that is because the primary test of a decision maker is, or should be, the decision itself. On the other hand, where, as here, the complaint is made that the award is defective in a number of respects, and – where some of those complaints are upheld – that may add force to the complaint in relation to sleeping. To take but one example, the Appellant here complains that the Arbitrator addressed the issue of delay without adverting to the evidence of Mr Johnson or permitting him to be called. The Council complained that the Arbitrator did not refer to the agreement itself evident on the transcript setting out the terms upon which Mr. Johnson might have to be called. To put it at its lowest, it seems to me that the complaint gains some support from the fact that the Arbitrator may have been asleep on occasions during the hearing: by the same token the fact that the Arbitrator appears to have been in error on this issue, adds a dimension to the complaint of sleeping. Thus I am left somewhat unsatisfactorily, with the impression that this was a reasonably serious matter in the course of the arbitration, and that it cannot be excused entirely by reference to the availability of a transcript, or by the reasoning contained in the judgment in R v Betson.

The second issue raised by the Contractor in this regard is the fact that when these proceedings were commenced, the Arbitrator was named as the second Defendant. It appears that he contacted the solicitors for the Contractor and asked them to enter an appearance on his behalf purely it was said as a legal clerking service by which I understand it to mean, that it was not intended that he would take a substantive part in the proceedings, or that the solicitors would act for him in doing so. The Arbitrator then contacted the solicitors for the Council by telephone to ask them if they had any objection to this arrangement.

In my view, this was an undesirable procedure. I cannot conceive of the circumstances in which it would be appropriate for an Arbitrator to give even the surface appearance of cooperation or alliance with the lawyers for one of the parties and particularly so in the context of a challenge to the award and especially when one of the grounds of the challenge involved the conduct of the Arbitrator. If this matter ended there I would have little hesitation in holding that this conduct violated the principle established in The State (Hegarty) v Winters [1956] IR 320.

However, the matter does go somewhat further. It appears (and was conceded) that the solicitors for the Council when contacted by the Arbitrator indicated that they had no objection to the solicitors for the Contractor entering an Appearance on behalf of the Arbitrator. This may have been an exercise of politeness, which is normally a virtue to be encouraged. However if so in this case it was in my opinion misplaced courtesy , certainly if the Council intended to rely on this matter to justify the future removal of the Arbitrator something which was already squarely in issue in these proceedings. In my view, it would have been more appropriate for the Council to respond that they did object to even the appearance of a relationship between the Arbitrator and the Contractor. Once again therefore, the factual situation is less than satisfactory. If this ground stood alone it would not in my view justify removing the Arbitrator.

It is necessary therefore to deal with the last argument raised by the Contractor. It was argued that it was inappropriate to seek to put together two different incidents themselves perhaps insufficient on their own merit to justify removal to argue that cumulatively they did justify such removal. In this regard, the Contractor relied on the observations of Colman, J. in Pamphilos (2002) 2 Lloyd’s Rep 681-690 where he said:


“I further reject the submission that even if none of these matters represented a serious irregularity, when taken in isolation, they do in aggregate amount to serious irregularity. This argument is misconceived. Once it is concluded that none of the matters alone amounted to an irregularity, it is logically untenable to derive an irregularity from those same matters in the aggregate.”

This observation was adopted with approval by Ramsay, J. in London Underground Ltd v City Link Telecommunications Ltd (2007) EWCH 1749 but with a qualification:

“Of course there may be facts which show that the irregularities combined become serious or can contribute to cause a substantial injustice, but absence such facts, I do not consider that a party can use multiple non serious irregularities or multiple irregularities which do not cause serious injustice to arrive at a serious irregularity or substantial injustice by aggregation.”

There is an attractive clarity in this argument. However, I am not convinced that it is just as compelling as the Contractor submits. There are areas of the law where this logic applies. For example in the law of evidence if any one incident itself does not amount to corroboration, then the incident cannot be used with another incident so as to provide such corroboration. Here however, the issue is not just as clear cut. There is, as I have discussed earlier, a qualitative element to the determination the court is obliged to make. It is not simply that there is an error, but that that error is so fundamental as to lead to a conclusion that a decision cannot stand. It does not seem to me to be absolutely impossible that the series of errors themselves individually not fundamental could nevertheless reach the point where it could be said that the decision could not be allowed to stand, and in my view, the qualification introduced by Ramsay, J. in the Citylink case recognises this.

In any event the logic cannot in my view be applied to the question of whether an Arbitrator should be removed where a party has justifiably lost confidence in him or her. It seems to me both as a matter of logic and human experience, that it is entirely possible that an accumulation of incidents will lead to a conclusion that a party has justifiably lost confidence in the Arbitrator, where any one of those incidents on its own ought to be overlooked.

If these matters stood alone I would not have set aside the award on these grounds, either individually or cumulatively. If this type of challenge is to be made, then I think it is necessary to have addressed the matter with the Arbitrator and made serious efforts to make sure the arbitration can be completed to the satisfaction of all parties. If nonetheless a challenge is raised it seems to me, that the court should not be left to speculate on such an important matter, on the basis of conflicting affidavits. To do so would I think risk a serious injustice to someone. However, since I have already concluded that the Arbitrator misconducted the arbitration, in the technical sense of that phrase, and since that is it itself a ground for removal of an arbitrator under s.37 of the Arbitration Act 1954, I would remove the Arbitrator but on that ground alone. In the light of those orders it is not necessary to make any order of remittal. Accordingly, I conclude therefore that if in the light of this determination the parties cannot themselves resolve this long running dispute, then the arbitration will have to proceed before a new arbitrator.