Palmat NV v Bluequest Resources AG [2023] EWHC 2940 (Comm)
Facts:
In an LCIA arbitration, Bluequest Resources AG (“Bluequest”) sought payment of a quantity of liquid caustic soda due to it from Palmat NV (“Palmat”) pursuant to an agreement entitled “Sales Contract”. On the same date as that of the said contract, the parties had entered into another agreement entitled “Purchase Agreement” whereby Palmat would deliver a quantity of aluminium to Bluequest. The price agreed for the liquid caustic soda was USD 590 per dry metric ton, and the payment terms were “100% against aluminium metal delivery” under the Purchase Agreement. Through the conclusion of the two contracts, the parties were basically exchanging liquid caustic soda for aluminium.
Liquid caustic soda was shipped pursuant to the Sales Contract, but no aluminium was shipped within the period agreed in the Purchase Agreement. In the first place, the tribunal found that the two agreements were independent to each other and could not be read together as a single barter agreement. Having asserted that Palmat had neither delivered aluminium nor paid by cash for the liquid caustic soda it received, the tribunal gave Bluequest damages. It also awarded interest on arbitration and legal costs despite Bluequest not having claimed such. Pursuant to section 68 of the 1996 Arbitration Act, Palmat sought to challenge the award alleging multiple procedural irregularities, all of which were dismissed save for that in
respect to interest on arbitration and legal costs.
Held:
The Court found the tribunal was right to conclude that the cash price of the liquid caustic soda became payable where the shipment of aluminium had not taken place. Insofar as it concerns interest on arbitration and legal costs, the award was set aside. The Court found that interest had been awarded on arbitration and legal costs when Bluequest had not sought interest on either. According to the Court “it was…common ground that interest on arbitration and legal costs was not in play in the relevant sense at the final hearing.”
Turning to the rationale of the decision, the Court cited Popplewell J in Terna Bahrain Holding Company WLL v Al Shamsi [2012] EWHC 3283 (Comm) who said: “In order to make out a case for the court’s intervention under section 68(2)(a), the applicant must show: (a) a breach of section 33 of the Act; ie that the tribunal has failed to act fairly and impartially between the parties, giving each a reasonable opportunity of putting his case and dealing with that of his opponent, adopting procedures so as to provide a fair means for the resolution of the matters falling to be determined; (b) amounting to a serious irregularity; (c) giving rise to substantial injustice.” With those principles in mind, the Court said that “[r]elief under section 68 will only be appropriate where the tribunal has gone so wrong in its conduct of the arbitration, and where its conduct is so far removed from what could be reasonably be expected from the arbitral process, that justice calls out for it to be corrected.” Thus, he added “there will generally be a breach of section 33 where a tribunal decides the case on the basis of a point which one party has not had a fair opportunity to deal with.”
Further on this point, the Court cited Carr J in Obrascon Huarte Lain SA v Qatar Foundation for Education, Science and Community Development [2019] 2 Lloyd’s Rep. 559 saying: “It is enough if the point is “in play” or “in the arena” in the proceedings, even if it is not precisely articulated…”
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