England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
(His Honour Judge Richard Seymour QC)

		Royal Courts of Justice Strand London WC2 Friday, 6th April 2001

1. LORD JUSTICE POTTER: I will ask Lord Justice Clarke to give the judgment of the court.
2. LORD JUSTICE CLARKE: This is an appeal from an order of His Honour Judge Seymour QC made on 1st November 2000 in the Technology and Construction Court, in which he set aside an interim award dated 31st March 2000 and made by John Phillips as arbitrator, and removed him for misconduct. The award had awarded £739,693.65 against the respondent. The judge also considered an application for permission to appeal against the award. He gave permission and, as we understand it, by agreement heard argument on the appeal and allowed the appeal.
3. For the avoidance of doubt I shall refer to the appellant in this appeal (who was the respondent before the judge) as "Moore" and to the respondent in this appeal (who was the applicant and appellant before the judge) as Miller.
4. The underlying dispute arises between Moore as subcontractor and Miller as contractor in connection with the construction of a bypass. During the course of the argument this morning on the appeal, the parties have compromised the appeal on the basis that the appeal will be allowed on certain terms. In these circumstances we would not ordinarily think it necessary to give any form of judgment. However, two aspects of the case have persuaded us that it is appropriate for us at least to say something. The first is the reputation of the arbitrator and the second arises from the fact that the judgment has been reported in [2001] Building Law Reports 10. We understand that it has been relied upon in other proceedings in support of applications based upon alleged misconduct of arbitrators.
5. The judge identified four principal grounds on which misconduct had been alleged against the arbitrator. The arbitrator was quite properly given an opportunity to comment upon them. As we read the judgment, the judge rejected the first three grounds and did not base his judgment on the fourth. In the light of the compromise, it is not necessary for us to say anything about the grounds, except this. The first ground alleged that the arbitrator decided to deal with the question of quantum in relation to the second of the issues before him without affording Miller an opportunity to make submissions on that question. It is to be noted that, perhaps not surprisingly, the application was not based upon any alleged prejudice to Moore as the respondent to the application, who is of course the appellant in this appeal. However, during the course of the argument before the judge it appears to have been suggested, either by the judge or perhaps by counsel for Moore, in riposte to something said by the judge, that Moore was or may have been disadvantaged by the arbitrator deciding the question of quantum in issue 2 without Moore having had an opportunity of making submissions about quantum.
6. The judge ultimately held that the way in which the arbitrator dealt with issue 2 amounted to misconduct and that the matter was so serious that only his removal was appropriate. He reached those conclusions by holding (1) that the question was whether, in the light of what occurred, a reasonable person would no longer have confidence in the arbitrator's ability to come to a fair and balanced conclusion if the matter were remitted, and (2) that Miller could rely upon misconduct, which did not cause prejudice to it but which did or may have caused prejudice to Moore, even though Moore was not complaining about the way in which the arbitrator dealt with issue 2.
7. It is not appropriate for us to express a final conclusion on these questions without hearing full argument but, both in fairness to the arbitrator and because of the reporting of the decision of the judge, we wish to state these conclusions on the basis of the material and submissions which were put before us before it was agreed that the appeal should be allowed. (1) It was not appropriate to make a finding of misconduct without at least giving the arbitrator notice of the ground upon which such a finding would or might be based. In this regard the following paragraph appears in Mustill & Boyd on Commercial Arbitrations, 2nd Edn, 553:

"Whenever an application is made to the court to set aside or remit an award on grounds of misconduct, 'technical' or otherwise, the notice of motion should be served on the arbitrator or umpire concerned. He may then either (a) take an active part in the proceedings or (b) file an affidavit for the assistance of the court or (c) take no action." We entirely agree. It follows that the arbitrator should have been given notice of the new ground on which it was suggested that he might have been guilty of misconduct.

(2) The evidence does not support a finding of misconduct, either on the basis found by the judge or on the fourth ground originally advanced by Miller. In these circumstances, we are of the view that nothing which occurred in this case reflects adversely on the arbitrator in any way at all.

(3) We have every confidence that this experienced arbitrator will be able to resolve the remaining matters fairly when they are remitted to him in accordance with the agreed order of the court.

(4) The question whether an arbitrator should be removed or the matter remitted to an arbitrator in the case of misconduct may well depend upon the answer to the objective question formulated by Mance LJ in Lovell Partnerships Northern Limited v A W Construction PLC (1996) 81 BLR 83, 99, namely: "... whether a reasonable person would no longer have confidence in the present arbitrator's ability to come to a fair and balanced conclusion on the issues if remitted."

8. It may be possible to imagine a case in which prejudice to the respondent to the application is a relevant consideration in answering that question, but it is difficult to do so, especially where, as here, the respondent is making no complaint about the arbitrator and accepting his decision in relation to the particular matters complained of.

(5) In any event, we are firmly of the view, based on the material that has been put before us so far, that this is not such a case.

Order: Appeal compromised on the basis that the appeal will be allowed on certain terms.