England and Wales High Court (Commercial Court) Decisions

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

		Royal Courts of Justice Strand, London, WC2A 2LL
		18/10/2004

The Hon Mr Justice Colman :

Introduction

1. This is an application under Section 68 of the Arbitration Act 1996 ("the 1996 Act") to remit to the Panel of three arbitrators of the Refined Sugar Association a final award dated 27 February 2004 whereby they awarded to the Claimants ("WTC") US$39,600 plus US$13,800 simple interest up to the date of the award. The respondent in the arbitration – defendants to this application – were C Czarnikow Sugar Ltd ("Czarnikow"). By a contract dated 10 April 1996 Czarnikow sold to WTC 10,000 mt of sugar comprising 7000 mt of Thai raw sugar and 3000 mt of Thai white sugar on CIFFO East African port terms. It was a term of the contract that WTC would make a US$350,000 deposit which was to stand as security for their performance. It was further a term of the contract that WTC would pay by means of a letter of credit to be opened, as the arbitrators found, prior to shipment. The arbitrators found that WTC did not open a letter in accordance with an extension of time granted by Czarnikow and that in failing to do so WTC was in repudiatory breach of the contract. They further held that Czarnikow accepted that failure as terminating the contract. Czarnikow sold the sugar to the buyers at a price below the contract price.
2. In the arbitration WTC claims that Czarnikow was in repudiatory breach in terminating the contract and claimed damages, asserting that the contract price was below the market price at the date of the breach and also claiming reimbursement of the US$350,000 deposit. Czarnikow alleged that the market price, as evidenced by its two substitute sale contracts, was below the contract price and claimed damages for breach which they said exceeded US$350,000. The main issues included whether the contract terms as varied included a requirement that a letter of credit should be opened by 21 June 1996 and what loss had been suffered by Czarnikow. WTC submitted that Czarnikow could have sold the sugar to substitute buyers at a higher price than was achieved.
3. After a paper hearing the arbitrators concluded that Czarnikow were entitled to treat the contract as terminated and that the contract price exceeded the market price to the effect that Czarnikow were entitled to damages for breach but that their damages were less than US$350,000. Accordingly, they awarded to WTC the amount by which their deposit exceeded Czarnikow's damages.

Threshold Points

4. It is submitted on behalf of Czarnikow that given that under Section 68(1) the right to apply under that section is subject to the restrictions in Section 70(2), this application is barred. Section 70(2) provides:

"An application or appeal may not be brought if the applicant or appellant has not first exhausted:-

(a) any available arbitral process of appeal or review, and

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

5. It is submitted that in the present case it was open to WTC to apply to the tribunal under Section 57(3) which provides:

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

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

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

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

6. WTC had failed to apply to the tribunal under (a) or (b). Accordingly, WTC was precluded from applying to remit the award under s.68 on the grounds of serious irregularity.
7. Investigation of the nature of the three groups of criticisms of the Award put forward as the grounds for this application and which are more fully discussed later in this judgment, demonstrates that they are all based on submissions that, in arriving at their conclusions on the facts, the arbitrators decided against the weight of the evidence. The applicants put forward particular features of the evidence in the witness statements and documents put before the arbitrators as grounds for the submission that the arbitrators failed to deal with all the issues put before them. In arriving at their conclusions as to certain material questions of fact they had not considered documents or other written evidence placed before them or had not attached sufficient weight to such documents or evidence.
8. I am not able to accept the submission that this kind of criticism falls within Section 57(3). The omission to attach weight or sufficient weight to particular evidence in arriving at a conclusion on a question of fact is, in my judgment, not a basis for deploying Section 57(3)(a). An award which determines a question of fact relevant to an issue to be decided and in doing so, gives weight to some evidence but fails to give weight to or even mention other evidence cannot normally be treated as containing any ambiguity at all. It is not the case that the award or the findings are capable of more than one meaning. The need for clarification does not arise, because the arbitrators have by definition arrived at a clear and unambiguous conclusion on the relevant question of fact. They are under no duty to deal with every possible argument on the facts and to explain why they attach more weight to some evidence than to other evidence. Unless their award is so opaque that it cannot be ascertained from reading it by what evidential route they arrived at their conclusion on the question of fact there is nothing to clarify. To arrive at a conclusion of fact expressly on the basis of evidence that was before them does not call for clarification for it is unambiguously clear that they have given more weight to that evidence than to other evidence.
9. In this connection, it is clear that arbitrators are not in general required to set out in their reasons an explanation for each step taken by them in arriving at their evaluation of the evidence and in particular for their attaching more weight to some evidence than to other evidence or for attaching no weight at all to such other evidence.
10. The starting point for the construction of section 57(3) is paragraph 58 of the Report of the Departmental Advisory Committee:

"The Court does not have a general supervisory jurisdiction over arbitrations. We have listed the specific cases where a challenge can be made under this clause. The test of "substantial injustice" is intended to be applied by way of support for arbitral process, not by way of interference with that process. Thus it is only in those cases where it can be said that what has happened is so far removed from what could reasonably be expected of the arbitral process that we would expect the Court to take action. The test is not what would have happened had the matter been litigated. To apply such a test would be to ignore the fact that the parties have agreed to arbitrate, not litigate. Having chosen arbitration, the parties cannot validly complain of substantial injustice unless what has happened cannot on any view be defended as an acceptable consequence of that choice."

11. It must not be forgotten that the facility under section 57(3) is made available to facilitate such limited supervisory jurisdiction as is provided for. This jurisdiction may well normally require that there should be available to the court the arbitrators' reasons for arriving at their conclusions on the issues in the reference which are free from clerical mistakes or errors arising from an accidental slip or omission and free from ambiguities, as provided for in Section 57(3)(a). Thus, for example, the right to apply under sections 67, 68 and 69 is by section 70(2) expressly made subject to the applicant's having first exhausted recourse under section 57. However, the ambiguities which are relevant for this purpose are those which go to the arbitrators' conclusions on those issues raised by the claim and defence and by any reply to the defence. Thus, in Torch Offshore LLC v. Cable Shipping Inc [2004] EWHC 787 (Comm), upon which Mr Simon Rainey QC, on behalf of Czarnikow, strongly relied, one of the issues before the arbitrator was whether a particular misrepresentation as to the strength of the deck of the vessel subsequently time chartered had induced the charterers to enter into the time charter. The charterers (Torch) alleged that they had been induced to enter into the charter by that misrepresentation. The owners put this in issue. The arbitrator did not mention this point in his reasons and it was impossible to tell what view he had taken. This was clearly potentially a failure to deal with an issue within section 68(2)(d). Cooke J. observed at paragraph 28:

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

12. It will at once be seen that it was unclear what, if anything, the arbitrator had concluded about the issue of inducement the resolution of which was essential in order to ascertain whether the charterers were entitled to rescind for misrepresentation. This judgment does not support the proposition that Section 57(3) can be used for the purpose of obtaining an explanation of the steps taken by the tribunal in arriving at its conclusion on facts relevant to essential issues. Nor does the judgment of H H Judge Havelock-Allan QC in Al Hadha Trading C v. Tradigrain SA [2002] 2 Lloyd's Rep 512, nor that of H H Judge Bowsher QC in Groundshire v. VHE Constructions [2001] BLR 395 support such a proposition.
13. Accordingly, if, which I do not accept, there were in the present case an ambiguity in the arbitrators' explanation for having reached their conclusion on certain of the facts relevant to the issues before them, this would not engage the obligation of WTC under Section 70(2) to invite the arbitrators to supply clarification or correct their award under Section 57(3)(a).
14. Further, there could be no basis upon which the criticisms of WTC could fall within Section 57(3)(b). An argument that by reason of the tribunal's making no mention of certain evidence relied on by a party as supporting a relevant finding of fact, there has been a failure to deal with a "claim" would be untenable. The word "claim" in that context does not mean a submission in support of a relevant question of fact. It means a claim for relief by way of damages, declaration or otherwise, such as would have to be pleaded.
15. Accordingly, Section 70(2) does not in this case operate as a bar to relief under Section 68.

Section 68(2)(d): General Principles

16. This provision is, in my judgment, designed to cover those issues the determination of which is essential to a decision on the claims or specific defences raised in the course of the reference. In Weldon Plant v. Commission for New Towns [2001] 1 All ER 264 (Comm), H H Judge Humphrey Lloyd QC observed at p279:

"….s 68(2)(d) is not to be used as a means of launching a detailed enquiry into the manner in which the tribunal considered the various issues. It is concerned with a failure, that is to say where the arbitral tribunal has not dealt at all with the case of a party so that substantial injustice has resulted eg. where a claim has been overlooked or where the decision cannot be justified as a particular key issue has not been decided which is crucial to the result. It is not concerned with a failure on the part of the tribunal to arrive at the right answer to an issue. In the former instance the tribunal has not done what it was asked to do, namely to give the parties a decision on all issues necessary to resolve the dispute or disputes (which does not of course mean a decision on all the issues that were ventilated but only those required for the award). In the latter instance the tribunal will have done what it was asked to do (or will have purported to do so) but its decision or reasoning may be wrong or flawed. The arbitral tribunal may therefore have failed to deal properly with the issues but it will not have failed to deal with them."

17. In Ascot Commodities NV v. Olam International Ltd [2002] LLC 277 Toulson J. said at p284:

"Nor is it incumbent on arbitrators to deal with every argument on every point raised. But an award should deal, however concisely, with all essential issues. One of the heads of serious irregularity recognised in s.68(2)(d) is 'Failure by the tribunal to deal with all the issues that were put to it'. The central point raised by Ascot on its appeal was that if the bills of lading were pledged as security, as appears on the face of the October 1998 contract, Olam's loss was not to be approached in the same way as if they were beneficial owners of the cargo. The point has, with respect, not been addressed."

18. In Hussman (Europe) Ltd v. Al Ameen Development & Trade Co [2002] 2 Lloyd's Rep 83 Thomas J. observed at p97:

"I do not consider that s.68(2)(d) requires a tribunal to set out each step by which they reach their conclusion or deal with each point made by a party in an arbitration. Any failure by the arbitrators in that respect is not a failure to deal with an issue that was put to it. It may amount to a criticism of the reasoning, but it is no more than that."

19. In Margulead Ltd v. Exide Technologies [2004] EWHC 1019 (Comm), I observed at paragraph 42:

"Deficiency of reasoning in an award is therefore the subject of a specific remedy under the 1996 Act. It is accordingly self-evident that:

(i) failure to deal with an "issue" under Section 68(2)(d) is not equivalent to failure to deal with an argument that had been advanced at the hearing and therefore to have omitted the reasons for rejecting it;

(ii) Parliament cannot have intended to create co-extensive remedies for deficiency of reasons one of which (Section 68) was a general remedy which might involve setting aside or remitting the award in a case of serious injustice and one of which (Section 70(4)) was designed to provide a specific remedy for a specific problem;

(iii) the court's powers under Section 68(2) being engaged only in a case where the serious irregularity has caused substantial injustice, the availability of the facility to apply for reasons or further reasons under section 70(4) would make it impossible to contend that any "substantial injustice" had been caused by deficiency of reasons."

20. The fact that Section 68(2)(d) is confined in its application to essential issues as distinct from the reasons for determining them should give rise no practical difficulties. If one simply approaches that provision by asking whether that which has not been dealt with is capable of being formulated as an essential issue of the nature of what would be included in an agreed list of issues prepared for the purposes of a case management conference if instead of an arbitration the matters were to be determined in court, the answer should normally be obvious.
21. With those considerations in mind I turn to consider the three specific grounds for this application.

Mitigation and the Cost of Insurance

22. Following their termination of the contract Czarnikow sold the sugar in two lots. They sold 3000 mt of white sugar on 1 July 1996 to Djama Omar Said at a price of US$380 per mt CIF Berbera on the mv AL BAKY which had arrived at Berbera on 1 or 2 July. The price was paid on 3 July. As the sale was on CIF terms Czarnikow had to take out insurance for US$1,254,000, at a premium of 1.5 per cent plus 0.25 per cent for war risks and 0.425 per cent for the vessel's age. Czarnikow sold the balance of 7000 mt of raw sugar on 10 July 1996 to Mohammed Enterprises (Tanzania) Ltd at a price of US$350 per mt CIF Dar Es Salaam. The price included insurance which Czarnikow purchased at 0.25 per cent plus 0.25 per cent war risks and 0.425 per cent age uplift on a cargo value of US$2,695,000. Czarnikow claimed as damages its loss on these resale contracts amounting to US$329,167.40 plus interest which brought the total to above US$350,000. They claimed, in consequence, that the deposit of US$350,000 made by WTC must be forfeited and was not returnable. WTC submitted that it was Czarnikow who were in breach in terminating the contract and claimed damages for loss of profit on a resale at US$405 per mt CIFFO Mombasa plus insurance and increased freight costs as well as the return of the deposit. Alternatively, Czarnikow had not sold at the best price available and had produced no evidence of its efforts to mitigate. They relied on sales which they claimed to have negotiated to a Mr Kones and to Premjee EA as a buyer from Czarnikow at no less than the contract price under WTC's contract with Czarnikow.
23. At paragraphs 159-163 of their Reasons the arbitrators found that there was no concluded contract between WTC and Mr Kones. At paragraph 163 they stated:

"In view of the evidence overall, we are not satisfied that there was a firm and binding contract with Mr Kones for the following reasons:

(a) we have not seen a contract;

(b) WTC on 15 July 1996 simply referred to an "offer" and withdrew it with no apparent consequences;

(c) WTC were still offering the cargo to other potential purchasers on 5 July 1996;

(d) no letter of credit was ever provided."

24. At paragraphs 164 to 171 the arbitrators reached the conclusion that there never had been a firm offer by Premjee to Czarnikow to pay for the cargo at the contract price. At paragraph 170-171 they stated:

"170. Having considered all of the evidence and the submissions, we find it difficult to make WTC and Premjee's version of events fit with the fax from Premjee EA to WTC of 10 July 1996. At that stage, Premjee EA's concern appeared to be to get the letter of credit from Mr Kones, and they said in this fax that they had until noon to do so. That is not consistent with Mr Mead having told Czarnikow the previous day that Premjee would pay for the documents and that the documents should be presented to RZB for payment.

Overall, on the evidence we are not satisfied that a formal offer was put forward by Premjee to Czarnikow to pay for the cargo at the Contract price. Indeed, given that it is Mr Mead's evidence that the discussions in which Premjee offered to buy the cargo took place over three days (9-11 July), it is extremely surprising that nothing was put in writing as might have been expected for a cargo worth some US$2.6 million."

25. And in rejecting WTC's whole case on failure to mitigate, the arbitrators said:

"We come to the conclusion that none of the alternatives other than those which were taken by Czarnikow were sufficiently firm to justify Czarnikow waiting any longer in reselling the cargo. Although there might have been what could loosely be called "interest" in the cargo, they appear to have been little more than hypothetical; the fact is that the cargo was distressed and we adopt what was said in the Banco de Portugal case to the effect that it is easy for the party in breach to criticise after the event. We see no reason why Czarnikow would wish to sell the cargo other than at the best realisable price and although the deposit would have given them some comfort, the absence of any evidence as to any other firm buying interest leads us to the conclusion that the prices obtained on the re-sales must be accepted as forming the basis for the assessment of Czarnikow's losses."

26. The reference to Banco de Portugal v. Waterlow & Sons Ltd [1932] AC 452 is to the passage at page 506 in the speech of Lord Macmillan:

"Where the sufferer from a breach of contract finds himself in consequence of that breach placed in a position of embarrassment the measures which he may be driven to adopt in order to extricate himself ought not to be weighed in nice scales at the instance of the party whose breach of contract has occasioned the difficulty. It is often easy after an emergency has passed to criticise the steps which have been taken to meet it, but such criticism does not come well from those who have themselves created the emergency. The law is satisfied if the party placed in a difficult situation by reason of the breach of a duty owed to him has acted reasonably in the adoption of remedial measures, and he will not be held disentitled to recover the cost of such measures merely because the party in breach can suggest that other measures less burdensome to him might have been taken."

27. In calculating the damages the arbitrators found that, in order to calculate the net resale price available to Czarnikow, it was necessary to deduct the cost of insurance which was 2.175% of 110 per cent of the contract price which totalled US$9.09 per mt. They observed:

"The insurance premium paid by Czarnikow was criticised by WTC, who submitted that they had been able to secure a premium of 1.4125% (although this was on the assumption that the vessel was not going to Berbera, in a war risk zone).

Looking at the matter overall, we do not regard the premiums paid by Czarnikow as unreasonable."

28. In Mr Jayprakash Panchmatia's witness statement in support of this application it is stated at paragraph 8 that the arbitrators overstated Czarnikow's recoverable loss because they had in effect done no more than accept the prices for which Czarnikow actually disposed of the sugar. He continues:

"It was WTC's case that there was more evidence on that point than the tribunal appears to have considered and that it was in WTC's favour."

29. He emphasises that the arbitrators should have held not merely that Czarnikow might have sold at the prices negotiated with Kones and with Premjee EA but that they ought to have done so or at least at the available market price of which those sales were evidence. The sale by WTC to Mr Kones was indeed a binding contract and therefore good evidence of the market price. However, it was important that the arbitrators should also take into account the price at which buyers in the market showed interest as distinct from concluding a contract and they had failed to do so. The witness statement then lists at paragraphs 18 and 20 a number of documents before the tribunal which it relies on as showing respectively market interest and WTC's contemporaneous criticisms of Czarnikow's failure to respond to available purchase offers. Then at paragraphs 22 to 27 attention was drawn to the paucity of evidence of market value adduced by Czarnikow:

"22. The only evidence produced by Czarnikow in relation to market price or its own efforts to mitigate its loss was documentation (of a not particularly substantial nature) showing the two sales which is actually concluded – with Establissement Djama Omar Said for 3,000 tons of whites (pages 81 to 84 of JP2) and the Mohammed Enterprises Limited for 7,000 tons of raws (pages 88 to 90 of JP2).

23. The absence of evidence from Czarnikow is all the more surprising and perhaps indicative given the contemporaneous complaints by WTC which are evidenced in the correspondence referred to above.

24. One would have expected to see offers of sale or notes of Czarnikow's attempts to contract with other potential purchasers, perhaps along the lines of the note which William Rook said that he kept in respect of his conversation with WTC (described at paragraphs 16 and 17 of the Award). In the absence of evidence to the contrary, it must be inferred that Czarnikow did not contact well-known purchasers of sugar in East Africa, or even those suggested by WTC, such as E D & F Mann or Kakira Sugar of Uganda. Reference is made to the following documents previously before the tribunal.

a. WTC's fax to Czarnikow dated 13 July 1996 (serial number 96/4030/SP – pages 73 to 75 of JP2)

b. WTC's fax to Czarnikow dated 24 June 1996 (serial number 96/3915/SP pages 31 to 33 of JP2)

25. One would also have expected to see evidence of Czarnikow investigating the potentially more advantageous sale which might have been concluded with G Premjee. That Czarnikow was in contact with G Premjee was admitted by Czarnikow's witness, Mr Guy Toller, at paragraph 27 of his first witness statement (exhibited hereto at page 6 of JP6). This is confirmed in the statement of Barry Mead of G Premjee (exhibited hereto at page 5 of JP5), who also indicates that his attempts to contact Mr Toller and Mr Rook of Czarnikow appeared to be ignored.

26. Mr Mead was a witness independent of WTC and his statement was prepared some years before the arbitration took place. In these circumstances, I respectfully suggest that the tribunal should have considered the implications of what he said for Czarnikow's apparent failure to mitigate its losses.

27. It is also surprising that Czarnikow did not appear to seek a buyer in Kenya, where prices were likely to be better than in Somalia. Reference is made to the fax from Cargill Kenya Limited to Premjee EA (exhibited hereto at page 64 pf JP2), in which a price of 41.50 shillings per kilo is quoted CIFFO Mombasa. I believe that this would have equated to about US$418 per metric ton at the time."

30. These submissions were then the basis for the overall criticism at paragraph 28:

"It is my belief that WTC raised a good case to the effect that Czarnikow's resales were not made at the best price likely to be obtained in the market at the relevant time. In comparison, Czarnikow produced next to nothing. The tribunal however did not consider the relevance of these points apart perhaps from the very brief paragraph 172. It was most important for it to do so, since any increase in the notional market price with Czarnikow should have obtained would have lead directly to an increase in the amount of money which Czarnikow would have been ordered to repay to WTC."

31. These criticisms are essentially to the effect that the arbitrators failed to take into account evidence that was to be found in the witness statements and documents put before them and accorded undue weight to other evidence before them. The question that the arbitrators had to decide was what was the market price of the sugar at the relevant time. The dispute on the facts was as to whether and if so to what extent Czarnikow had proved that the market price was below the contract price. That went to the issue whether Czarnikow had suffered any loss caused by WTC's repudiatory breach of contract. In order to resolve that issue the arbitrators had to decide whether in selling the two parcels of sugar at the prices obtained, Czarnikow had failed to mitigate its loss and had sold below the true market price. However, whether the arbitrators accorded to any particular evidence more weight or less weight or no weight at all was not an "issue" within the meaning of section 68(2)(d). It was merely the process of resolving the issue of what loss, if any, had been suffered by Czarnikow.
32. Accordingly, none of the matters relied on by WTC can be said to be capable of being described as a failure by the tribunal to deal with issues that were put to it.
33. As to the cost of insurance, at paragraphs 29 to 34 of the witness statement, Mr Jayprakash Panchmatia criticises the Award for having concluded that the insurance costs born by Czarnikow were as high as they were. It is said that the arbitrators should have considered whether Czarnikow should have taken an assignment of WTC's insurance policy on the goods. Further, the tribunal did not take into account that Czarnikow's insurance costs were higher than those of WTC, a matter relevant to whether Czarnikow's costs were reasonable. Nor did they consider the benefit to be derived from the inclusion of the load and discharge port survey costs in WTC's premium but not in that of Czarnikow.
34. The criticisms all go to the tribunal not having expressly referred to or expressly considered evidence which was before them. However, examination of the relevant paragraphs of the Reasons shows that the arbitrators had indeed adverted to the evidence relied upon and had clearly regarded it as of little or no weight in deciding the main issue of loss before them.
35. For these reasons, there is no substance in the criticism that the arbitrators failed to deal with an issue put to them with regard to the cost of insurance.

The fax dated 10 April 1996

36. This document was relied upon by WTC before the arbitrators in the following context.
37. It was Czarnikow's case that the letter of credit was to be opened by WTC prior to shipment in accordance with those terms of the contract evidenced by documents entitled by the arbitrators "Written Terms". Those terms, in so far as material, were set out in paragraphs 24 to 26 of the Reasons as follows:

"24. The Written Terms provided for a price on the basis C&FFO Dar Es Salaam Tanzania, made up of three elements:

(a) the weighted average of the prices at which Czarnikow bought 197 lots of the May 1996 New York No. 11 contract, on buyer's executable orders;

(b) a premium of US$103 per MT for the raw sugar and US$113 per MT for the white sugar;

(c) the actual cost of freight paid by Czarnikow in chartering a vessel to ship the sugar to Dar Es Salaam Tanzania.

25. The Written Terms provided that pricing was to be completed two days before the expiry of the May 1996 No. 11 contract, and that shipment was to be during May 1996.

26. The Written Terms also provided for WTC to transfer by latest 15 April 1996 the sum of U$150,000 as a "non-returnable performance deposit" to Czarnikow's bank account. The Written Terms stated that this deposit "shall secure the contract" but that if the May 1996 New York No. 11 contract moved lower then the weighted average of the price of the sugar, Czarnikow would be entitled to call for adverse margin cover in the event that the difference exceeded US$50,000. For the balance of the Contract value, WTC were to open an irrevocable letter of credit through RZB Bank in London prior to shipment. A fully operable letter of credit was to be received before the seller would ship the sugar."

38. It was WTC's case that the Written Terms did not accurately set out the terms which had been orally agreed upon. Those terms were evidenced by a fax dated 10 April 1996 from WTC to its bankers, RZB in London. If that were correct, that would be material to WTC's submissions on the underlying issue whether WTC was, in the circumstances, under an obligation to open a letter of credit before shipment, their failure to do so having been accepted by Czarnikow as a repudiatory breach. In essence, WTC was advancing a case that they were not obliged to accept Czarnikow's nomination of a vessel unless Czarnikow had already effected a sub-purchase by a third party from WTC and further that shipment was not to be until end June/July.
39. This document was relied upon by WTC as accurately reflecting the terms of the contract agreed between them over the telephone, including Czarnikow's duty to procure a sub-purchase, of which no mention was made in the Written Terms relied on by Czarnikow.
40. The arbitrators therefore had to determine what the terms of the oral contract were by reference to contemporary documents containing inconsistent terms. In essence, the documents were therefore deployed as evidence of the terms of the agreement. The arbitrators accepted Czarnikow's submissions that the contents of the Written Terms were the best evidence of what had been agreed. Their reasoning is to be found at paragraphs 135 to 148 of their Reasons. At paragraph 140, having set out Czarnikow's submissions, they stated that they had considered carefully the fax of 10 April 1996 and observed firstly that they found it strange that a document on which WTC placed so much weight was not disclosed until their Reply Submissions were served, although it had previously been referred to in WTC's main witness statement. Secondly, they drew attention to three features of the fax which they regarded as "oddities". Those matters were all obviously material to the weight to be attached to the fax as evidence of the contract.
41. Then, at paragraph 141 they voiced their doubts as to the quality of that evidence:

"We regard the above matters as sufficient to cast doubt on whether the fax really did reflect what WTC thought they had agreed with Czarnikow. It may be that WTC wished to give RZB a general picture of what was agreed, but without being too specific and perhaps putting the Contract in a better light."

42. At paragraph 142 they went on to consider other factors, all of which were relevant to the quality of WTC's case on the 10 April fax and to Czarnikow's case on the terms agreed upon and they concluded at paragraph 148 that:

"… on the totality of the evidence and on the balance of probabilities that the Written Terms in all material respects reflected the agreement reached between the parties on 10 April 1996."

43. Upon this application it is submitted that the arbitrators failed to deal fully with all the issues on the question of the claimant's fax to RZB of 10 April 1996. The respects in which, it is submitted, the arbitrators failed to do so are set out in paragraphs 38 and 39 of the witness statement of Jayprakash Panchmatia. In paragraph 38 he draws attention to three respects in which he says that the arbitrators either took into account irrelevant matters or failed to take into account facts which were relevant to the question whether the fax was good evidence of the terms agreed upon or based their conclusion on erroneous factual assumptions. In paragraph 39 it is said that the arbitrators failed to consider one possible way in which WTC's conduct subsequent to 10 April was consistent with the terms stated in their 10 April fax. It is further submitted that the tribunal failed in evaluating the evidence to take into account four further documents.
44. These criticisms of the arbitrators were expanded in Mr Sailesh Panchmatia's second witness statement, paragraphs 24-30. These were directed to the arbitrator's doubts as to the authenticity of the fax and to whether any adverse inference should be drawn from the time at which it was disclosed and its original purpose vis-à-vis WTC's bank.
45. On analysis, these criticisms are all directed to asserting that the arbitrators misdirected themselves on the facts or drew from the primary facts unjustified inferences. Those facts are said to be material to an "issue", namely what were the terms of the oral agreement. However, each stage of the evidential analysis directed to the resolution of that issue was not an "issue" within Section 68(2)(d). It was merely a step in the evaluation of the evidence. That the arbitrators failed to take into account evidence or a document said to be relevant to that issue is not properly to be regarded as a failure to deal with an issue. It is, in truth, a criticism which goes no further than asserting that the arbitrators made mistakes in their findings of primary fact or drew from the primary facts unsustainable inferences.
46. Accordingly, even assuming that each of the criticisms of the arbitrators' reasoning advanced on behalf of WTC was well-founded, such mistakes and omissions could not fall within Section 68(2)(d).

The fax dated 3 June 1996

47. The Reasons (paragraphs 149 to 158) found that WTC were in breach by failing to put up a letter of credit prior to shipment but that Czarnikow had waived this breach by entering into an agreement with WTC under which time for providing the letter of credit was extended to 21 June 1996. This agreement was found to be made in the course of a telephone conversation on 3 June 1996 and its terms evidenced by WTC's fax timed at 1501 that day and confirmed by Czarnikow's fax sent in response. WTC then sent a fax at 1526 which stated that there would be a few days further delay. It was submitted on behalf of WTC before the tribunal that this subsequent fax evidenced the agreement between the parties. The arbitrators rejected that submission and therefore concluded that WTC's failure to open a letter of credit by 21 June 1996 was a repudiatory breach which Czarnikow were entitled to accept on the following day.
48. WTC criticises this reasoning on the grounds that WTC's second fax of 3 June was evidence in support of WTC's account of what was agreed about extension of the time for opening the letter of credit. In this connection, Mr J Panchmatia stated in his witness statement that it was unbelieveable that Czarnikow did not respond in order to challenge the contents of this fax in view of the fact that in his additional statement put before the tribunal, Mr Toller of Czarnikow had stated that he had seen that message. In Mr S Panchmatia's witness statement further complaint was made that the arbitrators had accepted Mr Toller's evidence as to why he had not responded to that message although it was put forward in a supplementary statement in addition to that which had been exchanged, that being an unfair way of receiving evidence because WTC could not afford to participate in an oral hearing in the course of which there could have been cross-examination of Mr Toller.
49. The question which the arbitrators had to determine was the date under the contract by which a letter of credit was to be opened. That went to the issue whether WTC were in breach on 1 July when Czarnikow treated the contract as terminated. Having decided that the original time for opening a letter of credit (prior to shipment) had passed and WTC's breach in failing to do so had been waived, the arbitrators had to decide whether, as alleged by Czarnikow, there was an agreement for the extension to 21 June. In addressing this question the arbitrators had to decide whether there had been an oral agreement to that effect. For this purpose they considered the messages which had passed between the parties on 3 June and decided that the first messages from Czarnikow and WTC on that day evidenced what had been agreed but that WTC's 1536 fax had not been capable of varying that agreement. The substance of the criticism by WTC is that the arbitrators were wrong to fail to give weight to that fax and not to conclude that it evidenced the oral agreement. In other words, they gave weight to one document rather than another as a source of evidence.
50. From this analysis, it is clear that the true complaint is not of a failure to address an issue but of the tribunal's evaluation of the evidence before it in the course of determining an issue. Such a criticism is, as I have already explained, outside the scope of Section 68(2)(d). There was therefore no serious irregularity in this respect under Section 68.

Conclusion

51. As appears from this judgment, none of the criticisms in the grounds for this application is on analysis directed to a failure by the tribunal to deal with an "issue" within the meaning of Section 68(2)(d). No other basis for remission for serious irregularity is relied upon. It follows that this application must be dismissed.