England and Wales High Court (Commercial Court) Decisions

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

		Rolls Building 7 Rolls Building Fetter Lane London EC4A 1NL
		24/06/2015

The Honourable Mr Justice Flaux :

Introduction and background

1. By an arbitration claim form dated 20 October 2014, the claimant (to which I will refer as "Damen") applies to set aside the Award of the arbitrator, Mr Patrick O'Donovan, dated 23 September 2014 pursuant to section 68 of the Arbitration Act 1996. The grounds for the application are that:

(1) Pursuant to section 68(2)(a) and/or (c) the delay in publishing the Award (of some 376 days after a three day hearing) was a failure by the arbitrator to comply with his general duties under section 33 of the Act and/or a failure to comply with the procedure agreed between the parties, clause 20 of the LMAA terms;

(2) Pursuant to section 68(2)(a) and/or (d) the arbitrator failed to deal with all of the issues put to him and/or failed to consider central issues and/or failed to take proper consideration of key evidence.

2. The dispute between the parties arose under a contract dated 19 December 2000 pursuant to which Damen agreed to build and The Marine institute ("TMI") agreed to purchase a multi-purpose research vessel subsequently named the CELTIC EXPLORER. The vessel's engines were not commissioned at Damen's yard in Romania, but the vessel was towed to Holland where commissioning of the engines took place. For the purposes of keeping the engines in position during the towage, additional distance plates ("ADPs") were fitted on either side of each engine. Those ADPs should have been removed during the commissioning of the engine but were not. Unbeknownst to TMI they remained fitted when the vessel was delivered to TMI in December 2002. Subsequently damage was found which necessitated repairs to the vessel at Falmouth in January and February 2008 and later at Galway in July and August 2008.
3. Clause 19 of the contract provided for disputes to be submitted to a single arbitrator in London pursuant to the terms of the London Maritime Arbitrators Association ("LMAA") and the parties appointed Mr O'Donovan. In the arbitration, TMI claimed against Damen that the failure to remove the ADPs was a breach of contract and claimed damages for that breach of contract consisting of (i) €1,195,444.10 in respect of inspections and remedial work and (ii) €856,000 in respect of loss of hire. By the time of the hearing, which took place over three days on 9, 11 and 12 September 2013, Damen had admitted that it was in breach of contract, but asserted that the presence of the ADPs had not caused the damage sustained. It put forward three potential causes of the damage, none of which was the fault of Damen: (i) misalignment caused by normal wear and tear of the flexi-mounts (which permitted movement of the engines whilst in service); (ii) failure to turn the engine when not in use; and (iii) some underlying problem which was the common cause or a common cause for both the damage observed in 2008 and subsequent damage observed in 2011, the root cause perhaps lying in the Trelleborg mounting system.
4. Both parties were represented at the hearing by leading counsel. Expert marine engineering evidence was called from Mr John Gibson of Brookes Bell for TMI and Mr Nicholas Chell of London Offshore Consultants, who had exchanged reports sequentially (Mr Gibson's report being produced first) and produced a joint memorandum. Both were cross-examined in detail. It should be noted at the outset that, although Mr Chell's evidence in his reports and orally dealt with the first two potential causes of the damage referred to in the previous paragraph, misalignment and failure to turn the engine, no evidence was led from him about the third potential cause, the common cause of the 2008 and 2011 damage, (notwithstanding that at [7.2] of his first report, Mr Gibson had expressed the opinion that there were differences between the damage noted in 2008 and that noted in 2011 and that there was no connection between the causes of the damage). The common cause point was not pleaded by Damen but was raised for the first time in his written opening submissions by Mr Vineall QC on behalf of Damen. He cross-examined Mr Gibson about it at some length and, throughout, Mr Gibson maintained his opinion that the damage in 2011 was significantly different from the damage in 2008 and not caused by the same problem. Damen not having led any evidence from Mr Chell on the common cause theory, Mr Hill QC on behalf of TMI understandably did not cross-examine him about it.
5. It was not until more than five months after the end of the hearing that, on 24 February 2014, Mr O'Donovan emailed the parties to update them on the likely date of publication of the award which he envisaged would be in the second half of March. Neither party had chased him in the meantime, nor did they react to this email. A further two months passed until the arbitrator sent a further email on 29 April 2014 saying his earlier indication had been over-optimistic, but he was confident of publishing his Award in the week of 12 May 2014. On 20 May 2014 he wrote again apologising for the delay and saying he was making good progress and hoped to publish the following week, which seems to me to be a fair indication that he had started writing the Award by then.
6. However, he did not publish the Award the following week and wrote again on 3 June 2014, saying he envisaged publishing the following week or at the latest early in the week after that. On 30 June 2014, he emailed saying the Award was substantially drafted, but he was in a hearing and would be unable to finalise it that week but would do so the following week. TMI's solicitors responded asking the arbitrator if he could provide them with a figure for the costs of the Award but did not comment on the delay. On 28 July 2014, he emailed again saying he had hoped and expected to publish the Award before going on holiday the following weekend but that had not proved possible and he now envisaged publishing shortly after his return on 13 August 2014. On 5 August 2014, his assistant corrected the date for his return to 20 August 2014.
7. However, the Award did not appear shortly after his return from holiday and, on 28 August 2014, he emailed to say he was back in harness after the holiday and would publish the Award the following week. He did not. On 5 September 2014 he emailed again apologising that he would not publish that week, but stating he would definitely do so by the end of the following week. Again he did not do so and, on 16 September 2014, emailed saying he was in a hearing but would publish by the end of the week. On 23 September 2014, he published the Award and informed the parties by email apologising again for the delay in doing so. At no stage had either party chased the Award or complained about the delay.
8. For reasons which I elaborate later in the judgment, delay in publishing an Award is not in itself a ground of serious irregularity under section 68(2) of the Arbitration Act, because, without more, the delay will not have caused the applicant serious injustice. There must be something else, for example that the delay has led to a failure to deal with issues under subsection (2)(d). However, it does not follow that extensive delay, let alone inordinate delay of twelve months in publishing an Award, should be permissible. The arbitrator has not provided any explanation for this delay, other than on occasions in the emails suggesting it was due to the pressure of other work. If that is the explanation, then it is no excuse. If, because of pressure of work, an arbitrator cannot produce an Award for many months, then the solution is take on fewer appointments to ensure that Awards can be produced within a reasonable time of the conclusion of the hearing. Clause 20 of the LMAA terms provides that the Award should: "normally be available within not more than six weeks from the close of the proceedings". Whilst that is not intended to be an immutable rule, in a normal case, of which this was one, LMAA arbitrators should be aiming to produce Awards in that timescale and certainly not exceeding it to the extent that the arbitrator did in this case.
9. By the Award the arbitrator found that all the loss and damage claimed was caused by Damen's breach of contract and negligence. He provided 30 pages of Reasons supporting that conclusion. After the award was published, Damen's solicitors wrote on 20 October 2014 asking the arbitrator to correct the Award and provide further reasons pursuant to section 57 of the Arbitration Act in respect of various issues with which it was contended the arbitrator had not dealt in his Reasons. In his email response on 27 October 2014, the arbitrator said that he did not consider further Reasons were necessary or appropriate and he rejected the criticisms that Damen had made of the Award.
10. It is against this background that Damen brings its section 68 application. Before setting out the arbitrator's conclusion and reasoning in more detail I propose to summarise the applicable legal principles.

Legal principles applicable to section 68 applications

11. Section 68 of the Arbitration Act 1996 provides, inter alia, as follows:

"Challenging the award: serious irregularity.

(1)A party to arbitral proceedings may (upon notice to the other parties and to the tribunal) apply to the court challenging an award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award.

A party may lose the right to object (see section 73) and the right to apply is subject to the restrictions in section 70(2) and (3).

(2)Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant—

(a) failure by the tribunal to comply with section 33 (general duty of tribunal);

(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction: see section 67);

(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties;

(d) failure by the tribunal to deal with all the issues that were put to it;

(e) any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award exceeding its powers;

(f) uncertainty or ambiguity as to the effect of the award;

(g) the award being obtained by fraud or the award or the way in which it was procured being contrary to public policy;

(h) failure to comply with the requirements as to the form of the award; or

(i) any irregularity in the conduct of the proceedings or in the award which is admitted by the tribunal or by any arbitral or other institution or person vested by the parties with powers in relation to the proceedings or the award.

(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may—

(a) remit the award to the tribunal, in whole or in part, for reconsideration,

(b) set the award aside in whole or in part, or

(c) declare the award to be of no effect, in whole or in part."

12. The researches of counsel have not disclosed any decision under the Act where delay in publishing the Award has amounted to serious irregularity. Mr Timothy Hill QC for TMI suggested that the reason for this was very simple. Not only is delay in producing the Award not one of the kinds of "serious irregularity" listed, but delay in producing the Award is dealt with elsewhere in the Act in section 24 headed: "Power of Court to remove arbitrator" which, so far as relevant, provides as follows:

"(1) A party to arbitral proceedings may (upon notice to the other parties, to the arbitrator concerned and to any other arbitrator) apply to the court to remove an arbitrator on any of the following grounds—

…

(d) that he has refused or failed—

(i) properly to conduct the proceedings, or

(ii) to use all reasonable despatch in conducting the proceedings or making an award,

and that substantial injustice has been or will be caused to the applicant."

13. Mr Hill submitted that, if Damen had wished to complain about late production of the Award, its remedy was to apply to have the arbitrator removed under section 24 before the Award was published, but that delay in producing the Award would not amount to serious irregularity under section 68. I cannot accept that submission. The first head of serious irregularity under section 68(2) is failure to comply with the general duty under section 33. One of the aspects of that general duty under section 33(1)(b) is "avoiding unnecessary delay" which it seems to me would encompass delay in publishing an Award, so that on the face of it, unnecessary delay such as in this case is capable of amounting to a serious irregularity. However, more problematic for Damen is the question whether the delay has caused or will cause substantial injustice. I return to that question below.
14. Damen also submitted that the delay amounted to failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties within section 68(2)(c), here the LMAA terms and, specifically, clause 20. It seems to me to be a distortion of language to describe that provision as "the procedure agreed between the parties" and, in any event, as I have said, the provision is not an immutable rule as to when an Award must be published. However, even if that analysis were wrong and the delay was a failure within sub-section (2)(c), the problem Damen faces is still one of showing that the delay, without more, has caused substantial injustice.
15. The legal principles applicable in cases where the alleged serious irregularity is failure to deal with the issues were recently usefully summarised by Akenhead J in Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC):

"(a) Section 68 reflects "the internationally accepted view that the Court should be able to correct serious failures to comply with the 'due process' of arbitral proceedings: cf art 34 of the Model Law" (see Lesotho Highlands Development Authority v Impregilo SpA [2005] UKHL 43, Paragraph 27); relief under Section 68 will be appropriate only where the tribunal has gone so wrong in the conduct of the arbitration that "justice calls out for it to be corrected." (ibid).

(b) The test will not be applied by reference to what would have happened if the matter had been litigated (see ABB v Hochtief Airport [2006] 2 Lloyd's Rep 1, paragraph 18).

(c) The serious irregularity requirement sets a "high threshold" and the requirement that the serious irregularity has caused or will cause substantial injustice to the applicant is designed to eliminate technical and unmeritorious challenges (Lesotho, paragraph 28).

(d) The focus of the enquiry under Section 68 is due process and not the correctness of the Tribunal's decision (Sonatrach v Statoil Natural Gas [2014] 2 Lloyd's Rep 252 paragraph 11).

(e) Section 68 should not be used to circumvent the prohibition or limitations on appeals on law or of appeals on points of fact (see, for example, Magdalena Oldendorff [2008] 1 Lloyd's Rep 7, Paragraph 38, and Sonatrach Paragraph 45).

(f) Whilst arbitrators should deal at least concisely with all essential issues (Ascot Commodities NV v Olam International Ltd [2002] CLC 277 Toulson J at 284D), courts should strive to uphold arbitration awards (Zermalt Holdings SA v and Nu Life Upholstery Repairs Ltd [1985] 2 EGLR 14 at page 15, Bingham J quoted with approval in 2005 in the Fidelity case [2005] 2 Lloyds Rep 508 paragraph 2) and should not approach awards "with a meticulous legal eye endeavouring to pick holes, inconsistencies and faults on awards with the objective of upsetting or frustrating the process of arbitration".

(g) As to Section 68(2)(d):

(i) There must be a "failure by the tribunal to deal" with all of the "issues" that were "put" to it.

(ii) There is a distinction to be drawn between "issues" on the one hand and "arguments", "points", "lines of reasoning" or "steps" in an argument, although it can be difficult to decide quite where the line demarking issues from arguments falls. However, the authorities demonstrate a consistent concern that this question is approached so as to maintain a "high threshold" that has been said to be required for establishing a serious irregularity (Petrochemical Industries v Dow [2012] 2 Lloyd's Rep 691 paragraph 15; Primera v Jiangsu [2014] 1 Lloyd's Rep 255 paragraph 7).

(iii) While there is no expressed statutory requirement that the Section 68(2)(d) issue must be "essential", "key" or "crucial", a matter will constitute an "issue" where the whole of the applicant's claim could have depended upon how it was resolved, such that "fairness demanded" that the question be dealt with (Petrochemical Industries at paragraph 21).

(iv) However, there will be a failure to deal with an "issue" where the determination of that "issue" is essential to the decision reached in the award (World Trade Corporation v C Czarnikow Sugar Ltd [2005] 1 Lloyd's Rep 422 at paragraph 16). An essential issue arises in this context where the decision cannot be justified as a particular key issue has not been decided which is critical to the result and there has not been a decision on all the issues necessary to resolve the dispute or disputes (Weldon Plan Ltd v The Commission for the New Towns [2000] BLR 496 at paragraph 21).

(v) The issue must have been put to the tribunal as an issue and in the same terms as is complained about in the Section 68(2) application (Primera at paragraphs 12 and 17).

(vi) If the tribunal has dealt with the issue in any way, Section 68(2)(d) is inapplicable and that is the end of the enquiry (Primera at paragraphs 40-1); it does not matter for the purposes of Section 68(2)(d) that the tribunal has dealt with it well, badly or indifferently.

(vii) It matters not that the tribunal might have done things differently or expressed its conclusions on the essential issues at greater length (Latvian Shipping v Russian People's Insurance Co [2012] 2 Lloyd's Rep 181, paragraph 30).

(viii) A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue (Fidelity Management v Myriad International [2005] 2 Lloyd's Rep 508, paragraph 10, World Trade Corporation, paragraph 19). A failure by a tribunal to set out each step by which they reach its conclusion or deal with each point made by a party is not a failure to deal with an issue that was put to it (Hussman v Al Ameen [2000] 2 Lloyd's Rep 83).

(ix) There is not a failure to deal with an issue where arbitrators have misdirected themselves on the facts or drew from the primary facts unjustified inferences (World Trade Corporation at paragraph 45). The fact that the reasoning is wrong does not as such ground a complaint under Section 68(2)(d) (Petro Ranger [2001] 2 Lloyd's Rep 348, Atkins v Sec of State for Transport [2013] EWHC 139 (TCC), paragraph 24).

(x) A tribunal does not fail to deal with issues if it does not answer every question that qualifies as an "issue". It can "deal with" an issue where that issue does not arise in view of its decisions on the facts or its legal conclusions. A tribunal may deal with an issue by so deciding a logically anterior point such that the other issue does not arise (Petrochemical Industries at paragraph 27. If the tribunal decides all those issues put to it that were essential to be dealt with for the tribunal to come fairly to its decision on the dispute or disputes between the parties, it will have dealt with all the issues (Buyuk Camlica Shipping Trading & Industry Co Inc v Progress Bulk Carriers Ltd [2010] EWHC 442 (Comm), paragraph 30).

(xi) It is up to the tribunal how to structure an award and how to address the essential issues; if the issue does not arise because of the route the tribunal has followed for the purposes of arriving at its conclusion, Section 68(2)(d) will not be engaged. However, if the issue does arise by virtue of the route the Tribunal has followed for the purposes of arriving at its conclusion, Section 68(2)(d) will be engaged.

(xii) Whether there has been a failure by the tribunal to deal with an essential issue involves a matter of a fair, commercial and commonsense reading (as opposed to a hypercritical or excessively syntactical reading) of the award in question in the factual context of what was argued or put to the tribunal by the parties (and where appropriate the evidence) (Ascot Commodities v Olam [2002] CLC 277 and Atkins, paragraph 36). The Court can consider the pleadings and the written and oral submissions of the parties to the tribunal in this regard.

(h) In relation to the requirement for substantial injustice to have arisen, this is to eliminate technical and unmeritorious challenges (Lesotho, paragraph 28). It is inherently likely that substantial injustice would have occurred if the tribunal has failed to deal with essential issues (Ascot, 284H-285A).

(i) For the purposes of meeting the "substantial injustice" test, an applicant need not show that it would have succeeded on the issue with which the tribunal failed to deal or that the tribunal would have reached a conclusion favourable to him; it necessary only for him to show that (i) his position was "reasonably arguable", and (ii) had the tribunal found in his favour, the tribunal might well have reached a different conclusion in its award (Vee Networks Limited v Econet Wireless International [2005] 1 Lloyd's Rep 192, paragraph 40).

(j) The substantial injustice requirement will not be met in the event that, even if the applicant had succeeded on the issue with which the tribunal failed to deal, the Court is satisfied that the result of the arbitration would have been the same by reason of other of the tribunal's findings not the subject of the challenge."

16. Mr Vineall QC accepts that in a normal case where section 68(2)(d) is invoked those principles apply, but submits that the position is different in cases of delay such as this. He submits that where there has been delay such as in this case, the Court can and should examine very closely and carefully the tribunal's findings and, in an appropriate case, set aside the Award and remit it, if necessary to a different tribunal. In support of that submission he relies by analogy on appellate decisions in cases where there has been an appeal from a judgment delivered after an inordinate delay or where there has been some serious procedural or other irregularity in the proceedings before the court of first instance within CPR 52.11(3)(b).
17. The first case he relied upon was the decision of the Privy Council in Cobham v Frett [2001] 1 WLR 1775, an appeal from a decision of the Court of Appeal of the British Virgin Islands to set aside a judgment of the court of first instance where there had been a delay of more than twelve months between conclusion of the trial and judgment. The grounds of appeal did not in fact include delay in producing the judgment but contended that the judge had misinterpreted the evidence (see 1782D in the judgment of Lord Scott of Foscote), so that this was an appeal on issues of fact. The Board allowed the appeal against the decision of the Court of Appeal. At 1783E-H Lord Scott stated:

"In their Lordships' opinion, a legitimate basis on which the Court of Appeal could assert the right to disagree with the judge's evaluation of the evidence and of the witnesses was absent. It can be easily accepted that excessive delay in delivery of a judgment may require a very careful perusal of the judge's findings of fact and of his reasons for his conclusions in order to ensure that the delay has not caused injustice to the losing party. It will be important to consider the quality of the judge's notes, not only of the evidence but also of the advocates' submissions. In the present case the judge's notes were comprehensive and of a high quality. As to demeanour, two things can be said. First, in their Lordships' collective experience, a judge re-reading his notes of evidence after the elapse of a considerable period of time can expect, if the notes are of the requisite quality, his impressions of the witnesses to be revived by the re-reading. Second, every experienced judge, and Georges J. was certainly that, is likely to make notes as a trial progresses recording the impressions being made on him by the witnesses. Notes of this character would not, without the judge's permission or special request being made to him, form part of the record on an appeal. They might be couched in language quite unsuitable for public record. In the present case, delay, with a consequent dimming of the judge's recollection of the evidence and of the witnesses' demeanour, was not a ground of appeal. In these circumstances it is, in their Lordships' opinion, impermissible to conclude from the fact of a 12 month delay that the judge had a difficult task, let alone an "impossible" one as Singh J.A. suggested, in remembering the demeanour of witnesses."

18. Mr Vineall QC also relied upon the decision of the Court of Appeal in Bond v Dunster Properties Limited [2011] EWCA Civ 455. In that case, judgment had been delivered some 22 months after the conclusion of the hearing. As in Cobham v Frett, the appeal was against the findings of fact. In a section of her judgment headed: "Standard of review on appeal against findings of fact in a seriously delayed judgment" Arden LJ said at [7]:

"The function, however, of the court on hearing this appeal is not to impose sanctions or to investigate the reasons why the delay occurred. The function of this court on this appeal, which is principally brought against the judge's findings of fact, is to consider whether any of those findings of fact should be set aside and a retrial ordered. Findings of fact are not automatically to be set aside because a judgment was seriously delayed. As in any appeal on fact, the court has to ask whether the judge was plainly wrong. This high test takes account of the fact that trial judges normally have a special advantage in fact-finding, derived from their having seen the witnesses give their evidence. However there is an additional test in the case of a seriously delayed judgment. If the reviewing court finds that the judge's recollection of the evidence is at fault on any material point, then (unless the error could not be due to the delay in the delivery of judgment) it will order a retrial if, having regard to the diminished importance in those circumstances of the special advantage of the trial judge in the interpretation of evidence, it cannot be satisfied that the judge came to the right conclusion. This is the keystone of the additional standard of review on appeal against findings of fact in this situation. To go further would be likely to be unfair to the winning party. That party might have been the winning party even if judgment had not been delayed."

19. After a careful analysis of the evidence and the judge's findings, Arden LJ went on to find that the delay in delivering the judgment did not render his conclusions on the issues on appeal unsafe. Longmore LJ and Lord Neuberger MR agreed. At [119] of his judgment, the Master of the Rolls said:

"…it seems to me clear that, as a matter of good sense and authority, even a long delay such as has occurred in this case will not automatically invalidate or even undermine the judgment when it is eventually produced, although it must cause an appellate court to look very critically at the judgment. In the present case, I agree with Arden and Longmore LJJ that it is clear from the contents of the judgment, the grounds on which the Judge decided the issues, and the full and clear notes which he made, that the long delay in producing the judgment is not a good ground for allowing Mr Bond Senior's appeal, and that, once that ground is disposed of there is no other basis for challenging the Judge's conclusion."

20. The other decision of the Court of Appeal upon which Mr Vineall QC particularly relied was Crinion v IG Markets Ltd [2013] EWCA Civ 587. That was not a case of delay in producing a judgment, but a case where the basis for the appeal was that almost all the judge's judgment was "cut and pasted" from one side's counsel's submissions which he had received in Word and revised it to include some, but not much material of his own. The appellants' argument was that the judgment created the impression that the judge had abdicated his core judicial responsibility to think through and decide the issues for himself and that he had failed to address their case, which amounted to a serious procedural irregularity causing the decision to be unjust. However, the appellants' counsel refused to be drawn as to whether the decision was in fact right on the merits.
21. Mr Vineall QC evidently relied on this case as another example of the Court of Appeal examining the judge's findings carefully where there has been what appears to be a procedural irregularity. Having done so, they dismissed the appeal. At [17]-[18] Underhill LJ said:

"17 However, to say that the judgment was defective, even seriously so, is not necessarily to say that there has been an injustice which requires the appeal to be allowed. The judgments in the three cases considered by this Court in English were very seriously defective, but the Court was able in the end, by careful analysis of the judgment in the context of the evidence and submissions made, to satisfy itself that the judge had in each case properly performed his or her judicial function. Likewise in this case, if it is possible to demonstrate that, whatever the first impression created by the way he constructed his judgment, the Judge did in fact carry out a proper judicial evaluation of the essential issues and did not simply surrender his responsibility to counsel, then the judgment should stand. This involves no qualification of the principle that justice must be seen to be done; but in deciding whether that is so it is necessary, at least in a case like this, to go beyond first impressions.

18 In the end, and not without some hesitation, I have come to the conclusion that the judgment in this case does show, when examined carefully in the context known to the parties, that the Judge performed his essential judicial role and that his reasons for deciding the dispositive issues in the way that he did are sufficiently apparent. I take the sections of his judgment in turn."

22. Underhill LJ then went on to examine carefully each section of the judgment. Longmore LJ at [42]-[43] said this:

"42 In these days of written final submissions and computer literacy it must be tempting for a judge who has formed a clear view of a primarily factual dispute to frame his judgment by lifting large parts of the written submissions of the party he has decided should win and incorporating them in his judgment. But to do so without (or with only minimal) acknowledgment and without making reference to the submissions made by the other side inevitably leaves a deep sense of grievance with the losing party. He or she will understandably feel that the judge has never properly engaged with the case when forming his judgment.

43 It also puts this court in a position of considerable difficulty because it has to make a detailed examination of underlying factual material to see whether the judge has truly engaged with the losing party's case when the judge could easily have shown that he had so engaged, by reciting the main points made by the losing party and stating why he rejects them. Having made that detailed examination, all of us are satisfied that the judge has in fact engaged with the defendants' cases and has rightly seen that they have no substance; it would therefore serve no purpose to order a new trial before a different judge."

23. It seems to me that there is a fundamental problem with the analogy which Mr Vineall QC seeks to draw with those appellate decisions. Damen's solicitor said in terms in her witness statement in support of the section 68 application, that the application was not an attempt to challenge the arbitrator's findings of fact. In contrast, in those cases of appeals against judgments, the appellate court was being invited to examine closely the findings of fact either (in Cobham and Bond) because the appeal was against the findings of fact or (in Crinion) because it was being said that the judge had not engaged with the losing party's case in the findings he had made. It was open to and indeed necessary for the appellate court to examine closely the findings of fact. In contrast, in section 68 cases, the Courts have said time and again that it is not possible for an applicant to use the section to attack findings of fact made by the tribunal.
24. It seems to me that the furthest the analogy with the appellate decisions on which Mr Vineall QC relied can be taken on a section 68 application is that, in a case of lengthy delay between the hearing and the Award, the Court might be more likely to subject the reasons to a close analysis to check that the arbitrator has dealt with all the issues put before him. However, if that analysis reveals that he has dealt with all the issues, how he has dealt with them, whether well or badly, is irrelevant on a section 68 application. As I said in my judgment in Primera Maritime (Hellas) Ltd v Jiangsu Eastern Heavy Industry Co Ltd [2013] EWHC 3066 (Comm); [2014] 1 Lloyd's Rep 255 at [40-[41]:

"…Once it is recognised that [the tribunal] has dealt with the issue, there is no scope for the application of section 68(2)(d). As Mr Dunning correctly put it, once it is recognised that the tribunal has "dealt with" the issue, the sub-section does not involve some qualitative assessment of how the tribunal dealt with it. Provided the tribunal has dealt with it, it does not matter whether it has done so well, badly or indifferently.

41 It is wrong in principle to look at the quality of the reasoning if the tribunal has dealt with the issue. This emerges clearly from the judgment of Thomas J (as he then was) in Hussman (Europe) Ltd v Al Ameen Development & Trade Co [2000] 2 Lloyd's Rep 83 at [56]:

'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.'"

25. Mr Vineall QC sought to overcome the fundamental obstacle that it is not open to an applicant on a section 68 application to challenge the arbitrator's findings of fact by submitting that, because something had gone seriously wrong with the procedure in this case which he said cried out for correction, when that was corrected by sending the case back to another arbitrator, it would be open to Mr Vineall QC to challenge the findings of fact and invite the new arbitrator to make different findings. That submission simply demonstrated that this application is exactly what Mr Hill QC characterised it as being in his skeleton argument, an impermissible attempt to challenge the arbitrator's findings of fact. I consider that there is no basis whatsoever for reaching the conclusion that this restriction on the scope of section 68 applications does not apply in cases where there has been inordinate delay in producing the Award.
26. Were the position otherwise, the obvious question is where would the line be drawn in terms of the length of delay in publication of an Award required before the Court would interfere and examine closely the findings of fact in the way in which Mr Vineall QC suggests. Would a delay of three or four months be enough? Would the position be different if the arbitrator had a valid excuse for the delay, such as illness or if the arbitrator were able to demonstrate that despite the delay, he had in fact written the part of his Award dealing with the evidence within a matter of weeks of the hearing? The reality is that there is no principled basis for the approach which Mr Vineall QC advocates.

The Award

27. Mr Vineall QC pointed out that much of the first ten pages of the Reasons reflected TMI's opening submissions, which is neither surprising nor exceptionable, since those sections set out an outline of the dispute, the contractual provisions, who had given evidence and TMI's case in outline. The Reasons then set out Damen's case in outline, derived from Damen's opening. There were then two sections headed "The relevant facts" and "Repairs" which Mr Vineall QC submitted was also mainly derived from TMI's opening. However, even if it were open to Damen to complain about the findings of fact (which it is not for the reasons I have given in the previous section), there was nothing untoward in any of those findings. In the next section of the Reasons, the arbitrator set out in turn a summary of the expert evidence in their respective reports of Mr Gibson and Mr Chell, their joint meeting by telephone and then their supplemental reports.
28. The next section of the Reasons is headed "Discussion and my findings". Although this is only three pages long, it is all the arbitrator's text and none of it is derived from either party's written submissions. He begins by noting the submissions by Damen that the burden was on TMI and the principle that where there are many possible theories and explanations, it is for the claimant to show that its explanation is the most likely. He then referred to the fact that Damen had criticised what was referred to as TMI's "Delphic pleadings" and "unclear expert evidence" and Damen's complaint about late production of finite element analysis ("FEA") evidence and about non-disclosure, evidently a reference to late disclosure by TMI of certain documents. The arbitrator then stated that these points were not accepted by TMI who complained that the common cause case was run for the first time in Damen's opening skeleton argument at the arbitration.
29. At this point, it is worth pointing out two matters. First, the FEA was produced by TMI after the joint meeting of experts at the behest of Mr Gibson, to address the fact that Mr Chell seemed to him to be unable to appreciate that the movement of the engines would be different in a dynamic situation such as would occur in service at sea from in a static situation which was all Mr Chell seemed able to contemplate. Mr Gibson had the FEA done, as he explained in his evidence, not to prove the figures used which he accepted were not necessarily accurate but by way of comparative analysis to prove that the movement of the engines was indeed different in the dynamic situation as he maintained. Second the late disclosure produced by TMI related largely to the 2011 damage and consisted of meeting notes and technical materials relating to that damage. There is some force in TMI's point that, until shortly before the arbitration, it was not obvious that Damen were putting the 2011 damage in issue, as the "common cause" theory only emerged in Mr Vineall QC's opening submissions. In this context, although Damen complained about the late disclosure, no application for any sort of adjournment to deal with it or for Mr Chell to consider it was made to the arbitrator.
30. At [78] to [81] of the Reasons, the arbitrator then dealt with the potential three causes put forward by Damen in these terms:

"78. Essentially, I had to decide whether, as the Claimants said, all of the loss and damage that occurred at Falmouth and then subsequently at Galway was caused by the Respondents' admitted breach of contract and negligence or whether any of the Respondents' potential three causes was correct, namely:

(i) misalignment caused by normal wear and tear of the Flexi-mounts;

(ii) failure to turn the engine when not in use; or

(iii) some underlying problem, or perhaps more than one problem (but in any event nothing to do with the ADPs) which was the common cause, or a common cause, for both sets of observed damage - the root cause perhaps lying in the Trelleborg mounting system.

79. Both experts were doing their best to assist the Tribunal. Nevertheless, I have to make a decision as to whose expert evidence was to be preferred. Having given the matter very careful consideration, I have concluded that Mr Gibson's evidence should be preferred. I consider that he was consistent throughout his reports and in oral evidence. It was also backed up by Finite Element Analysis (albeit evidence served late and criticised by the Respondents, which I thought overstated). The Respondents' expert case did, as the Claimants said, metamorphose.

80. I reject the three different cases put forward by the Respondents, namely normal wear and tear, false brinelling and common cause with 2011 and find as a fact that Mr Gibson's evidence is correct and that the damage to the crankshafts was caused by the ADPs being in place.

81. It follows from the above that (in principle) the removal of the ADPs, the removal and polishing of the port and starboard crankshafts and replacement of bearings and the realignment of all three engines at Falmouth were caused by the Respondents' breach of contract. It also follows that (in principle) the loss and expense of replacing the Flexi-mounts and Vulkan Couplings at Galway and the consequent necessary realignment of all three engines was caused by the Respondents' breach of contract. I say "in principle" because the precise quantum of the Claimants' loss is, of course, still to be determined."

31. The arbitrator then went on to dismiss at [82]-[84] allegations made by Damen about failure of TMI to mitigate its loss. He indicated at [85] that he had adjourned issues of quantum until after his determination of liability.

Delay

32. The first issue in relation to Damen's case on delay with which I need to deal is TMI's suggestion that Damen has lost the right to object to the delay because it failed to make any application to the Court under section 24 or at least, complain about the delay to the arbitrator before the Award was published. In my judgment there is nothing in this point. It is always a delicate matter for counsel or solicitors to raise with a judge or arbitrator when a long outstanding judgment or Award is going to be produced, for fear of causing offence. It seems to me wholly unreal to suggest that, by not making some complaint about delay before the Award was issued, Damen had lost the right to complain about the delay after it was produced.
33. As set out above, the inordinate delay in publishing the Award was capable of amounting to a serious irregularity because it was a breach of the arbitrator's general duty under section 33. However, Damen still has to show that that irregularity has caused or will cause it substantial injustice. In this context, Mr Vineall QC placed particular reliance on [90] of the judgment of Colman J in Vee Networks Ltd v Econet Wireless International Ltd [2004] EWHC 2909 (Comm); [2005] 1 Lloyd's Rep 192:

"It is unnecessary and in the circumstances undesirable for me to express a view as to whether the arbitrator came to the right conclusion, even if by the wrong route, or whether, had he ignored the 2003 amendments, he should have reached the same or a different conclusion. The element of serious injustice in the context of section 68 does not in such a case depend on the arbitrator having come to the wrong conclusion as a matter of law or fact but whether he was caused by adopting inappropriate means to reach one conclusion whereas had he adopted appropriate means he might well have reached another conclusion favourable to the applicant. Thus, where there has been an irregularity of procedure, it is enough if it is shown that it caused the arbitrator to reach a conclusion unfavourable to the applicant which, but for the irregularity, he might well never have reached, provided always that the opposite conclusion is at least reasonably arguable. Above all it is not normally appropriate for the court to try the material issue in order to ascertain whether substantial injustice has been caused. To do so would be an entirely inappropriate inroad into the autonomy of the arbitral process."

34. In order to satisfy that test of serious injustice, Damen still has to show that, but for the inordinate delay (which on this hypothesis amounts to the relevant "serious irregularity"), the arbitrator might well have reached a different conclusion more favourable to Damen. It seems to me impossible to satisfy that test unless Damen can show that there has in fact been a failure to deal with all the issues within section 68(2)(d). If the Award is otherwise unimpeachable and has dealt with all the issues, it makes no difference whether it was produced a month or twelve months after the hearing, since however long the Award has taken to produce, the applicant cannot show that it has caused or will cause substantial injustice. That is why delay on its own does not amount to serious irregularity. Furthermore, since for the reasons I have given, it is never open to an applicant under section 68 to complain about the findings of fact, it avails Damen nothing to criticise the findings of fact, even if there were anything in its criticisms, which, for the reasons set out below, there is not.

No failure to deal with the issues

35. In its application and evidence in support, Damen relied upon four grounds in relation to which it contended that the arbitrator had failed to deal with all the issues:

(1) Failure to deal with the "common cause" issue.

(2) Failure to deal with the FEA evidence.

(3) Failure to deal with the evidence of TMI's failure properly to maintain the engines.

(4) Failure to deal with Damen's case of contributory negligence.

By the time of the hearing the third and fourth grounds had been abandoned.

36. In his skeleton argument, Mr Vineall QC sought to introduce as a first "issue" with which the arbitrator had not dealt, a refinement on his "common cause" point, that the arbitrator had failed to deal with the issue as to whether there was misalignment between the engines and their alternators after the 2008 repairs and before the 2011 failure. However, this misalignment point is exactly that, a "point" not an issue, and even if the "common cause" theory was an issue (and as set out below, I do not consider it was) the misalignment point was no more than a sub-issue or a sub-sub-issue within that issue. In terms of what Mr Vineall QC described as the granularity of issues, this criticism for failure to deal with misalignment is exactly the sort of "salami slicing" of points in the case, which are not by any stretch of the imagination essential issues, of which the cases on subsection (2)(d) disapprove. In any event, on the basis of Mr Gibson's expert evidence, which the arbitrator expressly accepted, there was nothing in this point.
37. So far as the suggestion that the arbitrator had failed generally to deal with the common cause issue is concerned, that allegation is hopeless for a number of reasons. First, this was not on analysis an "issue" but at best a "sub-issue" of the main issue which was whether the 2008 damage was caused by the breach of contract and negligence of Damen. So, even if the arbitrator had failed to deal with it, that could not be the subject of a successful section 68 challenge.
38. However, whether it was an issue or not, the arbitrator has dealt with it. He notes the potential causes alleged by Damen, including this one, at [78] of his Reasons, then at [79] prefers the expert evidence of Mr Gibson whom he finds was consistent throughout his reports and in his oral evidence. Of course, it was in his oral evidence in cross-examination that Mr Gibson maintained his opinion that the 2011 damage was different from the 2008 damage and there was no common cause. At [80] the arbitrator then states that he rejects the three cases put forward by Damen, which of course include the "common cause" theory.
39. In the circumstances, it seems to me impossible to maintain the case that the arbitrator has failed to deal with the common cause theory. He clearly has dealt with it, albeit in short order. Mr Vineall QC's real complaint is that the arbitrator's reasoning on this issue, if contrary to the view I have expressed above it is an "issue", is not fuller and better expressed. I do not consider the complaint has any force since it seems to me likely that the arbitrator dealt with the point shortly because it did not merit more discussion. In truth, it was a counsel led point advanced by Mr Vineall QC with no expert evidence from his own expert to support it, which was roundly rejected by TMI's expert Mr Gibson, whose evidence the arbitrator preferred anyway, as he was entitled to, so that it is scarcely surprising if Mr O'Donovan gave it pretty short shrift.
40. However, even if it were possible to criticise the arbitrator for not having dealt with the common cause "issue" more fully than he did, that is no basis for a section 68 challenge. Once he has dealt with the issue, which he clearly did, it is not open to Damen on a section 68 application to criticise the quality of the reasoning: see the passage from my judgment in Primera Maritime case cited at [24] above.
41. Damen also complained that the arbitrator had failed to deal with the late disclosure made by TMI including various meeting note after the 2011 damage had occurred in which Mr Wardle, the Salvage Association surveyor appears to have had second thoughts about the cause of the 2008 damage. The short answer to this complaint is that it is not permissible on a section 68 application to seek to argue that the arbitrator has not dealt with a particular piece of evidence. This was a point which I emphasised in [49-[50] of my judgment in Primera Maritime:

"49 However, Mr Dunning correctly points out that it is beside the point whether the tribunal's conclusion on the evidence is correct. The claimants cannot seriously begin to suggest that the tribunal has not dealt with an issue and what this part of the application really is, is a scarcely veiled attempt to challenge the findings of fact of the tribunal which the claimants do not like. Even if the tribunal had overlooked a particular piece of evidence in reaching its findings of fact, that is not susceptible to challenge under section 68 or otherwise: see per Colman J in World Trade Corporation v C Czarnikow Sugar Ltd [2005] 1 Lloyd's Rep 422 at [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."

50 It is clearly not appropriate to use an application under section 68 to challenge the findings of fact made by the tribunal. If it were otherwise every disappointed party could say it had been treated unfairly by pointing to some piece of evidence in its favour which was not referred to in the Reasons or not given the weight it feels it should have been. That is precisely the situation in which the Court should not intervene. Matters of fact and evaluation of the evidence are for the arbitrators."

42. Furthermore, given that Mr Wardle did not give evidence and was not an expert in the case, whereas Mr Gibson was and he was clear in his evidence, despite sustained cross-examination, that the cause of the 2011 damage was different from the 2008 damage, there was nothing in this point. The arbitrator did not have to deal separately with the late disclosure if he accepted Mr Gibson's evidence, which he did.
43. The second ground on which Mr Vineall QC submitted that the arbitrator had failed to deal with an issue was that he had failed to deal with the FEA evidence. What this amounted to was a complaint that the arbitrator had not recorded and accepted Mr Vineall QC's criticisms of the FEA which Mr Gibson had commissioned. This point is hopeless. Even if this was an "issue" which it was not, let alone an essential issue, the arbitrator did deal with it when he found at [79] that Mr Gibson's expert evidence, which he accepted, was backed up by the FEA and that criticism of the FEA by Damen was overstated. Accordingly, the point made at [24] and [40] above would be equally applicable here.
44. In any event, even if the arbitrator had not dealt with the criticisms of the FEA evidence, this is territory which is expressly forbidden by the authorities. The statement in [50] of my judgment in Primera Maritime could not be more apposite in the present context. This is a classic example of a disappointed party saying it has been treated unfairly because its criticism of some piece of evidence has not been accepted and fully dealt with. This is indeed precisely the situation where the Court should not intervene and there is simply no basis for subverting that fundamental restriction on the scope of section 68 challenges in the case of delay.
45. Even if, contrary to the findings I have made, Mr Vineall QC could demonstrate that the arbitrator had failed to deal with an issue as he suggests, Damen still has to show that this has caused or will cause it substantial injustice. Applying the Vee Networks test set out at [33] above, Damen cannot show that the result might have been different, since the arbitrator has held that he accepted and preferred Mr Gibson's evidence. It is quite clear that, even if he were ordered by the Court to provide further Reasons and to deal with what Mr Vineall QC contends were "issues" with which he has not dealt, he would reach the same ultimate conclusion.

Conclusion

46. Although the delay in producing the award in this case was extremely regrettable, there is no basis for any suggestion that the arbitrator has failed to deal with the issues put before him or that the delay has caused or will cause serious injustice to Damen. This section 68 application is no more than an impermissible attempt to criticise the arbitrator's evaluation and analysis of the evidence and must be dismissed.