[co-author: Sofie Gowran]
Arbitration awards rendered in arbitrations seated in England and Wales may be challenged in the English courts in only the limited circumstances set out in ss.67 to 69 of the Arbitration Act 1996 (the Act). Section 68 permits a party to challenge an award in circumstances where there was a serious irregularity affecting the tribunal, the proceedings or the award which has caused or will cause a substantial injustice to the challenging party.
In Seacrest Group Ltd (in provisional liquidation) v BCPR Pte Ltd & Another [2025] EWHC 3266 (Comm), the Commercial Court (Mr Justice Trower) recently considered a s.68 challenge to an arbitral award.
The decision provides useful guidance on the requirements for a successful s.68 challenge. More importantly, it serves as a clear reminder that parties should carefully consider pleading an alternative case, and that if it transpires that a party needs to amend its case, it should promptly apply to the tribunal for permission to do so.
The parties' cases
The dispute arose out of an English-law governed Investment Agreement dated 30 November 2018 (the Investment Agreement), pursuant to which BCPR Pte Ltd and Bangchak Corporation Public Company Ltd (together, BCP) invested in OKEA AS (a Norwegian company owned by an affiliate of Seacrest Group Ltd (Seacrest)). The Investment Agreement contained an arbitration agreement providing for disputes to be resolved by arbitration under the UNCITRAL Arbitration Rules (2021) (the UNCITRAL Rules) seated in London.
A key element of the dispute, which was referred to arbitration, concerned the calculation of a deferred compensation payment (DCP), driven largely by the value of OKEA shares over a 60-day pricing period ending on the four-year anniversary. A central issue was currency. Seacrest argued that the DCP calculation should be carried out in Norwegian krone (NOK) without conversion. BCP argued that the calculation had to be performed in US dollars (USD), requiring NOK inputs to be converted, and set out the conversion approach that it contended applied.
BCP's submissions in the arbitration set out a specific conversion approach (using an average USD/NOK rate over the 60-day pricing period). But, notably, Seacrest did not plead an alternative case setting out the conversion approach that would apply if it was wrong that the DCP calculation should be carried out in NOK. Further, in its reply, Seacrest framed the outstanding points of dispute in a way that did not include any dispute regarding exchange-rate methodology, appearing to accept that the approach adopted by BCP would apply in the event that Seacrest was wrong regarding the DCP calculation being carried out in NOK.
During the evidential hearing in the arbitration, the Tribunal made clear that, absent an application to amend, the parties would be held to their pleaded cases and should not introduce new issues in written closing submissions. It also asked various questions regarding the issue of exchange rates to be used to convert figures between USD and NOK.
New exchange-rate point raised in written closings
After the hearing, Seacrest sought to advance an exchange-rate case for the first time in its written closing submissions. It submitted that, if conversion from NOK to USD was required, the deemed sale price should be converted using the prevailing (spot) rate on the four-year anniversary (or, alternatively, on the date the DCP fell due), rather than the average NOK/USD rate over the 60-day pricing period as submitted by BCP.
The award and the Article 38 request
In its final award dated 27 September 2024 (the Award), the Tribunal found for BCP on the currency issue, holding that the currency of account was USD, not NOK. On the applicable exchange rate, it treated BCP's pleaded approach as common ground (by reference to the written submissions made by the parties during the course of the arbitration prior to the hearing) and did not expressly engage with Seacrest's point raised for the first time in written closing submissions.
Seacrest subsequently submitted a request to the Tribunal under Article 38 of the UNCITRAL Rules (which provides for computational, clerical and similar errors in awards to be corrected), requesting that the Tribunal correct the Award (the Article 38 Request). The basis for the Article 38 Request was that the Tribunal's failure to make any finding as to what exchange rate should be used to calculate the DCP amounted to an omission that could be corrected under Article 38.
After receiving submissions from the parties on the Article 38 Request, the Tribunal issued a decision in which it refused to make any correction to the Award (the Article 38 Decision). The reasons for the Tribunal's decision included: (1) there was no pleaded dispute as to the basis on which the exchange rate should be calculated – Seacrest had not put BCP's 60-day average approach in issue in the memorials; (2) the Tribunal had made clear that no new issues were to be raised in written closing submissions; (3) Seacrest should have applied to the Tribunal for permission to amend its case; (4) in the absence of any dispute raised by Seacrest prior to written closing submissions, the Tribunal was entitled to treat the issue of the applicable exchange rate as common ground; and (5) in any event, BCP's approach to the exchange rate was the appropriate methodology, meaning that the Tribunal would have decided against any correction in any event because any error would have made no material difference to the award.
Seacrest's s.68 challenge
Seacrest's challenge to the Award under s.68 of the Act was twofold: (1) it alleged that the manner in which the Tribunal determined the value of deferred consideration payable to Seacrest under the Investment Agreement constituted a serious procedural error under s.68(2)(a) of the Act (a failure by a tribunal to comply with its general duty under s.33 of the Act); and (2) it alleged that the manner in which the Tribunal handled a request by Seacrest under Article 38 of the UNCITRAL Rules for correction of the Award constituted a procedural irregularity under s.68(2)(b) of the Act (irregularities in the form of a tribunal exceeding its powers).
The Commercial Court's decision
The judge dismissed the s.68 challenge on two grounds:
a) No serious irregularity
The court accepted that Seacrest's exchange-rate submission was a significant new point raised for the first time in written closings. Given the Tribunal's procedural directions and the way Seacrest had pleaded its case in the memorials, it was not unfair for the Tribunal to proceed on the basis that the exchange-rate methodology was not in dispute unless and until Seacrest made a timely application to amend.
That conclusion was reinforced by Seacrest's own submissions in the arbitration: in its Reply it had positively identified the remaining issues in dispute, and the exchange-rate methodology point did not feature among them. It would also have been unfair to BCP for Seacrest to be permitted to advance a new case at the closing submissions stage without giving BCP a proper opportunity to object to any amendment and to respond to the new argument.
The court also rejected Seacrest's argument that the Tribunal's questions during the hearing opened the door to Seacrest to advance a new case on the applicable exchange rate. Properly read, the questions sought assistance on the narrow issue of the applicable rate on a given day, not permission to introduce a new issue about the period over which the exchange rate should be assessed.
Finally, the Tribunal's lack of express engagement in the Award with Seacrest's closing submissions on the applicable exchange rate did not, by itself, show that the point had been ignored. It was consistent with the Tribunal both: (i) applying its direction that no new issues could be raised in closing submissions without an application and permission; and (ii) having considered the passages relied upon and been unpersuaded.
b) No substantial injustice
Even if a serious irregularity had been shown, s.68 also requires the procedural irregularity to have caused substantial injustice to the applicant, meaning that the outcome might well have been different. The court held there was "no real doubt" that the result would have been the same, and said that this was "very clear" from the Tribunal's Article 38 Decision, which stated that any correction would have made no material difference to the Award because the Tribunal considered the 60-day average approach to be the appropriate methodology.
Article 38 Decision: not part of the Award, but still relevant
Seacrest argued that the court should disregard the Tribunal's Article 38 Decision because it did not form part of the Award. The court disagreed. It held that the Article 38 Decision could be taken into account when assessing substantial injustice, as admissible evidence of what the Tribunal would have decided if the exchange-rate point had been addressed.
Further, the Article 38 Decision did have legal effect because it was reached under a process agreed by the parties in accordance with the UNCITRAL Rules applicable to the arbitration, even though it did not form part of the Award.
Practical takeaways
- To bring a successful s.68 challenge, an applicant needs to show both a serious procedural irregularity and substantial injustice, i.e. that the outcome might well have been different had the procedural irregularity not occurred.
- Define the issues early and plead alternative positions where appropriate. If you run an all or nothing case and lose, you will have no fallback option to lessen the impact of your primary case failing and the tribunal may treat the other side's pleaded approach as common ground, particularly if your submissions support that interpretation.
- If a genuinely new issue emerges during the course of the proceedings or hearing, the safest course of action is to apply promptly to amend your case so that the other side has a reasonable opportunity to respond.
- Raising new points in written closing submissions, without seeking the tribunal's permission, is high risk because the tribunal may disregard them, particularly in circumstances where they have stated that no new points may be raised during or after the hearing.
- Decisions rendered by tribunals pursuant to post-award correction mechanisms, such as those in Article 38 of the UNCITRAL Rules, can take on more significance than a party may realise. Even if a decision rendered by a tribunal under such a mechanism is not part of the award, it may still have legal effect and be relevant as evidence of what the Award would have said in the counterfactual.
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