Section 68 Challenge: Understanding When A Tribunal Can Disregard A New And Unpleaded Case

This case is a reminder to raise and amend arguments in good time to avoid losing the opportunity to do so

In Seacrest Group Ltd v BCPR Pte Ltd [2025] EWHC 3266 (Comm), the English Commercial Court (Court) dismissed an appeal against an award brought under section 68 of the Arbitration Act 1996 (Act) (section 68 challenge) on the grounds of serious irregularity. Seacrest Group Ltd (Seacrest) alleged that it had suffered "substantial injustice" because the Tribunal had disregarded part of its written closing submissions disputing the correct exchange rate to be applied to the calculation of sums contested (Exchange Rate Issue). Seacrest further sought a declaration that the Tribunal's refusal to correct the Award did not bind the parties and had no legal effect. The Court found that the Tribunal was entitled to disregard the Exchange Rate Issue when making the Award, and that the Tribunal's refusal to correct the Award bound the parties and had legal effect.

Background

Seacrest and the Defendants (BCP) were parties to an investment agreement (Investment Agreement) in respect of BCP's investment into Seacrest's Norwegian affiliate. Following a dispute about (among other issues) the calculation of a deferred compensation payment (DCP), Seacrest commenced an arbitration against BCP under the UNCITRAL Rules.

The issues

The Exchange Rate Issue

Seacrest pleaded that the input to the DCP calculation ought to be in Norwegian Krone (NOK), while BCP pleaded that the input ought to be in US Dollars (USD) and supplied an NOK/USD exchange rate to be used. Seacrest did not plead a positive case in its memorials about an alternative NOK/USD exchange rate to be used. Indeed, Seacrest made further submissions in its Statement of Reply effectively stating that it did not dispute BCP's proposed NOK/USD exchange rate if the input ought to be in USD. Accordingly, in its Statement of Rejoinder, BCP treated the NOK/USD exchange rate to be used as common ground.

Consistent with the relevant procedural order, the Tribunal further clarified on the first day of the hearing that any new issues not included in the "original written submission[s]" by then could only be introduced via an application to amend the parties' cases (Direction). Without making any application, Seacrest disputed the NOK/USD exchange rate to be used in its written closing submission six weeks after the hearing. Subsequently, the Tribunal stated in the Award that "the currency of account for the DCP calculation is USD [and that the NOK/USD exchange rate] is common ground." The Award made no reference to Seacrest's closing submissions that proposed a different NOK/USD exchange rate to be used.

The Article 38 Issue

Around a week after the Award was handed down, Seacrest requested the Tribunal to make a finding as to the applicable NOK/USD exchange rate, and to correct the Award under Article 38 of the UNCITRAL Rules. However, the Tribunal refused to do so (Article 38 Decision) on the grounds that:

(i) "[t]here was no pleaded dispute as to the basis upon which the exchange rate should be calculated";

(ii) "no new issues were to be raised in the written closing submissions";

(iii) Seacrest ought to have applied to the Tribunal for permission to advance the Exchange Rate Issue (as a new case not previously pleaded);

(iv) the Tribunal was entitled to treat the NOK/USD exchange rate to be used as common ground where Seacrest failed to dispute the Exchange Rate Issue before its written closing submissions; and

(v) in any event, the Tribunal was "entitled to and did consider that the appropriate exchange rate to be applied ... was [as pleaded by BCP]", which means that it "would therefore have decided against correction in any event because any error would have had no material impact on the final award".

Decision on section 68 challenge on both issues

The Exchange Rate Issue

The Court found that the Tribunal was entitled to disregard the Exchange Rate Issue when making the Award. The general position is that a tribunal would be "guilty of a serious irregularity" if it fails "to deal with an issue which was put to the tribunal, and which would have a very significant impact on the amount to which the party concerned would otherwise be entitled, [which] is on the face of it obviously unfair and unjust" (applying RAV Bahamas Limited v Therapy Beach Club Inc [2021] UKPC 8 at [69]). However, the Court distinguished the present case from RAV Bahamas because:

(i) Seacrest's Exchange Rate Issue submission was raised "even later in the process than the oral submissions which were under consideration in RAV Bahamas"; and

(ii) "unlike in this case, there was no specific ruling by the arbitrator that no new case could be advanced in closing submissions [in RAV Bahamas]".

The Court also found that, on the facts of the case and regardless of the Tribunal's Direction on new issues, Seacrest should have applied for permission to amend its pleaded case in its Statement of Reply, and that Seacrest had had a reasonable opportunity to do so but had failed to do so.

Lastly, the Court found that there was "no real doubt that the Tribunal would have reached the same decision even if Seacrest had been permitted to address it on why it was correct on the Exchange Rate Issue", as evidenced by the Article 38 Decision.

The Article 38 Issue

The Court found that the Article 38 Decision bound the parties and had legal effect. The Court was entitled to take into account the Article 38 Decision when reaching its conclusion on the Exchange Rate Issue, regardless of whether that decision formed part of the Award (Margulead v Exide Technologies [2004] EWHC 1019 (Comm) at [46]). In other words, a correction decision such as the Article 38 Decision "will provide admissible evidence as to what the Award would have said in the counterfactual, i.e., if there had been no irregularity" (per Doglemor Trade Ltd v Caledor Consulting [2020] EWHC 3342 (Comm) at [53] to [54]).

The Court clarified that, while its decision on the Exchange Rate Issue was partly affected by the terms of the Article 38 Decision, that was not because the Article 38 Decision was itself part of the Award. Rather, it was because "the reasons for dismissing the Article 38 Request explained why any irregularity in the form of the Award or the approach adopted by the Tribunal to the Exchange Rate Issue did not itself cause any substantial injustice" (per Margulead and Doglemor).

Comment

The Seacrest judgment is a reminder to raise and amend arguments in good time to avoid losing the opportunity to do so. Parties should also be aware that the tribunal's decision to correct (or not to correct) an arbitral award – even though that decision does not form part of the award itself – may be taken into account by a court in subsequent proceedings brought to challenge the original award. In this case, the Article 38 Decision provided crucial evidence that no substantial injustice had been caused by the belatedly advanced submissions being found to be non-admissible.

The authors would like to thank Kevin Halim for his contribution to this post.

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