Background
Compagnia Italiana di Navigazione S.p.A. (CIN), the charterer of the sister vessels EUROCARGO CATANIA and EUROCARGO SICILIA, challenged two related London Maritime Arbitrators Association awards made in favor of their owner, Grimaldi Euromed S.p.A. The underlying disputes arose from materially identical bareboat charterparties and allegations that CIN had failed properly to maintain and repair the vessels or return them in the required condition.
The challenged portions of the awards concerned cavitation erosion and pitting in the vessels’ main-engine cylinder heads. The tribunal awarded Grimaldi €279,170 on the Catania claim and €506,945.74 on the Sicilia claim. CIN applied under section 68(2)(a) of the Arbitration Act 1996, alleging that the tribunal had permitted an unpleaded cylinder-head case, allowed a new “workaround” theory to emerge during the hearing, and decided the claims on an unpleaded negligence finding concerning the 30,000-hour engine overhauls.
The Court’s Holding
Mr Justice Saini dismissed both applications. The tribunal had applied the correct fair-warning test after extensive written and oral argument and had acted fairly in permitting Grimaldi to pursue the cylinder-head claims. The issue was already sufficiently in play: the claim materials included invoices relating to cylinder heads, CIN’s expert had addressed cavitation pitting and allowed the cost of replacing two heads, and CIN was permitted to submit further expert evidence during the hearing.
The “workaround” evidence was a permissible response to CIN’s expert evidence that the pitting resulted from a latent design defect, not an unfair new theory. Reading the awards as a whole, the tribunal had found a failure to manage, maintain, and repair the cylinder heads consistently with good commercial management practice—not liability based on an unpleaded negligence claim. Although the court identified an apparent oddity in the tribunal’s finding that the replacement pattern made the problem obvious by the time of the overhauls, revisiting that factual conclusion would amount to an impermissible merits appeal under section 68.
No serious irregularity was established. The court also held that, even if an irregularity had occurred, CIN had not shown substantial injustice: it had presented supplemental expert evidence, possessed and disclosed relevant maintenance records, called the obvious factual witness, and offered only speculation that earlier notice would have produced additional useful evidence.
Key Takeaways
- Section 68 is a due-process safeguard for extreme cases, not a route to appeal an arbitral tribunal’s factual or evidential conclusions.
- An issue need not be perfectly articulated in the pleadings if the opposing party received fair warning of its essentials and a reasonable opportunity to answer it.
- Serious irregularity and substantial injustice are separate requirements, and an applicant must establish both.
Why It Matters
The decision reinforces the English courts’ restrained approach to challenges alleging procedural unfairness in arbitration. Tribunals may resolve genuine issues on their merits when doing so is fair, particularly where the issue was already within the evidential arena and any potential prejudice was addressed through additional evidence and argument.
Parties cannot transform alleged factual errors or disagreements over the tribunal’s evaluation of expert evidence into section 68 challenges merely by characterizing them as pleading defects. A successful challenge requires a genuinely serious departure from due process and proof that the departure caused substantial injustice.