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Petition: Arbitration No.1 Of 2025 (Court of Session)
Factual and Procedural Background
The dispute concerned a repairing obligation in a commercial lease. The Plaintiff (the tenant in the underlying lease) challenged part of an arbitral award arising from arbitration commenced under Clause 16 of the lease. A part award dated 28 March 2025 had previously been the subject of an application to this Court seeking leave to appeal an alleged legal error; leave was refused. This opinion, delivered by Judge [Last Name] on 13 January 2026, addresses a subsequent challenge by the Plaintiff that there was a serious irregularity in the conduct of the arbitration. The specific contested point was described by the Plaintiff as the "Common Law Interpretation Argument" — a contention invoking the doctrine of mutuality of contract that, because the Defendant was alleged to have been in breach of its obligations, the Defendant could not enforce the tenant's repairing obligations. The procedural history before Judge [Last Name] included reference to the arbitration directions, the parties' written submissions, the hearing, the arbitrator's circulation of a draft part award on 4 December 2024, and post-draft "representations" submitted by the Plaintiff.
Legal Issues Presented
- Whether the matter asserted by the Plaintiff (the "Common Law Interpretation Argument") amounted to an "issue" for decision in the arbitration.
- Whether that matter had been "put to" the arbitrator for decision.
- If both answers are affirmative, whether the arbitrator failed to deal with that issue in the award.
- If such failure occurred, whether it caused substantial injustice to the Plaintiff (the Rule 68(2)(c) serious irregularity test).
Arguments of the Parties
Plaintiff's Arguments
- The Plaintiff characterised the omitted point as the "Common Law Interpretation Argument" and submitted it was essential to resolution of the dispute because, if accepted, it would render the tenant's repairing obligations unenforceable by reason of mutuality.
- Counsel for the Plaintiff relied on authorities (notably Secretary of State for the Home Department v Raytheon Systems Limited and Petrochemical Industries v The Dow Chemical Company) to submit that a matter is an "issue" where the whole of the claim could have depended upon its resolution and that fairness demanded it be dealt with.
- The Plaintiff argued the point had been advanced at the hearing (by reference to Napier v Ferrier) and was also raised in post-draft representations after the arbitrator circulated a draft award.
Defendant's Arguments
- The Defendant submitted the mutuality argument was not an issue identified for the arbitration and had not been put to the arbitrator in the pre-hearing materials or written submissions, which concerned the scope and interpretation of Clauses 6.1 and 6.21.
- The Defendant argued it was too late to raise the mutuality point after circulation of the draft award; the post-draft "representations" went beyond matters "about the draft" and attempted to open a new line of argument the arbitrator was not required to consider.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Arbitration Application No 1 of 2013, [2014] CSOH 83 | Serious irregularity appeals are a long-stop remedy reserved for extreme cases where the tribunal has gone significantly wrong. | Quoted as authority for the high threshold required for a serious irregularity appeal; cited with approval for the characterisation of Rule 68(2)(c) appeals. |
| Petrochemical Industries Company (K.S.C) v The Dow Chemical Company [2012] EWHC 2739 | Framed the four-part test (issue; put to tribunal; failure to deal; substantial injustice) for appeals under the equivalent rule. | The Court adopted the four issues from Petrochemical as the framework for analysis of the present Rule 68(2)(c) appeal. |
| Petrochemical Industries v Dow [2012] 2 Lloyd's Rep 691 | Support for the need to maintain a high threshold for establishing serious irregularity and for when a matter constitutes an "issue". | Quoted in support of the proposition that a matter will constitute an "issue" where the applicant's claim could have depended upon its resolution. |
| Primera v Jiangsu [2014] 1 Lloyd's Rep 255 | Authority on maintaining a high threshold for serious irregularity appeals. | Referenced as part of the authorities confirming the high threshold approach. |
| World Trade Corp v Czarnikow Sugar Ltd [2005] 1 Lloyd's Rep 422 | Where an 'essential' issue is one the determination of which is necessary to justify the decision reached in the award. | Applied to explain when a failure to decide a matter amounts to failure to deal with an 'issue'. |
| Weldon Plan Ltd v The Commission for the New Towns [2000] BLR 496 | Definition of an essential issue as one critical to the result. | Quoted in support of the principles about essential issues necessary to resolve disputes. |
| Secretary of State for the Home Department v Raytheon Systems Limited [2014] EWHC 4375 (TCC) | Distinction between 'issues' and 'arguments/points/lines of reasoning' and the need for a high threshold. | Relied on by the Plaintiff and quoted by the Court to show the distinction and the criteria for when a matter amounts to an 'issue'. |
| The Republic of Kazakhstan v World Wide Minerals Ltd [2025] EWHC 452 (Comm) | Recent approval of the principles about issues and the high threshold for serious irregularity appeals. | Noted as a recent authority where similar passages had been quoted with approval. |
| Buyuk Camlica v Progress Bulk Carriers [2010] EWHC 442 (Comm) | Authority on when determination of a matter is necessary to reach a decision on submissions made. | Referred to in assessing whether the Common Law Interpretation Argument was an 'issue' necessary for decision. |
| RAV Bahamas Ltd v Therapy Beach Club [2021] UKPC 8 | Guidance on what it means for an issue to have been 'put to' the tribunal; the tribunal's attention must have been clearly drawn to the issue. | Applied as the relevant test for whether the Common Law Interpretation Argument had been put to the arbitrator. |
| Napier v Ferrier 1847 9D 1354 | Historical authority invoked concerning the meaning of "keep" in repair obligations (as opposed to "put" in repair). | Referred to by the Plaintiff at the hearing in support of an argument about the content of the tenant's obligation; the Court found this concerned scope of obligation, not mutuality. |
| Dem-Master Demolition Limited v Healthcare Environmental Services Limited [2917] CSOH 14 | Identified as an authority the Plaintiff invited the arbitrator to revisit in post-draft submissions. | The Court recorded the Plaintiff's request that the arbitrator revisit this case but treated it as part of post-draft submissions focused on clause interpretation. |
| McCall's Entertainments (Ayr) Limited v South Ayrshire Council (No 2) 1998 SLT 1421 | Authority relied upon in argument regarding applicability to clause interpretation. | The Plaintiff asked the arbitrator to reconsider the applicability; the Court noted this formed part of post-draft submissions on interpretation. |
Court's Reasoning and Analysis
Judge [Last Name] framed the analysis by adopting the four-part test from Petrochemical Industries (issue; put to tribunal; failure to decide; substantial injustice). The court focused on the first two questions because the Court accepted the part award did not address the Common Law Interpretation Argument and that, if it had been an issue put to the arbitrator, non-decision could cause substantial injustice.
The Court examined three stages of the arbitration record: pre-hearing directions and written submissions, the hearing (including solicitor's notes), and post-hearing representations to the draft award.
Pre-hearing: the arbitrator's direction of 19 November 2023 required parties to identify essential details and issues. The parties' notes and written submissions identified the contested issues as the proper interpretation of Clauses 6.1 and 6.21 and the measure of loss. The Court recorded that the Plaintiff's written submissions discussed the condition of the premises at the outset as relevant to the content of the tenant's repairing obligation, but contained no mutuality argument that the Defendant could not enforce the lease.
Hearing: the Plaintiff relied on Napier v Ferrier to argue the tenant's obligation was a duty to "keep" rather than "put" in repair (a limitation/benchmarking argument about scope). The Court examined the Plaintiff's solicitor's notes and concluded the recorded oral submissions concerned scope of obligation, not a mutuality-based contention that the lease was unenforceable.
Post-draft representations: after the arbitrator circulated a draft award on 4 December 2024, the Plaintiff submitted ten pages of representations focused on interpretation of the clauses and related authorities. For the first time, the mutuality doctrine was mentioned in a single sentence asserting the Defendant could not enforce the repairing obligation. The Court found there was no basis for the Plaintiff's later assertion that the mutuality argument had been advanced earlier; the mutuality point first appeared in the post-draft representations.
On the procedural limit: the Court considered Rule 55 and the arbitrator's email inviting comments "about the draft". The Court held that allowing new matters to be raised for the first time after circulation of the draft would frustrate arbitration objectives (fair, impartial, without unnecessary delay and expense) and that Rule 55 limits representations to matters about the draft. Therefore the late mutuality argument was not one "put to" the arbitrator within the sense required by RAV Bahamas. Applying the RAV Bahamas test, the Court concluded the Common Law Interpretation Argument had not been sufficiently put to the arbitrator and thus the arbitrator was not required to decide it.
Holding and Implications
THE PETITION IS DISMISSED — THERE IS NO SERIOUS IRREGULARITY.
Holding: The Court held that the Common Law Interpretation Argument (mutuality argument) was not an "issue" that had been put to the arbitrator within the meaning of Rule 68(2)(c) and RAV Bahamas, and consequently the arbitrator's failure to address it does not amount to a serious irregularity.
Implications: The immediate effect is that the arbitral part award stands and is not vitiated by the alleged omission. The Court recorded that no broader precedent was established beyond the application of the existing authorities and procedural principles (including limits on post-draft submissions under Rule 55) to the facts of this case.
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