Symbion Power LLC v Venco Imtiaz Construction Company
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Jefford |
| Judgment Date | 10 March 2017 |
| Neutral Citation | [2017] EWHC 348 (TCC) |
| Docket Number | Case No: HT-2016-000211 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 10 March 2017 |
[2017] EWHC 348 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mrs Justice Jefford
Case No: HT-2016-000211
Mrs Jane Davies Evans (instructed by Mishcon de Reya LLP) for the Claimant
Mr Benjamin Pilling QC (instructed by Cooke, Young & Keidan LLP) for the Defendant
Hearing dates: 30 th January 2017
This is an application under s. 68(2)(d) of the Arbitration Act 1996 in which the Claimant alleges serious irregularity in the Award of an arbitral tribunal ("the Award") because the tribunal ("the Tribunal") failed to deal with all the issues that were put it. The Claimant asks the Court to set aside or vary the Award rather than remit it to the Tribunal in the particular circumstances of this case.
The arbitration arose out of a project to construct a power station in Kabul, Afghanistan. Under a contract dated 14 June 2008, the Prime Contractor (whom I shall refer to as "the JV") engaged Symbion Power LLC ("Symbion") for a scope of works called the Balance of Plant. This contract is referred to as "the BOP Contract".
Symbion in turn engaged Venco Imtiaz Construction Company ("Venco") as sub-contractors for civil and structural works. The Sub-Contract was dated 14 August 2008 and was based on the FIDIC Red Book. In addition to the standard terms of the Red Book, the Sub-Contract contained at Schedule 9.6 detailed provisions in respect of "Payment Management". Clause 9.1 provided:
"This section covers the method of managing the payment amount determination, invoicing, and required support information to provide payment to the Subcontractor for the Subcontract Work."
The Sub-Contract provided that the works and the project were subject to "the Laws" (of which there was a lengthy definition which is not relevant) but that "interpretation of this contract is to be construed under the law of the State of Nevada". In respect of dispute resolution, the Sub-Contract provided for arbitration; I am told that the parties agreed that the seat of the arbitration should be England and certainly no issue has arisen about this.
Disputes arose under the BOP Contract which was terminated on 19 May 2009 and termination of the Sub-Contract followed.
In due course an arbitration took place between the JV and Symbion and an award was published on 24 October 2012. I shall refer to this arbitration, as it was referred to at the hearing, as "the prior arbitration" and to the resultant award as "the Prior Award".
In March 2013, Venco commenced an arbitration against Symbion. Venco's primary claim was for payment for work done prior to termination in a sum in excess of US$ 4 million. In the course of the arbitration, there were various Statements of Case, Memorials and Briefs served by the parties. A hearing took place in September 2015 and the parties served Post-Hearing Briefs. Not all of this material was, understandably, before the Court on this application but extensive extracts were exhibited to the various statements served in support of and in response to the application. The Award was published on 11 July 2016. Venco was largely successful in the arbitration.
Symbion, however, now make this application on the basis that they raised 7 discrete defences. Symbion accepts that the Tribunal dealt with 3 of these defences but contends that the Tribunal failed to address 2 of these defences at all and failed to address the essential parts of the 2 remaining defences.
The Award
It is helpful if I set out at this stage some parts of the Award which I will refer to further below.
In relation to the Prior Award, the Tribunal said:
"It has, however, been suggested by both parties … that some findings in that Award could be of guidance to the Tribunal, although not binding on it. In this regard we do note later in this Award (in paragraph 166) certain consistencies between this Award and [the Prior Award] but otherwise do not refer to [the Prior Award]." [paragraph 23]
The relevance of the reference to paragraph 166 is not immediately apparent but it is obvious from this paragraph that the Tribunal was aware of the Prior Award and it is implicit that they had had regard to it and whether it might be relevant.
At paragraph 52, the Tribunal referred to Symbion's case that there was an oral modification to the Sub-Contract to provide that it was only required to make payment to Venco if it had itself been paid by the JV. The Tribunal continued:
"Further, it [Symbion] argues that even if there was no pay-if-paid modification, the onus is on the Claimant [Venco] to prove the value of the work it carried out. It says that the Claimant has failed to discharge this burden and therefore no damages should be awarded. By contrast, the Claimant denies that it agreed any pay-if-paid modification. ….. Further the Claimant contends that it had sufficiently proved the value of the works in respect of which it is claiming payment."
Having concluded that the pay-if-paid modification was never agreed, the Tribunal turned, under the section heading "PROOF OF CLAIMANT'S DAMAGES" to Venco's claim for damages: US$3,148,457 in respect of invoices 6 to 13 and US$937,724 in respect of 21 Purchase Orders (POs). The Tribunal recited that it had received written and oral testimony from both witnesses of fact and expert witnesses on the issue of proof of damage.
It is neither necessary nor appropriate for me to set out in this judgment the detail of that testimony. Some of the invoices had been approved by Symbion but evidence had been given that any review of the invoices was fairly broad brush. One of the reasons given for that was that Symbion's witnesses were aware that interim payment certificates could be "corrected" particularly when the final payment was made. Some of Venco's invoices had not been approved but had not been returned to Venco for correction or additional information. Quality Control Daily Reports (QCDRs) had been provided to the Tribunal for the relevant periods. Most of the Purchase Orders had been approved by Symbion. There was evidence about work done or materials supplied under other orders.
The Tribunal recited both Venco and Symbion's submissions. Symbion's submissions, in summary, disputed the evidence on which Venco relied and contended that the QCDRs and invoices were inaccurate and could not be relied on for proof of percentage of work complete. The Tribunal set out the evidence on each invoice or group of invoices and on each PO or group of POs and their conclusions on each. As I have said, they largely found in Venco's favour.
Symbion's application: the law
Before I turn to the detail of Symbion's case, it is also helpful to set out the relevant law.
On this application, Symbion relies specifically on s. 68(2)(d) which provides as follows:
"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 —
…
(d) failure by the Tribunal to deal with all the issues that were put to it.
…"
There are disputes between the parties both as to whether the matters relied on by Symbion are issues within the meaning of that sub-clause and as to whether, even if there are issues that the Tribunal has failed to deal with, there is any substantial injustice.
The parties were agreed that a clear summary of the law, which I gratefully adopt, is set out in the decision of Akenhead J in Secretary of State for the Home Department v Raytheon Systems Ltd [2014] EWHC 4375 (TCC) both as to the meaning of "issue" [33(g)] and substantial injustice [33(h) and (i)], namely:
"(g)(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 […].
(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 […].
(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 […]. 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 […].
(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 […].
(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 […]; 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 […].
(viii) A failure to provide any or any sufficient reasons for the decision is not the same as failing to deal with an issue […]. A failure by a tribunal to set out each step by which they reach its...
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