Danae Air Transport Societie Anonyme v. Air Canada
(England and Wales) Supreme Court of Judicature (Court of Appeal), Kennedy, Ward and Tuckey
LJJ., 29th May 1999.
Arbitration agreement excluding rights of appeal - award allocating costs - tribunal determining by award that Claimant had failed to beat Calderbank offer - whether based on a arithmetical error - whether such an error, if not admitted, was a procedural mishap - whether court could remit award under s. 22, Arbitration Act 1950.
Facts:
Following the making of an award in proceedings between the plaintiff (claimant in the arbitration) and defendant (respondent and counterclaimant in the arbitration) whereby the tribunal awarded a net sum to the claimant, the arbitral tribunal invited submissions from the parties as to the appropriate order allocating costs, having regard to a Calderbank offer made by the respondent during the course of the proceedings.
The tribunal, adopting a method of calculation different from that advanced by either party, concluded that the claimant had not beaten the Calderbank offer and, by award, ordered the claimant to pay the costs of the arbitration from the date of that offer.
The parties having excluded all rights of appeal, the claimant sought to have this award remitted or set aside under sections 22 and/or 23 of the Arbitration Act 1950. Its contention being that it had beaten the Calderbank offer and that the tribunal's contrary finding was due to a basic arithmetical error.
The court accepted that the tribunal had made a basic arithmetical error in reaching the conclusion that the claimant had not beaten the Calderbank offer but rejected the application to remit or set aside the award on the grounds that an award allocating costs could only be challenged by appeal on a point of law unless there was an excess or jurisdiction or a procedural mishap, which there was not. The Claimant appealed.
Held:
Although the judge was correct in his interpretation of King v. Thomas McKenna [1991] 2 QB 480 (CA) and subsequent cases, that an award allocating costs could only be challenged by appeal, unless there was an excess or jurisdiction or a procedural mishap, he was wrong to conclude that there was no procedural mishap in this case. The appeal would be allowed.
It was clear that the arbitral tribunal made a simple mathematical error in coming to the conclusion that the claimant had not beaten the Calderbank offer. It failed to treat the counterclaim in the same way when evaluating that offer against their award in the claimant's favour. Such an error, even though not accidental or admitted by the tribunal, could be categorised as a procedural mishap, which, in exceptional circumstances such as in this case, enabled the award to be remitted under section 22. The tribunal had also made a procedural mishap by using a method for calculating whether or not the claimant had beaten the Calderbank offer that went outside the rival contentions advanced by the parties.
The court expressed the view that similar principles would apply under the Arbitration Act 1996.
The judgements given by the court read as follows:
For the Plaintiff: Mr S Tomlinson QC and Mr P Shepherd (instructed by Messrs Brown Cooper).
For the Defendant: Mr M Collins QC and Mr V Flynn: (instructed by Messrs Dibb Lupton Alsop).
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