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Metal Trading Arbitrators Were ‘Obviously Wrong’

In the context of a $10 million dispute in respect of a metal trading contract, a judge was entitled to substitute his own views for those of arbitrators who had reached an  ‘obviously wrong’ conclusion, the Court of Appeal has ruled. In circumstances where there as only one possible answer to the issues of contractual interpretation raised, there was no requirement to remit the dispute to the arbitrators for consideration.

The arbitrators’ view that there was no enforceable contract between the parties had been described as ‘somewhat surprising, if not bizarre’ by the first instance judge who ruled that no reasonable tribunal applying the correct legal principles could have reached such a conclusion. In the light of those ‘trenchant views’, the judge ruled that it would be wrong to remit the matter to the arbitrators and substituted his own resolution of the dispute.

Upholding the judge’s decision, the court noted that the arbitrators, in ruling the contract unenforceable, had failed to address themselves to critical issues in respect of the contracting parties’ intentions. In circumstances where the correct application of legal principle admitted of ‘only one answer’ to that issue, remission of the matter to the arbitrators would have been ‘completely inappropriate’.