UNION MARINE CLASSIFICATION SERVICES LLC V GOVERNMENT OF THE UNION OF COMOROS

[2017] EWHC 2364 (Comm), Queen's Bench Division, Commercial Court, His Honour Judge Waksman QC, 28 September 2017

Arbitration - Serious irregularity - Application for removal of arbitrator - Ad hoc agreement to arbitrate - Issue estoppel - Allegation of absence of evidence to justify factual findings - Arbitration Act 1996, sections 24 and 68

By a written agreement dated 15 February 2007 and to last for 25 years, Union Marine agreed to provide to the Government of the Union of Comoros services for registering seagoing vessels under the Comoros flag. UM was to receive 50 per cent of the revenue, subject to a minimum monthly payment of US$11,000 to Comoros. UM ceased making the payments in August 2011, and in April 2012 Comoros gave notice of termination. UM commenced an arbitration, asserting that the notice of termination was invalid. By an award dated 22 July 2014 the arbitrator held that the letter of termination from Comoros was itself a repudiatory breach as there was no legal justification for it, and the arbitrator commented that as far as he was aware Union Marine appeared not to have accepted the repudiation "as such". On 31 August 2014 the arbitrator published a corrected award holding that UM had been in breach of its payment obligations, that the breach was not repudiatory and that Comoros was entitled to damages to be assessed. Following an unsuccessful appeal to the courts against the amendment, the parties each sought declarations: UM claimed that the contract subsisted and that it was entitled to damages; Comoros claimed that the contract had come to an end by the original letter, by acceptance of the repudiation or by a subsequent letter. The arbitrator by a second award following written submissions granted declarations to Comoros on each of the grounds put forward by it. UM challenged the second award on the grounds that the arbitrator had exceeded his powers in considering the question of valid termination, and that there had been no evidential basis for his findings.