CTI GROUP INC V TRANSCLEAR SA (NO 2)

[2007] EWHC 2340 (Comm), Queen’s Bench Division, Commercial Court, Mr Justice Field, 17 October 2007

Arbitration – Appeal against award for error of law – Application upheld – Respondent applying for award to be upheld on other grounds – Whether other grounds had to be grounds of law – Arbitration Act 1996, section 69, CPR Practice Direction 62, para 12.3(3)

The sellers agreed to sell to the buyers under a fob sale 27,000 metric tonnes of cement on board the vessel Mary Nour, delivery to be in Indonesia. The sellers were unable to deliver the cement because it became known that the cement was to be sent to Mexico, and nobody would supply it. The buyers obtained cement from Russia at a higher price, and claimed the additional sum plus various costs from the sellers. The arbitrators ruled in favour of the sellers, holding that the contract had been frustrated, but went on to hold that but for frustration they would have found that there was liability in damages for breach of contract. The buyers appealed against the ruling on frustration and succeeded. The sellers applied to have the award upheld on the ground that the arbitrators had been wrong in finding liability in damages for breach of contract and that they must have erred in their conclusions on causation and remoteness. Field J held that an award could only be upheld for other reasons if those reasons constituted a point of law not dealt with in the award: although causation and remoteness had not been dealt with in the award, they were not points of law and it was not open to the court to review factual issues.