Disregard of the applicable law

In B v A [2010] EWHC 1626 (Comm) the law applicable to the substantive dispute was Spanish law. The majority award was attacked by the dissenting arbitrator as one which had disregarded the relevant provisions of Spanish law. Given that an English court has

no power to hear an appeal from arbitrators on a point of foreign law under s69 of the Arbitration Act 1996, can such disregard amount to serious irregularity capable of sustaining an appeal under s68 of the 1996 Act? Tomlinson J thought not.

B v A: the facts

The parties were all Spanish companies. B, a manufacturing company, owned all of the share capital of C, a company involved in the development, manufacture and marketing of equipment for computer-aided design. A was in the same business as C. In April 2004, under a share purchase agreement (SPA) governed by Spanish law, B agreed to sell to A 100% of the share capital in C for the sum of approximately €52m. Under cl 10 of the SPA, B as seller agreed to indemnify, defend and hold harmless A in respect of any shortfall in assets or increase in liabilities arising from: any false statement or breach of warranty by B; any claim having its cause or origin prior to 31 December 2003; or any inaccuracy or omission in the 2003 audited financial statements. All disputes were to be referred to ICC arbitration in London.