Assessing evidence

The Arbitration Act 1996 draws a distinction between fact and law: alleged errors in factual findings can never be appealed to the court, although the court has the power to give permission for an appeal for an error of law under s69 of the Act. Accordingly, there has been some attempt by disaffected parties to argue that a point of fact was a point of law so as to establish jurisdiction under s69, and one particular means by which this has been done is to assert that an award is wrong in law if there is no evidence, or inadequate evidence, for the arbitrator’s conclusions. That approach would in effect allow every award to be reopened and it has been firmly rejected by Peter Smith J in House of Fraser Ltd v Scottish Widows plc [2011] EWHC 2800 (Ch), following the most recent authorities on the point.

House of Fraser: the facts

The dispute in this case concerned a rent review clause in a lease entered into on 30 July 1999 for premises in Leeds. The lease was for 40 years and the initial rent was £1,040,000. The rent review clause provided that the rent was to be reviewed every five years. The rent on first review was to be £1,205,762 or the open market rental value, whichever was higher, and the rent on the second review was £1,397,656 or the open market rental value, whichever was higher. The phrase ‘open market rental value’ was defined as meaning ‘the annual rent at which the demised premises might reasonably be expected to be let on the open market at the relevant review date’, taking into account various assumptions about the market, the fitting out of the premises and their use as a department store. If the parties were unable to agree the open market rental value, the question would be referred to an arbitrator.