MV Canary – English court refuses challenge under section 68 of the Arbitration Act 1996
Section 68 Arbitration Act 1996
Section 68 of the Arbitration Act 1996 (AA 1996) permits a party to challenge an arbitration award in the English High Court on the ground of serious irregularity affecting the tribunal, the proceedings, or the award, where that irregularity has caused (or will cause) substantial injustice. The alleged irregularity must fall within one of the categories listed in section 68(2).
If a serious irregularity is established, the court may remit the award to the tribunal, set it aside, or declare it to be of no effect (in whole or in part). Before applying to court, an applicant must exhaust any available arbitral remedies, including correction or clarification under section 57 (section 70(2)).
Section 68 is intended as a limited safeguard. As explained by the Departmental Advisory Committee in 1996, it operates as a ‘long stop’, available only in extreme cases where the conduct of the arbitration has gone seriously wrong. Successful applications are rare, reflecting the AA 1996’s policy of minimal court intervention and respect for arbitral finality.
Section 68 applications are often used in an effort to challenge findings of fact, notwithstanding that such findings are not appealable. The courts have repeatedly illustrated that they are not willing to entertain challenges to the tribunal’s conclusions of fact (see Ameropa SA v Lithuanian Shipping [2015] EWHC 3847 (Comm) and Claire & Co Ltd v Thames Water Utilities Ltd [2005] EWHC 1022 (TCC)).
The decision in Eagle Bulk Pte Ltd (now Star Bulk (Singapore) Pte Ltd) v Traxys North America LLC [2026] EWHC 518
In Eagle Bulk Pte Ltd (now Star Bulk (Singapore) Pte Ltd) v Traxys North America LLC [2026] EWHC 518, the High Court dismissed an application under sections 68(2)(a) and 68(2)(d), reaffirming the high threshold that applicants must meet.
The facts
The dispute arose out of a voyage charter under which Traxys chartered the MV Canary to carry petcoke cinder from India to New Orleans. On arrival, several cargo holds, and in particular hold 4, were found to contain significant quantities of water, disrupting discharge operations.
The owners contended that the water had been loaded with the cargo and claimed demurrage. The charterers argued that the cargo was dry when loaded and that water had entered through leaking valves in the vessel’s bilge system, making the owners responsible for delay and additional costs. They also brought a shortage claim based on a discrepancy between the loaded weight and the weight recorded on discharge.
The tribunal found that:
- The effective cause of the delay was water ingress through defective valves in the bilge system, particularly affecting hold 4.
- The owners were liable for the cargo shortage.
An application by the owners under section 57 for clarification or correction was rejected by the tribunal, which considered the award clear and complete.
The section 68 challenges
The owners subsequently challenged the award under section 68 on two grounds.
(1) Section 68(2)(a): failure to comply with the tribunal’s general duty
The owners argued that the tribunal breached its duty under section 33, which requires a tribunal to:
- act fairly and impartially and to give each party a reasonable opportunity of putting its case and dealing with that of its opponent; and
- adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense, so as to provide a fair means for the resolution of the matters falling to be determined, by deciding the case on a basis not advanced by either party and without giving them an opportunity to address it.
In particular, they contended that the tribunal wrongly interpreted a 3 February 2022 defect list as referring to defective butterfly valves BLV 12 and 13, despite this not being common ground or argued.
Mr Justice Butcher rejected this challenge. He held that the complaint fell ‘markedly short’ of establishing a serious irregularity and amounted to an impermissible attempt to appeal the tribunal’s factual findings. The tribunal had relied on a substantial body of contemporaneous evidence regarding longstanding defects in the bilge system, and the defect list was not an ‘essential building block’ of its reasoning.
Even if the tribunal had adopted an interpretation not expressly advanced by the parties, the judge concluded that this was not unfair. In any event, he was not satisfied that any alleged irregularity caused substantial injustice; the tribunal would plainly have reached the same conclusion on the evidence as a whole.
(2) Section 68(2)(d): failure to deal with all issues
The owners argued that the tribunal failed to deal with essential issues relating to the shortage claim, including whether any weight difference was attributable solely to water removed from the cargo and whether the charterers had in fact suffered any loss, given the commercial arrangements for payment of the cargo.
Mr Justice Butcher restated the established approach under section 68(2)(d), emphasising the distinction between a failure to deal with an issue and a failure to address specific arguments or lines of reasoning. If a tribunal has dealt with an issue in substance, section 68(2)(d) is not engaged, regardless of the quality of its reasoning.
Applying that approach, the judge held that the tribunal had dealt with the shortage issue. Read fairly and commercially, the award concluded that there was a cargo shortage which the owners had failed to explain or justify. The tribunal’s finding that the owners lacked reliable evidence to show that the weight difference was due to removal of water meant that it was unnecessary to address further arguments advanced on that premise. There was therefore no failure to deal with an essential issue.
Conclusion
The High Court dismissed the owners’ application under both section 68(2)(a) and section 68(2)(d).
The decision provides a clear reminder that section 68 is not an easy route of appeal and will only succeed where unfairness in the conduct of the arbitration is shown to a high standard. It also confirms that, for section 68(2)(d), inadequacy of reasons is not the same as a failure to address an issue; once the arbitral tribunal has dealt with an issue in any manner, the court will not intervene.