The Respondent was the main contractor for a construction project. The Claimant was a subcontractor whose work included the supply and installation of two types of marbles – Statuario stones (“S Stones”) and Statuario Venato stones (“SV Stones”). There was provision under the subcontract for a quality assurance and quality control (“QA/QC”) process for stone selection. A stone inspector was appointed to conduct stone inspections against the Acceptance Criteria formulated.
In the course of the project, the architect and/or the Respondent rejected all the S Stones and most of the SV Stones. The Claimant disputed the rejection of the stones, and commenced arbitration under the ICC Rules 2017 (the “ICC Rules”) seeking further payment from the Respondent. The Respondent had cross-claims which were being pursued in a second arbitration.
The arbitrator decided that the S and SV Stones supplied by the Claimant met the Acceptance Criteria, and should not have been rejected. The arbitrator awarded reliefs to the Claimant, including the outstanding balance of the subcontract price and the first half of the retention monies retained by the Respondent, which was to be released in accordance with the subcontract terms.
The Respondent commenced an application to set aside parts of the arbitral award (including an addendum issued to correct certain paragraphs of the arbitral award) on the following:
the arbitrator’s finding that the stones complied with the Acceptance Criteria and should not have been rejected; and
the arbitrator’s award of retention monies as it allegedly resulted in the Claimant being awarded retention monies twice over.
Ruling
The High Court dismissed the setting-aside application.
The arbitrator’s finding that the stones complied with the Acceptance Criteria
The Respondent contended that the arbitrator exceeded the scope of submission to arbitration, by making a decision that the architect should have relied on the stone inspector’s finding, and for proceeding on a factual basis contrary to the facts that were common ground between the parties. The Respondent relied on the grounds of breach of the rules of natural justice to the prejudice of the Respondent, and excess of jurisdiction in support of this contention.
The Claimant acknowledged that the arbitrator had made mistakes in his arbitral findings, but the court could not intervene to correct those mistakes as the arbitrator’s decisions were within the scope of the submission to arbitration, and there was accordingly no breach of natural justice.
The High Court held that the arbitrator’s decision that the architect should have relied on the stone inspector’s finding, was within the scope of submission to arbitration. The issue before the arbitrator was whether the stones complied with the Acceptance Criteria, and it was open to the arbitrator to prefer the stone inspector’s views to those of the architect.
However, the High Court found that the arbitrator was wrong to have determined that the architect did not attend the dry lays in March 2016 for inspection of the S stones despite it being common ground between the parties that the architect did attend all four dry lays. The arbitrator was making a decision on a matter that had not been submitted for his decision in the arbitration given the common ground between the parties.
The High Court however held that the arbitrator’s mistake in finding that the architect only attended one of the four dry lays of the S Stones was not material as the arbitrator’s mistake concerned only one of several grounds on which he based his decision that the stones complied with the Acceptance Criteria and were wrongly rejected. As such, the Respondent did not suffer actual or real prejudice.
The High Court therefore declined to set aside the arbitrator’s finding that the stones complied with the subcontract and were wrongly rejected.
Award of retention monies
The Respondent also sought to set aside the amounts awarded to the Claimant, claiming that the Claimant was awarded retention monies twice over. The High Court held that no deduction was required from the arbitral award made as the sum claimed was the difference between the parties’ respective valuations which was already subject to deduction of retention monies.
Last, the High Court held that the parties’ agreement for the arbitration to be governed by the ICC Rules did not displace the general obligation of confidentiality. The High Court therefore granted the Respondent’s application for sealing and redaction orders to preserve the confidentiality of the arbitration.
