The Gazette 1991

GAZETTE

NOVEMBER 1991

1988 upholding the High Court decision of Blayney J. and the arbitrator's award was delivered by McCarthy J. He concluded with lines which are often quoted by judges, practitioners and students: "Arbitration is a significant feature of modern commercial life;. . . the field of international arbitration is an ever expanding one. It ill becomes the Courts to interfere in such a process; if policy considera- tions are appropriate, as I believe they are in matters of this kind, then every such consideration points to the desirability of making an award final in every sense of the term." In Keenan -v- Shield, the insurance company repudiated liability on the basis of alleged misrepresentation of fact and non-disclosure of information. The arbitrator's award found against the insurer on those allegations but decided that the insured was not entitled to recover under the policy. Challenges to the award failed in the High Court and on appeal to the Supreme Court. (1) It was t oo late for the arbitrator to state a case under s.35 of the 1954 Act after he had made his award and became functus officio. (The case-stated procedure has in general not been abused in the Irish jurisdiction. In England & Wales, which have Arbitration Acts d i f f erent f rom Scotland and Northern Ireland, a restricted appeal system has replaced the case-stated procedure). (2) At common law, the Court can either remit or set aside an award if there is an error on its face. Policy considerations point to the desirability of making an arbitration award final in every sense of the term. Therefore, McCarthy J. did not approve of courts fine-combing an award unless it showed on its face an error of law so fundamental that the courts could not stand aside and allow it to remain unchallenged. Keenan -v- Shield was not such a case. The learned McCarthy J. in his judgment also made the following points:

judge was critical of fine-combing by Costello J. in a previous case Church & General Insurance -v- Connolly & anor. 6 Comment The jurisdiction to set an award aside because of an error of law on its face is often criticised as anomalous. 9 It was abolished in the English Arbitration Act, 1979 which also introduced (a) a new appeal procedure with specific restrictions, (b) statutory recognit- ion of parties' rights to reasoned awards. There is a strong case for similar reforms in Irish law so that arbitrators in line with international trends may give reasons for awards without perceived fears of undue court interference. Assicurazione Genera/i & Maguire, 10 known as the McStay case, the Supreme Court in November, 1990 upheld the arbitrator's award and dis- missed the p l a i n t i f f 's appeal against a High Court challenge to the award. This was also an insurance case. The plaintiff/ appellant, John McStay as receiver of Hotel Holyrood Ltd. pleaded inter alia in the High Court for an order remitting to the second defendant, Peter Maguire SC, for reconsidera- tion part of his award in which the arbitrator had decided that he had no jurisdiction to award interest for the period prior to the award. Chief Justice Finlay's judgment in McStay endorsed the arbitral process and made the following points: (1) A fundamental ingredient of arbitration as contained in the common law is the finality of the arbitrator's decision subject to cer- tain qualifications and precautions. Parties acknowledge when agree- ing to refer a particular question in dispute to an arbitrator's decision, that they have abandoned their right to litigate that precise question. (2) Exceptions to the finality as outlined at (1) above arise at common law and in statutory provisions: In McStay -v-

(a) The arbitrator has power to state any question of law arising in course of a reference or award, as a special case for the High Court's decision. The Court may, on application, direct an arbitrator to state such a case - s.35, 1954 Act. (b) The Court may remove an arbitrator for misconduct - s.37, 1965 Act. (c) The Court may set aside an award where an arbitrator has misconducted himself or an award has been improperly obtained - s.38, 1954 Act. (d) The Court may revoke an arbitrator's power because he may be partial. (e) At common law, where an arbitrator decides a question of law where that precise question has not been referred to him for decision, the Court may intervene in its discretion and in particular cases where the decision is clearly wrong on its face by re- mitting the matter to the arbi- trator in the interests of justice. The Chief Justice emphasised in McStay that a decision made by an arbitrator on a specific point of law referred to him for decision, was not covered by any of the exceptions listed above even if the award appears on its face to be erroneous. Finlay C.J. referred to an English case Abso/om -v- Great Western London Garden Village Society : 11 Lord Russell of Killowen succinctly set out the law: " I t is essential to keep the case where disputes are referred to an arbitrator in the decision of which a question of law becomes mater ial, distinct from the case where a specific question of law has been referred to him for decision . . . The authorities make a clear distinction between the two cases . . . in the former case the Court can interfere if and when any error of law appears on the face of the award, but in the latter case no such interference is possible . . . "

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