
'Due process paranoia' or 'a perceived reluctance by tribunals to act decisively in certain situations for fear of the award being challenged' is arguably one of the banes of modern arbitration practice. No arbitrator is immune; even the experienced ones seem to lose their 'sanity' from time to time.
Arbiters, fall not to this procedural malaise, for as long as your actions are just and fair, you have the curial backing, tells us Henshaw J in Collins & Ors v Wind Energy Holding Company Ltd [2025] EWHC 40 (Comm).
FACTS
In 2022, Ms. Collins, Mr. Lakhaney, Ms. Siddique, and ALKBS LLC ('the Claimants'), represented by a law firm, commenced an LCIA arbitration under a letter of indemnity ('LoI') against Wind Energy Holding Company LTD ('the Respondent'). The dispute concerned the validity and enforceability of the LoI, and the Respondent's alleged breach of the LoI by not meeting the Claimants' ongoing costs of litigation brought against them by third parties ('Litigation'). In the Litigation, the Claimants instructed the same law firm.
According to PO1, the last written submission was the Claimants' Sur-Reply. However, shortly before the relevant deadline, the Claimants requested the Sole Arbitrator to stay arbitration considering that the Respondent commenced parallel litigation abroad and the potential impact of the forthcoming judgment in Litigation on the Claimants' claim.
The Sole Arbitrator denied the request, extending, however, the deadline to serve the Sur-Reply.
A few days before the new deadline, the Claimants were found jointly and severally liable to the Litigation claimants in a considerable sum ('Judgment'). The court handed down the Judgment and granted a freezing order to the Litigation claimants shortly after the deadline to serve the Sur-Reply passed.
According to Ms. Collins' witness statements in arbitration, the Judgment came as a shock to her and had a serious effect on her mental health, and on the Claimants' ability to focus on the arbitral proceedings (¶17). To wit, in arbitration, Mr. Lakhaney stated on behalf of the Claimants that they could not meet the deadline to file the Sur-Reply as they 'had to factor [the Judgment] into the Claimants' decision-making processes' (¶24). Further, according to Ms. Collins, she and the other Claimants understood the freezing order to prevent the Claimants from spending 'any sums on legal representation in the arbitration' (¶17).
As soon as the embargo on the Judgment was lifted, the Claimants provided the Sole Arbitrator with a Judgment (but not a freezing order) and again requested a stay of arbitration. The Claimants stated that they could not continue with arbitration until the Judgment was appealed. The Claimants undertook to withdraw the claim should the permission to appeal not be granted, or if they would not succeed on the appeal.
The following day, the Claimants' law firm wrote to the Sole Arbitrator to withdraw the claim, inviting the Respondent to withdraw the counterclaim in light of a decision in the Respondent's favor in parallel litigation abroad. The counsel also requested the Sole Arbitrator to dismiss the counterclaim with prejudice should the Respondent maintain it.
On the same day, the Claimants' counsel informed the Sole Arbitrator that they were no longer instructed in the arbitration and requested the Sole Arbitrator to send correspondence to the personal email addresses of Ms. Collins and Mr. Lakhaney. The counsel did not mention the freezing order, nor gave any other reason for recusal.
A week later, Mr. Lakhaney on behalf of the Claimants requested a variation of the procedural timetable to allow the Claimants time to find and retain new counsel in arbitration should the Sole Arbitrator permit the counterclaim to continue. Mr. Lakhaney did not mention the freezing order.
The Sole Arbitrator denied the request.
Two days later, Mr. Lakhaney on behalf of the Claimants wrote to the Sole Arbitrator seeking:
the Sole Arbitrator's permission to reinstate the claim since its withdrawal was without prejudice and subject to the Respondent's dropping the counterclaim, which it did not. According to Mr. Lakhaney, '[r]einstating the Claimants' claim is the only way the Claimants will have a reasonable opportunity of putting their case and dealing with the case of the Respondent' (¶24).
variation of the procedural timetable as the timetable set was 'no longer suitable to the circumstances of this particular case'. Mr. Lakhaney requested the Sole Arbitrator to hold a procedural hearing at the beginning of September in lieu of the evidentiary one, considering the Claimants' involvement in the consequential hearings in the Litigation, the need to find new counsel, and limited resources.
Yet again, Mr. Lakhaney did not mention the freezing order.
The Respondent objected to the Claimants' request.
A few days later, a new counsel for the Claimants entered the procedural scene.
In an email to the Sole Arbitrator, the new counsel asked her to adjourn the evidentiary hearing to an unspecified date, explaining that they had just been retained and needed time to familiarize themselves with the case. The injunction was not mentioned.
On the same day, the Sole Arbitrator allowed the Claimants to reinstate the claim, denying, however, the Claimants' request to amend the timetable. The Sole Arbitrator also stated that the Claimants had leave to submit the Sur-Reply.
Nonetheless, the Claimants did not file the Sur-Reply.
After the deadline to submit the Sur-Reply passed and upon the Respondent's request, the Sole Arbitrator directed that the Claimants were not allowed to file any further statements or evidence.
Two weeks before the evidentiary hearing, the new counsel for the Claimants wrote to the Sole Arbitrator seeking adjournment of the hearing to an unspecified date again, that time, however, with a reference to the freezing order. According to the new counsel's request and Ms. Collins' witness statement to support it, the injunction, unless varied or lifted, made payment of the new counsel's fees impossible.
Unsurprisingly, the Respondent objected to the adjournment application.
Responding to the Sole Arbitrator's request to clarify the effect of the injunction and any steps taken by the Claimants to mitigate such in connection with the arbitration, the new counsel for the Claimants explained that the Claimants had not applied to court to vary the injunction, but were in the process of obtaining a carve-out for arbitration costs through consent of the Litigation claimants' counsel. The Claimants' new counsel maintained the adjournment request citing due process considerations.
Under the circumstances, the Sole Arbitrator granted a short adjournment 'solely to allow the Claimants time to address the scope of the freezing injunction' (¶38), making it clear that no further adjournment would be granted on that ground. Ultimately, the Sole Arbitrator scheduled the evidentiary hearing to take place on 4-6 and 9-10 October.
A few weeks later, in response to the Sole Arbitrator's request for a status update, the new counsel for the Claimants informed the Sole Arbitrator that the only way going forward was a further adjournment of the hearing until the freezing order issue is resolved, as the Claimants had allegedly not been able to obtain a relevant variation of the injunction at the consequential hearing in the Litigation.
In line with her previous directions, the Sole Arbitrator did not grant further adjournment.
The new counsel for the Claimants invited the Sole Arbitrator to reconsider her decision, explaining that the Claimants attempted but failed to obtain the Litigation claimants' counsel's consent to vary the freezing order and were preparing a formal variation application to be filed in the Litigation.
The Sole Arbitrator indicated that the hearing dates were maintained.
It appears around that time, the Claimants' new counsel abandoned the matter.
A week before the hearing, Mr. Lakhaney emailed the Sole Arbitrator stating that the adjournment was necessary until the freezing order was varied, especially since the Claimants were no longer represented.
The Sole Arbitrator replied that the Parties were free to vary the timetable by agreement, but she would not move the hearing dates herself. The Sole Arbitrator also told Mr. Lakhaney that the Claimants, even unrepresented, were invited to attend any and all parts of the hearing.
The following day, Mr. Lakhaney submitted an 80-page draft Sur-Reply to the Sole Arbitrator, along with several witness statements—three of which were unsigned—and an exhibit, requesting their admission. In a cover email, Mr. Lakhaney, inter alia, stated that the unrepresented Claimants were not in a position to conduct cross-examination or make legal submissions.
The same day, the Sole Arbitrator admitted the draft Sur-Reply in lieu of the Claimants' Pre-Hearing Brief and reserved the decision on evidence until after the Respondent had made an application to exclude it. Addressing Mr. Lakhaney's concerns, she reiterated that the Claimants were invited to attend the hearing and were permitted to put their positions and cross-examine the Respondents' witnesses.
Two days before the hearing, Mr. Lakhaney sent another email to the Sole Arbitrator, in which he, inter alia, informed that Ms. Collins would not appear at the hearing due to her emotional state. The following day, Ms. Collins confirmed that statement by communicating a GP certificate.
Neither Mr. Lakhaney nor Ms. Collins sought the adjournment on that ground.
The evidentiary hearing commenced on 4 October.
Neither the Claimants nor any counsel for them appeared at the hearing. As such, the hearing revolved around the Respondent's request to exclude the draft Sur-Reply and supporting evidence.
Having heard the Respondent, the Sole Arbitrator admitted the draft Sur-Reply, signed witness statements, and an exhibit, but refused to admit the unsigned witness statements.
The hearing reconvened on 6 October. Neither the Claimants nor any counsel on their behalf were present, save for Mr. Lakhaney appearing remotely for cross-examination. After the Respondent made opening statements and answered the Sole Arbitrator's questions, Mr. Lakhaney took the stand.
During the cross-examination of Mr. Lakhaney, the Sole Arbitrator 'intervened on several occasions to query the basis for a question or to ask counsel to move on' (¶65) and to ask Mr. Lakhaney a question. Thereafter, it was the Respondents' witnesses' turn, who affirmed their written statements. Mr. Lakhaney did not cross-examine the Respondents' witnesses; the Sole Arbitrator did not ask them questions either.
The hearing concluded.
On 17 November 2023, the Sole Arbitrator rendered her Final Award.
The Sole Arbitrator rejected the Claimants' claim and allowed the Respondent's counterclaim.
THE CHALLENGE
The Claimants challenged the Final Award on the ground of serious procedural irregularity, pursuant to section 68 of the English Arbitration Act 1996Â ('EAA 1996'). The Claimants argued that the Final Award must be set aside, because the Sole Arbitrator breached her duties to act fairly and impartially and to give each party a reasonable opportunity of putting his case and dealing with that of his opponent (EAA, s 33).
The Claimants' case can be reduced to three main arguments:
The Sole Arbitrator breached 'her section 33 duty by granting an unrealisically short adjournment of the evidential hearing ... [despite] the obvious continuing difficulties the Claimants faced with the lack of legal representation, and Ms Collins' mental health issues' (¶74);
The fairness required the Sole Arbitrator to admit the draft Sur-Reply and additional evidence in full 'in circumstances where the Claimants were unrepresented and Ms Collins was unable to attend for medical reasons (¶93). Thus, the Sole Arbitrator's decision to not admit such all the evidence was unfair to the Claimants, so was her failure to test the credibility of the Respondent's witness (¶95);
The Sole Arbitrator failed to indentify the weight she had given to the Claimant's evidence and 'address all the disputes of fact and law ... in explaining how she had come to her conclusions', as well as relied on the findings about the Claimants' credibility as witnesses made in the Litigation and parallel proceedings abroad, instead of carrying out her own evaluation (¶96).
HIGH COURT'S DECISION AND REASONING
Henshaw J dismissed the Claimant's application to challenge the Final Award.
On the first argument, Henshaw J found that the Sole Arbitrator's decision to proceed with the evidentiary hearing was fair and consistent with her duties under EEA, s 33, since:
'the Claimants' lack of legal representation was a result of their failure, over a period of time, to take proper and prompt steps to obtain a variation of the freezing order' (¶87). During arbitration, the Claimants had ample opportunities to address any issues related to the injunction. However, the Claimants did not raise this issue until the very late stage in arbitration, and 'made no realistic efforts' to resolve it (¶89);
the Claimants did not seek the adjournment on the ground of Ms Collins' mental health problems. In any event, the Claimants did not prove that 'any substantial injustice was caused by Ms Collins' absence' as it 'would have been open to Mr Lakhaney to make submissions on the Claimants' behalf, and there [was] no indication that Ms Collins' oral testimony would have been critical to the outcome' (¶92).
Henshaw J was not persuaded by the Claimants' second argument, because:
it was not unfair for the Sole Arbitrator to not admit three unsigned witness statements submitted by the Claimants just before the hearing. The Sole Arbitrator had already received evidence from the Claimants, including signed witness statements, and, as the Respondent pointed out, 'the documents appear to have been in final or near final form since at least' several months before the hearing (¶94);
It was primarily for the Claimants to test the Respondent's evidence and submissions. The Sole Arbitrator probed the Respondent's case to the extent she found it necessary and did act fairly.
Henshaw J found the third Claimants' argument lacking merit likewise, as the Sole Arbitrator 'set out the reasons for her Award in clear, detailed and sufficient terms' and 'made her own findings about' the Claimants' credibility (¶99-100).
CONCLUSION
Although, as is often with challenges on the ground of serious procedural irregularity, Collins & Ors is facts-heavy and -specific, the judgment offers several important lessons (legal and not so much) to all involved in arbitral proceedings whether seated in England or elsewhere:
Preparation is the key
The parties to any arbitration, even more so complicated by parallel court proceedings in multiple jurisdictions, should have robust contingency plans in place for any foreseeable adverse events (e.g. unfavorable judgment(s), injunction(s), recusal of counsel). For example, the Claimants seem to have thought of third-party funding only after being hit with the freezing order (¶33).
Even if one were to put the merits of the claim aside, a rare (if any) funder would have provided financing in those circumstances. Had the Claimants procured a funding arrangement or an adverse judgment insurance, they might not have lost two arbitration counsel.
Lack of experience is not an excuse
Whether you are a self-represented party or counsel with little or no exposure to arbitration, your lack of experience and expertise does not give the green light to late (let alone unsolicited) statements and submissions or permission to disregard the tribunal's procedural directions. While, in the present case, the Sole Arbitrator admitted the Claimants' late statement and certain evidence, another tribunal may not and in most scenarios would be right to do so.
Arbitration is an adversarial process
Each party has to prove its case and contest that of the opponent. The arbitral tribunal could not and would not argue the case on your behalf. As far as the evidence is concerned, it is for the arbitrator to determine the extent to which she or he would be involved in probing it. This takeaway is particularly relevant to parties and counsel from civil law jurisdictions used to the inquisitorial system of justice.
Be candid
The Claimants and their counsel failed to mention the freezing order until, as the Sole Arbitrator put it, 'eleventh hour' (¶38). Was it an innocent omission? Did the Claimants and their counsel honestly believe that the injunction issue would be quickly and favorably resolved and hence there was no need to mention it in arbitration? Maybe the Claimants and their counsel feared a security for costs order and kept silent therefore? Only the Claimants and their representatives can tell.
The Claimants' failure to mention the injunction in a timely fashion seems to have created (at the very least) an appearance that the Claimants were (ab)using the freezing order to protract arbitration. Had the Claimants informed the Sole Arbitrator about the injunction sooner, the adjournment requests (at least some) might have seen a different outcome.
Arbitration is not the place and time for mind games
In their multiple adjournment requests, the Claimants repeatedly raised either expressly or impliedly an argument that can be rephrased as follows: 'grant the adjournment or your award would not stand a chance in court.' While that and similar arguments might indeed cause due process paranoia among 'junior' arbitrators, they seldom (if ever) work with seasoned tribunals.
Instead of rattling the 'Damocles sword' of a set-aside application, be coherent, concise, and articulate. For instance, if you seek the adjournment of the hearing, state the grounds clearly, present supporting evidence, and always specify the date (even if estimated). Few (if any) tribunals would be inclined to grant an open-ended adjournment. Further, if the adjournment is requested to do something (e.g., find a new counsel, appeal/vary the injunction), the best practice is to proactively inform the tribunal on the status and steps taken. Do not wait for the arbitrator to ask you for a status update.
The arbitrator's duties under EEA, s 33(1) & (2) are interrelated
The duty to act fairly, giving each party a reasonable opportunity to present its case, and the duty to ensure time- and cost-efficient conduct of the proceedings are the hammer and anvil tribunals often find themselves in between. Discharging both is of equal import. As long as the balance between procedural fairness and efficiency is found, the English courts would not interfere with the arbitrator's decision-making.
Establishing serious procedural irregularity under EEA, s 68 is difficult
Vacation of the award under section 68 of the EAA is a longstop remedy, and as Collins & Ors reminds, it is reserved for the most extreme cases, where the arbitral tribunal has gone so wrong as to justify curial intervention.