Arbitration Bill [HL]

Debate between Lord Hope of Craighead and Lord Hoffmann

Committee stage
Wednesday 11th September 2024 Lords Chamber

[Lord Hoffmann (CB)]

My Lords, I declare an interest in that, since retiring from the Appellate Committee of your Lordships’ House, I have practised as an arbitrator. More to the point, I was the presiding arbitrator in the Nigerian case to which the noble Lord referred. Of course, no one could object to the sentiment behind the noble Lord’s amendment—we all disapprove of bribery and corruption—but the question your Lordships have to think about is: what does that mean we arbitrators are supposed to do in practice?

Take, for example, the Nigerian case to which the noble Lord referred. It was a claim for breach of contract against the Government of Nigeria: they were supposed to supply the claimants with quantities of gas over a very long period, but they did not do so. The question was: was that a breach of contract? If it was, what were the damages to be? No objection was made on the validity of the contract. We heard the arguments about whether there had been a breach, and we decided there had. Eventually, at another hearing, we went into the question of what damages had to be paid. Arguments were again brought, with expert witnesses on both sides, and we came to the conclusion that it was a large figure, because the gas was due to have been supplied over a period of 25 years and it all added up. That was the rub.

As the noble Lord said, at the hearing before Mr Justice Knowles it turned out that there had been some bribery and corruption in obtaining the contract and in the conduct of the litigation. None of this was known to us. So the question is: what ought we to have done? Should we have said to the parties at the beginning, “By the way, can you please assure us that there has been no bribery and corruption?” It seems an extraordinary ritual that we would have had to go through, and it would have to be the case in every arbitration.

Arbitration is a consensual arrangement. The parties have agreed that each of them will come before a tribunal, that each will present his case and that the tribunal will decide on the basis of the arguments the parties present. Is it consistent with that form of decision-making that the tribunal should attempt to dig away at a point on which the parties have not relied? Of course, if one of the parties suspects that there has been bribery and corruption on the other side, so to speak, that would enable it to resist the application, it would no doubt do so. But, in a case in which neither party raises this point, it is difficult to see what the arbitrators can do.

It is also difficult to see why that should not also be the case in ordinary litigation in the Commercial Court. Is the judge in the Commercial Court to say to the parties, “Has there been any corruption? Nobody’s mentioned it yet, but can you please tell us and inquire as to whether there’s been corruption?” It is quite inconsistent with the way in which litigation and arbitration are conducted that the tribunal should have to take that sort of active investigatory role.

As far as I can see, all that introducing this amendment would do is add a formalised ritual to the conduct of arbitrations, and it may even provide a technical ground on which a party who has lost an arbitration can say, “Well, it’s true that I can’t say there was any corruption, but the tribunal didn’t do enough to investigate whether there was, and that was a breach of its duty under this new provision in the Arbitration Act”. It would therefore create uncertainty and unnecessary difficulties in the way in which arbitrations are conducted. For that reason, I invite your Lordships to reject the proposed amendment.

[Lord Hope of Craighead (CB)]

My Lords, I entirely endorse what my noble and learned friend Lord Hoffmann has said, but I would like to say a word about the procedure that the noble Lord, Lord Hacking, has invited the Minister to adopt. Surely the stage of conferring with people as to what they think about this amendment has passed. This matter could have been raised in the Committee of the noble and learned Lord, Lord Thomas —it was not, of course—but now it is a matter for this Committee to decide whether or not to accept the amendment. It is as simple as that. With great respect, I think it is a matter for the Committee and not for anybody else now. I agree with my noble and learned friend Lord Hoffmann that this amendment should not be accepted.