The Supreme Court has set aside an arbitration award arising from Galway City Council’s redevelopment of Eyre Square, after finding that the arbitrator’s handling of proposed expert evidence amounted to misconduct and that the award contained fundamental legal errors.
The dispute concerned a 2004 contract between the Council and Samuel Kingston Construction Ltd for works valued at €6.326 million. The parties later reached an unwritten acceleration agreement involving a €130,000 lump sum and weekly payments of €6,802.69. Disagreement followed over the agreement’s terms and status. In June 2005, the contractor stopped work and returned the site keys; the Council invoked a contractual procedure to enter the site and remove the contractor.
An arbitrator appointed in 2006 issued an award in October 2007 largely in the contractor’s favour. In an amended award two months later, he accepted that the contractor had abandoned the site, but found the Council’s actions unreasonable and concluded that the contractor’s withdrawal was a breach, but not a repudiation of the contract. The Council challenged the award in the High Court, which rejected its application. The Council appealed to the Supreme Court on four grounds concerning the award and sought the arbitrator’s removal on two further grounds.
The Supreme Court focused on the treatment of the Council’s proposed expert witness, Mr Johnson, whose report addressed project delays. The parties’ discussions during the arbitration left it unclear whether his evidence would be heard, depending on the arbitrator’s assessment of its relevance and other objections. The arbitrator made a finding about delay without hearing Johnson, and later explained that Johnson had no personal knowledge of events at the time.
The Court held that the arbitrator had not ruled on the objections or resolved the uncertainty over whether Johnson would testify. Since delay was relevant to the arbitrator’s conclusion against the Council, the expert evidence was relevant too. The Court said the explanation for excluding it did not address the substance of the complaint. It concluded that the handling of the evidence fell short of basic procedural fairness and would make it unjust to let the award stand.
The Court also found a fundamental error in the arbitrator’s conclusion that the contractor’s withdrawal was not a repudiation, and said his treatment of the relationship between the contract’s termination clause and common-law rights was inadequate and flawed. It identified further legal errors in the reasoning on the engineer’s certificate and the Council’s liability. These conclusions formed part of the Court’s reasons for setting aside the award and ordering those issues reconsidered in arbitration.
The Court separately considered allegations that the arbitrator had fallen asleep during the hearing and had contacted the parties’ solicitors about entering an appearance for him. It did not set aside the award on those grounds, nor did it remove him on that basis. It ordered his removal because of the misconduct concerning Johnson’s evidence. The Court made no order remitting issues to him; if the parties cannot resolve the dispute, it will have to proceed before a new arbitrator.