The Supreme Court has dismissed John McCarthy’s appeal over an arbitration that set the value of his shareholding in Eireann International Finance Brokers Limited. The court found no misconduct by the arbitrator and rejected McCarthy’s request to have the award sent back for reconsideration.
The judgment, delivered by Fennelly J on 16 December 2004, concerned an award valuing McCarthy’s 39 per cent stake in the company. McCarthy had sought to have the award set aside and the arbitrator removed under the Arbitration Act 1954, or alternatively to have the matter remitted to the arbitrator. The High Court had dismissed his claim, and the Supreme Court dismissed his appeal.
The valuation followed a settlement of earlier High Court oppression proceedings brought by McCarthy under section 205 of the Companies Act 1963. The settlement provided for the purchase of his shares in the company and associated companies. It specified a valuation based on a willing seller and willing purchaser, with a valuation date of 21 July 2000. The arbitrator was not given the settlement consent, which stated that its terms were not to be disclosed to him.
McCarthy alleged that the arbitrator mishandled both the valuation basis and procedure. His complaints included that the arbitrator excluded consideration of the court order and the alleged quasi-partnership background, did not provide the opposing party’s withdrawn original submissions, and allowed a rejoinder letter to be read at the hearing.
The Supreme Court said the arbitrator was entitled to interpret his written terms of reference as requiring a willing-seller, willing-purchaser valuation without regard to the identity of the parties or the background to the litigation. It found that both sides had argued the valuation issue and that the arbitrator’s rulings fell within his authority. The court also found no unfairness in withholding the withdrawn submissions, noting that McCarthy had received the report on which they were based.
On the rejoinder, the court observed that the procedure had not provided for such a document, but found that the arbitrator allowed it to be read as part of the other side’s submissions, invited comment, and denied no one the opportunity to respond. The court said it might have been better to circulate the letter at the outset.
The court also rejected remission under section 36. It said the complaints did not amount to a procedural mishap warranting reconsideration, and noted that McCarthy had declined the arbitrator’s offer to delay issuing the award so he could apply to the High Court. The Supreme Court therefore dismissed the appeal, leaving the award in place.