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COURTS OF
JUSTICE
Neutral Citation Number: [2025] EWHC 452 (Comm)
Case No: CL-2024-000236
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
COMMERCIAL COURT (KBD)
Released for publication
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Date: 28 February 2025
Before :
The Hon. Mr Justice Bryan
Between :
| THE REPUBLIC OF KAZAKHSTAN | Claimant |
| - and - | |
| (1) WORLD WIDE MINERALS LTD (a company incorporated in Canada) (2) The estate of PAUL A CARROLL QC (deceased) (3) CATHARINE CARROLL as executor of the estate of PAUL A CARROLL |
Defendants |
--------------------------------
Christopher Harris K.C. and Paul Choon Kiat Wee
(instructed by Reed Smith LLP) for the Claimant
Philip Edey K.C. and Edward Ho (instructed by Jones Day) for the Defendants
Hearing dates: 28 and 29 January 2025
Approved Judgment
This judgment was handed down remotely at 10.30am on 28 February 2025 by circulation to
the parties or their representatives by e-mail and by release to the National Archives.
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MR JUSTICE BRYAN:
1. This is an application by the Claimant, the Republic of Kazakhstan (“Kazakhstan"), under
section 68(2)(d) of the Arbitration Act 1996 (the “Arbitration Act”) challenging operative
paragraphs of an award (the “Award”) rendered on 26 March 2024 by Sir Franklin Berman
and Professor John Crook (the “Tribunal") in an UNCITRAL arbitration in relation to
causation and loss in a long-running Investor-State arbitration seated in London, on the
ground of serious irregularity, on the basis that the Tribunal failed to deal with all the issues
that were remitted back to it (following a previous successful section 68 challenge by
Kazakhstan under section 68(2)(a)) and that this has caused Kazakhstan substantial
injustice.
2. In short, Kazakhstan alleges that the Tribunal failed to deal with Kazakhstan's central
argument on causation and loss at the remitted hearing, which would (per Kazakhstan's
case) have provided a complete defence to the claim, with the result that the Defendants,
World Wide Minerals Ltd (“WWM”) and its CEO, President and shareholder Mr Paul A
Carroll QC (jointly, the “WWM Parties”) would have suffered no loss (whereas the
Tribunal in fact found that Kazakhstan was liable to the WWM Parties in an amount of
some US$13.7 million, which together with interest, stood at over US$54.5 million by
September 2020).
3. In this regard, Kazakhstan had previously successfully challenged the “Final Award on
Merits" (the “2019 Award”) of the full tribunal (which then included Professor Park as
chair) (the "Full Tribunal”), under section 68(2)(a) (the “First Section 68 Challenge”) on
the ground of serious irregularity. The serious irregularity was that the Tribunal had
awarded damages on a basis that had not been argued by the WWM Parties, and which
Kazakhstan had therefore not had the opportunity to address. That basis of damages was
as to WWM's “sunk costs”. His Honour Judge Pelling QC (sitting as a Judge of the
Commercial Court) found that there was a serious irregularity in such circumstances and
remitted issues of causation and loss to the Full Tribunal (see The Republic of Kazakhstan
v World Wide Minerals Limited [2020] EWHC 3068 (Comm); [2021] 1 Lloyd's Rep. 593
(the "Pelling Judgment")).
4. This challenge, therefore, concerns the Tribunal's second attempt to analyse and address
the issues of causation and loss based on the evidence and arguments placed before them
on the remitted hearing which, following extensive written submissions by the parties,
culminated in a five day oral hearing at which expert witnesses were called and further oral
submissions were made by the parties, including as to the key issue of whether a (limited)
breach by Kazakhstan (referred to as the “Export License Breach”) was in fact a cause of
the demise of WWM's investment at all since (per Kazakhstan's counterfactual case) even
but for the Export License Breach the relevant agreement (the Management Agreement)
would still have been terminated by Kazakhstan for WWM's failure to make payments
thereunder, and WWM's investment would have been lost in any event, with the result that
WWM suffered no loss (the “Counterfactual Case").
5. Kazakhstan submits that this key issue was simply not dealt with by the Tribunal in its
Award and accordingly its section 68 challenge must succeed. For its part WWM accepts
(1) that the Counterfactual Case was put by Kazakhstan, at length, to the Tribunal and (2)
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that if the Court concludes that in addressing causation, the Tribunal “completely
overlooks"/"entirely ignores” the Counterfactual Case, there will be substantial injustice to
Kazakhstan within the meaning of section 68, with the result that Kazakhstan's section 68
challenge would succeed. However WWM submits that the Tribunal did deal with this key
issue (however briefly and however inferentially), and as such the section 68 challenge
should be dismissed.
6. Accordingly, the difference between the parties could not be more stark. In the context of
such difference it will be necessary to consider the Award, which runs to some 174 pages
and 427 paragraphs, in some detail. I would only note at the outset that having set out its
"route-map" as to how causation should properly be determined (at paragraph 268 of the
Award) in terms which are unobjectionable, the Tribunal then either (per WWM) dealt with
causation and the Counterfactual Case in a single operative paragraph (paragraph 293) or
(per Kazakhstan) simply did not deal with the key issue at all. What is indisputable (and
was candidly acknowledged by Mr Edey KC on WWM's behalf at the hearing) is that the
argument that there was no loss because the Management Agreement would have been
terminated in any event is not, in terms, referred to anywhere in the Award, and Kazakhstan
says it is not in fact dealt with at all by the Tribunal. Equally, there is no record in the
Award of the matters that Kazakhstan relied upon in relation to the Counterfactual Case
including in its extensive written submissions, and at the oral hearing that took place over
5 days and involved evidence as to Kazakh law, and from the parties' respective
accountancy experts and uranium experts, so far as they related to the Counterfactual Case,
still less any findings or determinations in relation to the same. It is, on any view, a
remarkable state of affairs.
7. I address the applicable principles in relation to a challenge under section 68 of the
Arbitration Act in due course below, but it is apposite to bear in mind at the outset, and
throughout, that, as was said by Akenhead J in Secretary of State for the Home Department
v Raytheon Systems Limited (“Raytheon”) [2014] EWHC 4375 (TCC) at [33]:
"(a) Section 68 reflects “the internationally accepted view that
the Court should be able to correct serious failures to comply
with the "due process” of arbitral proceedings: cf art 34 of the
Model Law." (see Lesotho Highlands Development Authority v
Impregilo SpA [2005] UKHL 43, Paragraph 27); relief under
Section 68 will be appropriate only where the tribunal has gone
so wrong in the conduct of the arbitration that "justice calls out
for it to be corrected." (ibid)".
8. Turning to the facts underlying the dispute and procedural events to date. The underlying
facts date back to June 1996, when WWM (which Kazakhstan characterised as a start-up
and under capitalised junior mining company) won a tender to manage and acquire a
uranium processing facility in Stepnogorsk, Kazakhstan owned by “TGK”, a state-owned
company that held several uranium deposits in Northern Kazakhstan as well as the uranium
processing facility itself (which has been described as a “basket case”).
9. The WWM Parties managed TGK under the terms of a management agreement (the
"Management Agreement"). Under the Management Agreement WWM had various
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financial obligations, as well as rights to certain uranium deposits (the “Northern Mines”),
which WWM had itself identified as “uneconomic”. In order to capitalise TGK, WWM
extended loans of US$12.7 million to it, which were secured by a pledge over all of TGK's
major assets.
10. WWM attempted to secure additional rights from the Government of Kazakhstan
(including, per Kazakhstan, by deliberately starving TGK of funds which it was said put
the lives of thousands of people at risk over the cold winter of 1996/1997).
11. To sell uranium mined in Kazakhstan on the international market, an export license from
the Kazakh authorities was necessary. In early 1997, WWM applied to the Kazakh
authorities for a license to export some of TGK's uranium oxide to the USA (so it could
fulfil a contract with Consumers Energy, a utility company in the USA). No license was
granted. In due course WWM claimed that the treatment of its application breached
Kazakhstan's fair and equitable treatment (“FET”) obligation under the Agreement between
the Government of Canada and the Government of the USSR for the Promotion and
Reciprocal Protection of Investments concluded on 20 November 1989 (“the Treaty”), a
breach defined by the parties as the “Export License Breach”.
12. In August 1997 Kazakhstan terminated the Management Agreement due to WWM's
repeated, and continuing, failure to make payments required of it under the Management
Agreement (in due course its right to do so was upheld by the Full Tribunal in the 2019
Award).
13. In this regard, in 2013, the WWM Parties commenced a London-seated Investor-State
arbitration (the “Arbitration”) against Kazakhstan in which they contended that WWM had
possessed a much-expanded range of rights, and that it had lost them due to multiple
breaches by Kazakhstan of the Bilateral Investment Treaty (including the Export License
Breach). The WWM Parties asserted a single monolithic damages claim of US$1.914
billion. It is important to note at the outset that that claim was governed by international
law and not, for example, English law.
14. On 19 October 2015, the Full Tribunal produced a partial award on jurisdiction deciding it
had jurisdiction pursuant to the Canada-USSR Treaty (following a jurisdictional challenge
by Kazakhstan which argued, unsuccessfully, that Russia not Kazakhstan was the successor
party to the Canada-USSR Bilateral Treaty (the “Treaty”)). In 2018, Kazakhstan sought to
challenge that award out of time under section 67 of the Arbitration Act. That challenge
attempt failed at first instance and permission to appeal was refused by the Court of Appeal.
15. After the Full Tribunal had rejected Kazakhstan's challenge to its jurisdiction, the WWM
Parties' claims were heard and determined by the Full Tribunal. On 29 October 2019, the
Full Tribunal rendered the 2019 Award in which, amongst other matters, it:
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(3) Proceeded to construct a theory of causation and loss with respect to the Export License
Breach and the Bankruptcy Breach, not argued by the parties, and awarded
compensation to the WWM Parties on this basis in the principal sum of US$13.7 million
as at the date of breach (which, together with interest, stood at approximately US$54.5
million by September 2020).
16. As already foreshadowed, the Claimant challenged the 2019 Award under section 68(2)(a).
The WWM Parties had never identified what loss flowed from each of the specific breaches
it alleged and instead had only advanced a single case on the overall effect of all the
breaches taken together. Since only the Export License and Bankruptcy Breaches were
established, and the rest were rejected, Kazakhstan had not had the chance to address the
losses, if any, which those specific breaches had caused.
17. As already noted, that challenge succeeded before HHJ Pelling QC (sitting as a Judge of
the Commercial Court). He held that that irregularity had caused Kazakhstan substantial
injustice because had Kazakhstan had that opportunity, the Full Tribunal might have
reached a different conclusion on causation and damages. In particular, the Judge observed
that the Claimant had not had the opportunity of persuading the Full Tribunal that the
WWM Parties' loss would have been suffered in any event (i.e. Kazakhstan's
Counterfactual Case), stating at [53] as follows:
"53... in considering the causation issue, it would be necessary
for WWM to prove what loss had been caused on the basis of the
findings made by the Tribunal in relation to breach including in
particular that WWM did not have any rights to the Southern
Mines and [that Kazakhstan] was entitled to terminate the
Management Agreement. Had this exercise been carried out the
Tribunal might well have reached a different conclusion from
that it reached in paragraph 587 of the Award ... That WWM
did not have any rights in relation to the Southern Mines may
well have a substantial impact given that it was WWM's own
case that without access to the Southern Mines the whole project
was fundamentally loss making. It may well have been loss
making whether or not the export license sought had been
granted as and when it should have been granted".
18. HHJ Pelling QC therefore set aside paragraphs 587, 596-601 and 649 of the 2019 Award
which related to the quantification of loss and remitted the determination of all issues
concerning causation and quantification to the Full Tribunal. He also set aside and remitted
to the Full Tribunal paragraphs 631-644(i) and 650 of the 2019 Award for reconsideration
of the costs payable (if any) by Kazakhstan to WWM.
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19. A further phase of the Arbitration (the “Remitted Proceedings”) then followed. During the
initial phase of the Remitted Proceedings Kazakhstan and WWM served extensive written
submissions on causation and loss. This was followed by a five day oral hearing before the
Full Tribunal between 11 and 15 July 2022 to address causation and quantum, at which the
parties called oral expert evidence (on Kazakh law, accountancy issues, and uranium
issues), much of which was directed at the Counterfactual Case (as is common ground).
20. After the evidentiary hearing in July 2022, the Presiding Arbitrator resigned due to ill-
health in March 2023, and the parties agreed that the proceedings would continue with the
two remaining arbitrators only (the “Tribunal”).
21. On 26 March 2024, the Tribunal rendered the Award. In the disposition part of the Award
(at [427]) it determined (amongst other matters including as to costs):
22. On 23 April 2024 Kazakhstan issued its Arbitration Claim Form and Accompanying
Schedule challenging the Award under section 68(2)(d) of the Arbitration Act on the basis
that:
Kazakhstan's contention that the Export License Breach was not a cause of the demise
of WWM's investment at all (i.e. not even one of a number of multiple causes), since
even but for the Export License Breach, the Management Agreement would still have
been terminated and the Arbitration Claimants' investment in TGK would still have
been lost in any event, and
23. On 24 May 2024, WWM's solicitors Jones Day (of its own motion) wrote to Kazakhstan's
solicitors Reed Smith LLP stating, amongst other matters as follows:-
"We refer to the Republic of Kazakhstan's ("Kazakhstan")
challenge, pursuant to section 68(2)(d) of the Arbitration Act
1996 (the "Challenge"), to the award issued on 26 March 2024
in the above-referenced matter (the "Award").
Having now had the opportunity to review the Challenge in
detail, we believe Kazakhstan's arguments are wholly without
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merit and are prepared, should this prove necessary, to fully
defend our clients against Kazakhstan's claims. This said, given
that this matter has been pending for over a decade (having
started in December 2013 when World Wide Minerals Ltd. 's
Notice of Arbitration was filed), and in the interests of the swift
resolution of the dispute, our clients are prepared to attempt to
reach agreement with Kazakhstan on next steps.
With this objective in mind, we write to propose that the Parties
jointly agree that the Court grant the alternative relief sought by
Kazakhstan at paragraphs 24(1)(b) and 24(2)(b) of its Arbitration
Claim Form Schedule and that the issues listed therein be
remitted to the Truncated Tribunal for reconsideration and
rendering a fresh award as soon as possible but no later than
within 3 months, as provided in section 71(3) of the Arbitration
Act 1996. Upon such remission, we do not envisage any new
submissions nor any further hearing being necessary (consistent
with Kazakhstan's position that it has already raised such
matters).
Should your client be amenable to this proposal, the Parties
should commence work on a Consent Order at the earliest
possible opportunity. We would be pleased to send through a
draft of such Order for your review shortly upon receipt of your
confirmation that our clients' proposal is, in principle, agreed.
This proposal is put forward, and any subsequent discussions
will be, without prejudice to the respective Parties' positions in
relation to the Challenge (and until any agreed Consent Order
has been signed and sealed by the Court). Our clients do,
however, reserve the right to rely on this correspondence in
relation to the issue of costs in the context of the Challenge.
We will, separately, be writing to the Truncated Tribunal to
confirm whether they would also be ready and willing to
determine any matters remitted back to them within 3 months of
the remission. We will, of course, copy you on that
communication".
24. The same day (and without awaiting any response from Reed Smith LLP on behalf of
Kazakhstan) Jones Day wrote to the Tribunal in similar terms, and ended their letter by
stating:
"In light of the Parties' pending deadlines before the Court we
are therefore writing to ask the Tribunal whether, should it prove
possible for the Parties to reach agreement on the basis outlined
above, the Truncated Tribunal would, for its part, be willing and
available to address Kazakhstan's requests for reconsideration
within the above-stated statutory deadlines”.
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25. By letters dated 27 and 28 May 2024 respectively, the members of the Tribunal each
indicated that they would be unable to accept any further assignment in this matter.
26. On the challenge under section 68(2)(d) of the Arbitration Act, the issue that arises is
whether the Tribunal failed to deal with Kazakhstan's Counterfactual Case, namely:
"whether the Export License Breach was in fact a cause of the
demise of WWM's investment at all, since even but for the
Export License Breach, the Management Agreement would still
have been terminated and WWM's investment in TGK would
still have been lost in any event”.
27. The question whether there is a serious irregularity within subsection 68(2)(d) raises three
specific questions (Petrochemical Industries Co (KSC) v DOW Chemical CO [2012]
EWHC 2739 (Comm) [2012] 2 Lloyd's Rep. 691) at [15]:
28. If the answer to all these questions is in the affirmative, a further issue is whether such
failure of the Tribunal to deal with the Counterfactual Case caused or will cause Kazakhstan
substantial injustice.
29. By way of riposte to the section 68 challenge, WWM says that such challenge is precluded
because if, contrary to WWM's case, there is any real doubt about whether the Tribunal
dealt with the Counterfactual Case, Kazakhstan could and should have applied to the
Tribunal under Article 35 of the UNCITRAL Rules 1976 (under which the Remitted
Proceedings were conducted) for an interpretation of paragraph 293 of the Award to clarify
what WWM says is, on this hypothesis, an ambiguity in the Award. For its part Kazakhstan
submits that Article 35 of the UNCITRAL Rules 1976 is not engaged as there is no
"ambiguity" and no issue of “interpretation” that arises in circumstances where there was
a wholesale failure by the Tribunal to deal with the Counterfactual Case (relying in that
regard on the analysis of Foxton J in Czech Republic v Diag Human SE (“Diag”) [2024]
EWHC 503 (Comm) at [206] and following).
30. Section 68 of the Arbitration Act provides, amongst other matters, that:
"(1) A party to arbitral proceedings may ... apply to the court
challenging an award in the proceedings on the ground of serious
irregularity affecting the tribunal, the proceedings or the award.
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A party may lose the right to object (see section 73) and the right
to apply is subject to the restrictions in section 70(2) and (3).
(2) Serious irregularity means an irregularity of one or more of
the following kinds which the court considers has caused or will
cause substantial injustice to the applicant—
...
(d) failure by the tribunal to deal with all the issues that were
put to it".
31. The applicable principles are well established, and were largely common ground between
the parties, albeit that there were differences of emphasis between Kazakhstan and WWM.
32. In Diag, Foxton J restated the principles summarised by the Privy Council in RAV Bahamas
Ltd v Therapy Beach Club (“RAV Bahamas”) [2021] UKPC 8, [2021] AC 907 (in which
Lord Hamblen and Lord Burrows JJSC handing down the judgment of the Board
themselves approved what was said by Aikenhead J in Raytheon).
33. In this regard Foxton J stated at [160] (references are to paragraphs in RAV Bahamas):
“i) The test of serious irregularity was intended to limit
intervention to "extreme" cases where it could be said that "the
tribunal has gone so wrong in its conduct of the arbitration that
justice calls out for it to be corrected" ([30]).
ii) Serious irregularity has been recognised as imposing a "high
threshold" or as “the hurdle" ([31]).
iii) The focus is on due process, not the correctness of the
decision reached ([32]).
iv) Even if a case is shown to fall within one or more of the kinds
of irregularities listed in section 68 this will only amount to a
serious irregularity if the court considers that it “has caused or
will cause substantial injustice”, which means “more than some
injustice" ([33]).
v) There will be substantial injustice where it is established that,
had the irregularity not occurred, the outcome of the arbitration
might well have been different, but it is not necessary to show
that the outcome would “necessarily or even probably be
different" ([34]).
vi) Some irregularities may be so serious that substantial justice
is “inherently likely” or “likely in the very nature of things” to
result ([35]), including where “on a central matter a finding is
made on a basis which does not reflect the case which the party
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complaining reasonably thought he was meeting, or a finding is
ambiguous, or an important issue is not addressed.”
vii) In general, there will, however, be no substantial injustice if
it can be shown that the outcome of the arbitration would have
been the same regardless of the irregularity ([37])”.
34. In relation to the meaning of an “issue”, the applicable principles are again identified by
the Board in RAV Bahamas by reference to what was said by Akenhead J in Raytheon at
[33(g)]):
"(ii) There is a distinction to be drawn between ‘issues' on the
one hand and ‘arguments', ‘points', ‘lines of reasoning'or
'steps' in an argument, although it can be difficult to decide quite
where the line demarking issues from arguments falls. However,
the authorities demonstrate a consistent concern that this
question is approached so as to maintain a ‘high threshold' that
has been said to be required for establishing a serious irregularity
(Petrochemical Industries v Dow [2012] 2 Lloyd's Rep 691, para
15; Primera v Jiangsu [2014] 1 Lloyd's Rep 255, para 7).
(iii) While there is no expressed statutory requirement that the
section 68(2)(d) issue must be ‘essential', 'key' or 'crucial', a
matter will constitute an 'issue' where the whole of the
applicant's claim could have depended upon how it was resolved,
such that 'fairness demanded' that the question be dealt with
(Petrochemical Industries, at para 21).
(iv) However, there will be a failure to deal with an ‘issue' where
the determination of that 'issue' is essential to the decision
reached in the award (World Trade Corpn v C Czarnikow Sugar
Ltd [2005] 1 Lloyd's Rep 422 at para 16). An essential issue
arises in this context where the decision cannot be justified as a
particular key issue has not been decided which is critical to the
result and there has not been a decision on all the issues
necessary to resolve the dispute or disputes (Weldon Plan Ltd v
The Commission for the New Towns [2000] BLR 496 at para
21)".
35. Turning to whether the issue has been “put to” the tribunal, the Board in RAV Bahamas at
[42] quoted what was said by Aikenhead J in Raytheon at [33(g)(v)] that “[t]he issue must
have been put to the tribunal as an issue and in the same terms as is complained about in
the section 68(2) application”. The Board continued:
"There is a degree of overlap between the considerations
relevant to whether there is an "issue" and whether it has been
"put to" to the tribunal. It is clear that this does not require the
issue to have been pleaded or included in a list of issues. It is
necessary to consider the arbitration proceedings as a whole,
including the pleadings and the written and oral submissions.
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Having done so, in general, what is required is that the tribunal's
attention has been sufficiently clearly drawn to the issue, as one
which it is required to determine, that it would reasonably be
expected to deal with it".
36. The Board then addressed the principles in relation to the third question, i.e. whether the
arbitrators had failed to deal with the issue, quoting with approval what was said by
Aikenhead J in Raytheon at [33(g)(vi) to (xii)]. The parties in the present case referred me
to Foxton J's summary in relation to many of these matters at [163(vi) to (viii)] in Diag,
which is as follows:
"vi) If the tribunal has dealt with the issue in any way, section
68(2)(d) is inapplicable and that is the end of the enquiry; it does
not matter for the purposes of section 68(2)(d) that the tribunal
has dealt with it well, badly or indifferently ([43]). It matters not
that the tribunal might have done things differently or expressed
its conclusions on the essential issues at greater length. A failure
to provide any or any sufficient reasons for the decision is not
the same as failing to deal with an issue. Nor is a failure by a
tribunal to set out each step by which it reached its conclusion or
deal with each point made by a party a failure to deal with an
issue that was put to it.
vii) A tribunal may deal with an issue by so deciding a logically
anterior point such that the other issue does not arise. If the
tribunal decides all those issues put to it that were essential to be
dealt with for the tribunal to come fairly to its decision on the
dispute or disputes between the parties, it will have dealt with all
the issues ([43]).
viii) Whether there has been a failure by the tribunal to deal with
an essential issue involves a matter of a fair, commercial and
commonsense reading (as opposed to a hypercritical or
excessively syntactical reading) of the award in question in the
factual context of what was argued or put to the tribunal by the
parties (and where appropriate the evidence) ([43]).The court
can consider the pleadings and the written and oral submissions
of the parties to the tribunal in this regard".
37. It is important to note, however, that Foxton J did not summarise all the applicable
principles in this regard that were identified by Aikenhead J in Raytheon at [33(g)] and
quoted with approval by the Board in RAV Bahamas at [43]. In particular, his summary
omits what was said by Aikenhead J in Raytheon at [33(g)(xi)] which was quoted with
approval by the Board in RAV Bahamas at [43]. It may be that this passage was not
considered by him to be of relevance on the facts in Diag but, as will be seen, it may be of
some considerable importance on the facts of the present case:
"(xi) It is up to the tribunal how to structure an award and how
to address the essential issues; if the issue does not arise because
of the route the tribunal has followed for the purposes of arriving
at its conclusion, Section 68(2)(d) will not be engaged. However,
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if the issue does arise by virtue of the route the Tribunal has
followed for the purposes of arriving at its conclusion, Section
68(2)(d) will be engaged”.
(emphasis added)
38. In relation to what issues need to be dealt with, the following passages from the judgment
of Gavin Kealey QC (sitting as a Deputy High Court Judge) in Buyuk Camlica v Progress
Bulk Carriers (“Buyuk”) [2010] EWHC 442 (Comm) are, I consider, of relevance:
"29. However, the principal issue (i.e. the very dispute that the
Tribunal had to decide), whether or not the Charterers were
entitled to damages, could not be decided fairly in this case
unless the Tribunal also dealt with such issues as had been raised
by the parties that were essential to be dealt with for the Tribunal
to come fairly to its decision on that principal issue.
...
30. ... Provided that the tribunal decides all those issues put to it
that were essential to be dealt with for the tribunal to come fairly
to its decision on the dispute or disputes between the parties, it
should, in my view, have complied with the requirements of
section 68(2)(d).
...
"38. Nevertheless, it seems to me that the question whether
or not the Tribunal failed to deal with an essential issue, viz. an
issue that was crucial to the Tribunal's decision, cannot be
decided on the basis of whether or not the issue has any merit:
the presence or absence of merit might be relevant to whether or
not a substantial injustice might have been done to one or other
of the parties but it cannot resolve the question whether or not
the issue was dealt with in the first instance. Having said that,
what if the issue is one that is so devoid of merit that one might
be able to contemplate the possibility that it was dismissed by
the Tribunal which, given the quality of the issue in relation to
the complexity of the case overall, did not then think it necessary
to articulate as much in its Reasons? In my judgment, the answer
to this question is that it should not be left to the parties, or the
task of the court, to engage in speculation of that kind. If the
determination of an issue is crucial to the result, as in these
references waiver was crucial to the question whether there was
an actionable breach of contractual warranty, then however
unmeritorious the arguments might be in favour of that issue the
Arbitral Tribunal is bound to deal with it and, in my view, to do
so in such a way, normally by reference in the Award or Reasons,
as to make it evident to the parties that the Tribunal has indeed
dealt with it: as His Honour Judge Humphrey Lloyd Q.C.
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observed in Weldon Plant v Commission for New Towns [2001]
1 All ER 264, 279:
“.. where the decision cannot be justified as a particular key
issue has not been decided which is crucial to the result .... the
tribunal has not done what it was asked to do, namely to give
the parties a decision on all issues necessary to resolve the
dispute or disputes."
In a similar vein was the observation of Toulson J. in Ascot
Commodities N.V. v Olam International Ltd. [2002] 2 Lloyd's
Rep. 277, 284:
“Nor is it incumbent on arbitrators to deal with every
argument on every point raised. But an Award should deal,
however, concisely, with all essential issues.”
As those observations recognise, there should be some form of
communication, normally in the form of a decision, by an arbitral
tribunal to the parties from which the latter can ascertain whether
or not an essential issue has dealt with. It is not sufficient for an
arbitral tribunal to deal with crucial issues in pectore, such that
the parties are left to guess at whether a crucial issue has been
dealt with or has been overlooked: the legislative purpose of
section 68(2)(b) is to ensure that all those issues the
determination of which are crucial to the tribunal's decision are
dealt with and, in my judgment, this can only be achieved in
practice if it is made apparent to the parties (normally, as I say,
from the Award or Reasons) that those crucial issues have indeed
been determined".
(emphasis added)
39. Further, in relation to reading an award in a reasonable and commercial way, as was said
by Andrew Smith J in Petrochemical Industries Co (KSC) v Dow Chemical CO [2012]
EWHC 2739 (Comm) [2012] 2 Lloyd's Rep. 691) at [27(v)];:
"(v) [the] approach may involve taking into account of the
parties' submissions when deciding whether, properly
understood, an award deals with an issue. Although submissions
do not dictate how a tribunal is to structure the disposal of a
dispute referred to it, often awards (like judgments) do respond
to the parties' submissions and they are not to be interpreted in a
vacuum".
40. As is provided in section 68(2), a serious irregularity is an irregularity which the court
considers has caused or will cause substantial injustice to the applicant. In this regard, and
as was said by Aikenhead J in Raytheon at [61]:
[Page 14]
“[i]t almost goes without saying that, necessarily, there has been
substantial injustice because the arbitrators have not addressed
the key issues ... This cannot be classified as anything less than
substantial injustice because the arbitrators have not applied their
minds to the issue at all and any right minded party to arbitration
would feel that justice had not been served”.
41. In RAV Bahamas Lord Hamblen and Lord Burrows JJSC referred to the Report on the
Arbitration Bill (later, the Arbitration Act) of the Departmental Advisory Committee on
Arbitration Law (the “DAC”) to emphasise that:
"30. ... it is only in those cases where it can be said that what has
happened is so far removed from what could reasonably be
expected of the arbitral process that we would expect the court
to take action. The test is not what would have happened had the
matter been litigated. To apply such a test would be to ignore the
fact that the parties have agreed to arbitrate, not litigate. Having
chosen arbitration, the parties cannot validly complain of
substantial injustice unless what has happened simply cannot on
any view be defended as an acceptable consequence of that
choice. In short, clause 68 is really designed as a long stop, only
available in extreme cases where the tribunal has gone so wrong
in its conduct of the arbitration that justice calls out for it to be
corrected".
(emphasis added)
42. They also noted at [35]:
"35. Some irregularities may be so serious that substantial justice is "inherently likely"
or "likely in the very nature of things" to result. As Toulson J stated in Ascot
Commodities NV v Olam International Ltd [2002] CLC 277, 284F—285A:
"Since the whole process of arbitration is intended as a way of
determining points at issue, it is more likely to be a matter of
serious irregularity if on a central matter a finding is made on a
basis which does not reflect the case which the party
complaining reasonably thought he was meeting, or a finding is
ambiguous, or an important issue is not addressed, than if the
complaints go simply to procedural matters . . .”
It is inherently likely to be a source of serious injustice if
irregularities occurred of the kind to which I have referred. Since
the purpose of arbitration is to determine central issues between
the parties, if there has been a flaw in that this has not been done,
that is likely in the very nature of things to be a matter of serious
injustice".
(emphasis added)
[Page 15]
43. A claimant will suffer substantial injustice if a tribunal has “entirely ignored”
(Petrochemical Industries Co (KSC) v Dow Chemical at [33]), or “overlooked" (Buyuk at
[38]), or “failed to deal with” (Torch Offshore LLC v Cable Shipping Inc [2004] 2 Lloyd's
Rep 446 at [25]); or “disregard[ed]" important issues (Russell on Arbitration, 24th edn,
para 20.30.17).
44. The arbitration was conducted in accordance with the 1976 UNCITRAL Rules.
45. Article 35 thereof provides that:
"1. Within thirty days after the receipt of the award, either party,
with notice to the other party, may request that the arbitral
tribunal give an interpretation of the award.
2. The interpretation shall be given in writing within forty-five
days after the receipt of the request. The interpretation shall form
part of the award and the provisions of article 32, paragraphs 2
to 7, shall apply".
46. As already noted, section 68(1) of the Arbitration Act provides that a party to arbitral
proceedings may apply to the court challenging an award in the proceedings on the ground
of serious irregularity affecting the tribunal, the proceedings or the award but that, “[a]
party may lose the right to object (see section 73) and the right to apply is subject to the
restrictions in section 70(2) and (3)”. In this regard section 70(2) provides:
“An application or appeal may not be brought if the applicant or
appellant has not first exhausted—
(a) any available arbitral process of appeal or review, and
(b) any available recourse under section 57 (correction of
award or additional award)".
47. In Diag, Foxton J held that the materially identically worded Article 37 of the UNCITRAL
Rules 2010 was “a comprehensive set of arbitration rules” ousting the default powers of
the tribunal under section 57(3)) (see at [208(iv)]).
48. As for Article 37 itself, he stated at [200]-[201] as follows:
“200. David Caron and Lee Caplan's commentary on the
UNCITRAL Rules (The UNCITRAL Arbitration Rules: A
Commentary 2nd, [802]) states “interpretation, as distinct from
other post-award proceedings, provides a means of ‘clarification
of the award' by resolving any ambiguity and vagueness”. They
refer to the travaux préparatoires for the UNCITRAL Rules
noting that the word “clarification” had at one stage been
proposed, referring to certain observations from representatives
that interpretation involved “clarification of ‘the purpose of the
award" or was “useful in resolving confusion and ambiguity in
[Page 16]
the wording of the award arising in cases where the award was
not rendered in the native language of the parties". Caron and
Caplan continue:
“Interpretation is not a mechanism for revisiting an issue
... that the tribunal should have decided but did not."
201. Other commentary also stresses the need for lack of clarity
before an Article 37 request can be made: e.g. Thomas Webster,
Handbook of UNCITRAL Arbitration (4th), [37-05] ("if the
operative part is unclear") and [37-06] (“If the reasons are
unclear in some respect, a party may wish to have an
interpretation of the reasoning of the Award to determine the
scope of any issues of res judicata"). The Claimants relied upon
UNCITRAL Model Law on International Commercial
Arbitration: A Commentary (2020) [851-22] when commenting
on Article 33 of the UNCITRAL Model Law (which permits one
arbitrating party with the agreement of the others to “request the
arbitral tribunal to give an interpretation of a specific point or
part of an award”). This commentary states:
"There may be situations where a statement needs to be
clarified, or it is uncertain whether some specific issues
have been dealt with in the award or reserved for future
determination.
Interpretation can be used whenever the final award does
not contain the minimum information necessary to grasp
the tribunal's line of reasoning”.
Once again, this commentary presupposes a genuine lack of
clarity or "uncertainty", or an inability to "grasp" reasoning. I
would note that the scope for abusive requests for interpretation
under the UNCITRAL Model Law led to a requirement that both
parties consent before it can be exercised (see the 329th meeting
of the UNCIRAL Working Group on the UNCITRAL Model
Law, on 18 June 1985 for discussion of this issue)".
(emphasis added)
49. Accordingly, Articles 35/37 of the UNCITRAL Rules 1976/2010 are not engaged where
there is no “ambiguity", and no issue of “interpretation” arises in circumstances where there
is a failure by a tribunal to deal with an issue (see Diag at [206] and following).
Consistently, in that case, there was no issue of interpretation because the merits of the
issue at hand (concerning an assignment point) were not referred to in the award and there
was nothing in the award at all to reference to the assignment point.
50. In circumstances in which WWM concedes that the Counterfactual Case was "an issue”,
that it was “put to” the Tribunal, and that if the Tribunal “completely overlooked” the
[Page 17]
Counterfactual Case Kazakhstan will have suffered substantial injustice, the main (and
determinative) issue between the parties on the section 68 challenge is whether the Tribunal
"dealt with" the Counterfactual Case. However on the authorities, that issue cannot be
considered in a vacuum and without regard to the evidence and arguments before the
Tribunal and the Award read as a whole. It will therefore be necessary to identify and
address both the evidence and arguments before the Tribunal and the Award as a whole.
51. Kazakhstan's overarching submission is that the Tribunal did not, and clearly did not, deal
with the Counterfactual Case at paragraph 293 of the Award (in particular, the one sentence
therein on which WWM places so much reliance) or anywhere else in the Award.
Kazakhstan submits that this was a serious failure to comply with the due process of the
arbitral proceedings such that the Tribunal has gone so wrong in the conduct of the
arbitration that justice calls out for it to be corrected. Kazakhstan submits that the omission
was all the more serious as this was a central, if not the key, issue in the Remitted
Proceedings, and Kazakhstan had advanced detailed and evidentially robust arguments in
the Remitted Proceedings in its written submissions, in its evidence at the Oral Hearing,
and in its oral submissions demonstrating that WWM's investment would have failed in
any event but for the Export License Breach, not least because Kazakhstan would have
terminated the Management Agreement for non-payment in any event. Kazakhstan submits
that it is all the more surprising that the Tribunal failed even to refer to the Counterfactual
Case (including that Kazakhstan would have terminated the Management Agreement in
any event) given the obvious relevance of the same to causation and loss, which were
matters that led HHJ Pelling QC to uphold the First Section 68 Challenge and remit the
matter to the Tribunal in the first place.
52. In contrast, WWM's overarching submission is that the Tribunal did, at least implicitly,
deal with the Counterfactual Case in paragraph 293 of the Award when read together with
other associated paragraphs (in particular paragraphs 268, 417, 422 and 427) albeit that it
realistically accepts that nowhere in the Award does the Tribunal expressly refer to
Kazakhstan's argument that the Management Agreement would have been terminated in
any event by Kazakhstan (which is an integral part of the Counterfactual Case). It
nevertheless submits that there was no failure to deal with the Counterfactual Case. Mr
Edey KC accepted, however, that if the Tribunal “completely overlooked" (and therefore
did not deal) with the Counterfactual Case then there would be a substantial injustice within
the meaning of section 68(2)(d).
53. Mr Edey KC referred to Diag at [163(viii)], and suggested that the Tribunal should be given
the benefit of the doubt. He points out that a tribunal can deal with a point despite giving
no reasons at all for it, and it can deal with a point by not deciding it at all because of a
decision on a logically prior point (see Petrochemical Industries v Dow Chemical, supra,
at 27(i) and (ii)). Mr Edey KC's overarching submission was that on a fair, commercial and
common sense reading of the Award, the Tribunal did deal with Kazakhstan's
Counterfactual Case however briefly or concisely, and however lacking in reasons in
relation thereto.
54. On the case of each of Kazakhstan and WWM, two paragraphs of the Award are key;
namely, paragraphs 268 and 293. I address each of them further in Section F below, but it
is appropriate to identify the parties' respective submissions, and express some initial
observations in relation thereto, so that they can be borne well in mind when considering
the Award, and addressing the elements of the section 68(2)(d) test.
[Page 18]
55. Paragraph 268 of the Award provides:
"As to the Respondent's position, the Tribunal accepts that it may
in appropriate cases be convenient to apply a counterfactual test
to help determine the existence of injury and its cause, after
which a remoteness test might be applied to distinguish between
compensable damage and damage that is too remote. The
Tribunal is not however persuaded that international law lays
down as a fixed requirement a two-stage process consisting of
those elements. The true position is, as the Tribunal has already
remarked, that on standard principles it is the claimant who must
prove, by appropriate evidence, the loss or damage for which it
claims. That is best regarded as one single process which may,
according to particular circumstances, involve considerations
both of injury and its causation, and of proximity. Once a
claimant has produced its evidence and presented the
conclusions it draws from that, the respondent may of course set
out to rebut them by whatever means it chooses, which may well
include in an appropriate case a counterfactual analysis designed
to question whether the alleged injury was in fact suffered, or
whether it was in fact caused by the alleged breach. The
adjudicator will then decide the issues in dispute on the basis of
the evidence and argument presented. But, and especially in
respect of alleged breaches of the FET guarantee, these are
matters involving a measure of evaluation and assessment, and
not the application of rigid rules".
(emphasis added)
56. Kazakhstan submits that in paragraph 268 the Tribunal recognise the potential relevance of
a counter-factual case, then correctly state the true position that the claimant (WWM) must
prove its case with evidence as to the loss or damage it has suffered and the conclusions it
draws therefrom after which a respondent may seek to rebut the same by whatever means
it chooses, including, in an appropriate case, a counterfactual analysis designed to question
whether the alleged injury was in fact suffered or whether it was in fact caused by the
alleged breach (this being an appropriate case as Kazakhstan has indisputably raised the
Counterfactual Case here) and then the adjudicator (here the Tribunal) “will decide the
issues in dispute on the basis of the evidence and arguments presented” (which include the
Counterfactual Case), which is the Tribunal's route map (the “Route Map") yet, says
Kazakhstan, the Tribunal (in paragraph 293), simply did not do so, and did not deal with
the Counterfactual Case at all.
57. In contrast, WWM submits that the first part of paragraph 268 involves a rejection of
Kazakhstan's Counterfactual Case (as Mr Edey KC confirmed was its position in the course
of oral argument). In this regard Mr Edey KC referred back to paragraph 262 of the Award
where the Tribunal had stated that it was "not able to endorse either of" the parties'
approaches under international law to causation (I address paragraph 262 of the Award in
due course below).
[Page 19]
58. However, as for the remainder of paragraph 268, and even after hearing extensive oral
submissions from Mr Edey KC, it remains unclear to me what meaning and effect WWM
gives to the remainder of paragraph 268, given that the Tribunal then correctly identifies
and sets out the “true position” (and neither party suggests otherwise) and the Tribunal then
rightly recognises that a respondent may seek to rebut the claimant's evidence and
conclusions sought to be drawn by whatever means it chooses which may include a
counterfactual analysis, and which Kazakhstan undoubtedly did with its Counterfactual
Case. The Tribunal then said it would decide the issues in dispute on the basis of the
evidence and arguments presented (i.e. the Route Map) which must ex hypothesi include
the Counterfactual Case. The remaining (and central) issue is whether it did deal with the
Counterfactual Case at paragraph 293.
59. I can say at the outset that I consider that Kazakhstan's construction of paragraph 268 is
the correct construction (both construing paragraph 268 in situ and in the context of the
Award as a whole), and that WWM's construction is wrong and does not reflect what the
Tribunal says, and finds. Most importantly, for the debate as to whether the Tribunal do
deal with the Counterfactual Case (specifically at paragraph 293) the Tribunal does not
reject the relevance of a counterfactual analysis or the Counterfactual Case in paragraph
268 and indeed (correctly) recognises that a respondent is entitled to raise a counterfactual
analysis, which Kazakhstan of course did in its written submissions, in its evidence, and in
its oral submissions at the five day oral hearing, and (importantly) the Tribunal made clear
that it would then “decide the issues in dispute on the basis of the evidence and argument
presented" (i.e. the Route Map). In this regard, and as will appear below, the “evidence and
arguments presented” indisputably included the Counterfactual Case (indeed, and as
accepted by Mr Edey KC, the Counterfactual Case was at the very heart of the evidence
and Kazakhstan's case and was a major issue, if not the key issue, to be dealt with by the
Tribunal). I address paragraph 268, which has five identifiable elements, in more detail in
due course below.
60. I address the construction of paragraph 293 in due course below. It suffices at this point to
identify, at a high level, the parties' respective submissions in relation thereto as to whether
the Tribunal there dealt with the Counterfactual Case so that the same can be borne in mind
when addressing the Award as a whole below.
61. For ease of reference the Counterfactual Case is as follows:
"whether the Export License Breach was in fact a cause of the
demise of WWM's investment at all, since even but for the
Export License Breach, the Management Agreement would still
have been terminated and WWM's investment in TGK would
still have been lost in any event”.
62. Paragraph 293 provides as follows (I include the lettering added by WWM for the purpose
of discussion):
"Reverting to paragraphs 234 and 271 above, [A] the Tribunal
must now give its attention to the question, what injury was
caused to the Claimants' investment in Kazakhstan by the export
license breach? [B] It is incontestable that the export license
breach cannot be found to be either factually or notionally a
[Page 20]
confiscation of the Claimants' investment. That would be
incompatible with the Tribunal's res judicata finding that
Respondent's termination of the Management Agreement was
not in breach of the BIT, not to mention its finding of no
expropriation (paragraph 9 above). [C] Nor is it open to question
that Claimants' investment was already at serious risk of failure
by the time of the export license breach. This is so whichever is
taken to be the date of breach (see further, paragraphs 396-400
below). [D] The Parties vigorously disputed whether timely
grant of an export license would have remedied this situation.
[E] However, no license was in the event granted, making the
failure by Respondent to respect the FET guarantee in its
handling of Claimants' export license applications a decisive
factor that, together with others, caused the investment's
eventual demise. [F] As already laid down in paragraphs 244 and
268 above, the determination by the Tribunal of the injury and
damage caused by this breach of the FET guarantee are matters
involving a measure of evaluation and assessment, not the
application of rigid rules. [G] On that foundation, the Tribunal
will now consider afresh what remedy is warranted to redress the
Claimants' injury, on the strength of the 'new and/or existing
evidence of all issues concerning causation and the
quantification of loss' as referred to in paragraph 2 of the High
Court Order."
(emphasis added)
63. Leaving aside the fact that it might be thought to be quite remarkable that in a 427
paragraph Award running to some 174 pages, the Tribunal addresses the question of
causation and loss in one paragraph (paragraph 293), each of WWM and Kazakhstan place
particular focus on one sentence therein (highlighted in bold at letter [E]) as to where, if at
all, the Tribunal dealt with causation including the Counterfactual Case (albeit construed
with regard to paragraph 293 as a whole and indeed the Award as a whole).
64. Kazakhstan's position is that the Tribunal clearly did not deal with the Counterfactual Case
either in paragraph 293 or indeed, anywhere else in the Award. It points out that there is no
reference to the factual matters that Kazakhstan relied upon, the disputed issues of Kazakh
law that were addressed extensively by both parties in expert evidence (both in writing and
in cross-examination at the July 2022 oral hearing), the extensive submissions of the
parties' uranium experts which addressed (amongst other matters) whether WWM would
have been able to fulfil the CE Contract, or the submissions of the parties' quantum experts
addressing (amongst other matters) WWM's inability to fund TGK and satisfy its
outstanding liabilities. Most fundamentally of all (and Kazakhstan says determinatively on
the section 68(2)(d) challenge), the Tribunal simply do not deal at all with the issue of
whether the Management Agreement would have been terminated in any event, which is at
the very heart of the Counterfactual Case and which (if successful) would be fatal to
WWM's claim for loss. Yet further, and far from there being any statement to the effect
that the Tribunal did not consider it necessary to determine this issue, or that a
determination of a logically anterior point meant the issue did not arise, the Tribunal has
recognised at paragraph 268 that Kazakhstan was entitled to rebut causation by any means
[Page 21]
it chose, including by a counterfactual analysis, and the Tribunal had then expressly chosen
a route (the Route Map) by which it would “decide the issues in dispute on the basis of the
evidence and the argument presented” (which ex hypothesi inevitably involved dealing with
the Counterfactual Case) yet the Tribunal simply had not done so in paragraph 293 (or any
where else in the Award).
65. As for the highlighted sentence on which WWM places so much reliance, namely, “no
license was in the event granted, making the failure by Respondent to respect the FET
guarantee in its handling of Claimants' export license applications a decisive factor that,
together with others, caused the investment's eventual demise”, Kazakhstan submits that
this cannot possibly be construed as the Tribunal dealing with the Counterfactual Case. The
words “no license was in the event granted” is simply a statement of the actual factual
position (and indeed the basis for the Export License Breach itself). It is a given before one
even considers the issues on causation that arose to be dealt with. This cannot make "the
failure by the Respondent to respect the FET guarantee in its handling of Claimants export
license" a factor, still less a “decisive factor", that caused the investment's eventual demise
– that is the very issue the Tribunal are supposed to be dealing with, yet they do not do so
in this sentence or anywhere else (not least given that the Tribunal has already (rightly)
rejected WWM's case that it would suffice if the Export License Breach was a cause of the
loss). "Together with the others” cannot be a reference to the Counterfactual Case as on
that Counterfactual Case it is a trump card that would mean that WWM has suffered no
loss (so it cannot be a factor “together with others" supporting WWM's loss), and equally
if it was demonstrated it would be a “knock-out” blow to loss being suffered by WWM at
all. Weighed in the scales it would, by its very nature, outweigh all other factors. In short,
the Tribunal have failed to follow their own Route Map and have failed to deal with the
Counterfactual Case.
66. In contrast WWM submits, as encapsulated at paragraph 8 of its Skeleton Argument, that,
"it is plain beyond argument that [the Tribunal] did deal with the
central issue 'whether the Export License Breach was in fact a
cause of the demise of WWM's investment at all': at §293 of the
[Award] the [Tribunal] held that the export license breach was
'a decisive factor that, together with others, caused the eventual
demise of [WWM's] investment in Kazakhstan' and it repeated
that critical conclusion in the Disposition at §427a”.
67. I would simply interpose, at this point, that WWM's characterisation of “the central issue”
omits a major part of the Counterfactual Case, namely “since even but for the Export
License Breach, the Management Agreement would still have been terminated and
WWM's investment in TGK would still have been lost in any event”. Importantly, WWM
accepted in the course of the oral argument that this part of the Counterfactual Case was
part of the "issue” that was “put to” the Tribunal (as opposed to being a “sub-issue” which
at one point WWM had sought to characterise it as). Further, per Kazakhstan, it was the
key issue which in and of itself answered the first part of the Counterfactual Case but, per
Kazakhstan, the Tribunal did not deal with.
68. As for paragraph 293 as a whole, WWM submits as follows:
[Page 22]
69. WWM then state "[n]o doubt [the Tribunal] might for completeness have said more about
the factual aspect of [Kazakhstan's] Counterfactual Case” (which Kazakhstan would no
doubt characterise as something of an understatement). WWM then submits, “[b]ut that is
not a basis for a section 68 challenge. Rather all that matters is that the [Tribunal] dealt
with it to the extent which, on its view of the proper approach to causation under
international law, was necessary”. Kazakhstan's riposte to this is that this is the whole point,
in the sense that the Tribunal did not deal with it as required on the established authorities,
and even more fundamentally on the facts of the present case, it had not dealt with it in the
manner it had said it would in its Route Map at paragraph 268 (“on the basis of the evidence
and argument presented”) which is a fundamental aspect of due process, and which engages
section 68(2)(d) (see Raytheon at [33(g)(xi)] and RAV Bahamas at [43]).
[Page 23]
70. I turn then to consider the three specific questions that arise as to whether there was a
serious irregularity within subsection 68(2)(d) (per Petrochemical Industries Co (KSC) v
Dow Chemical Co supra [15]) namely, (1) whether there was an “issue” within the meaning
of the subsection, if so, (2) was it “put to” the Tribunal, and if so (3) did the Tribunal fail
to deal with it, before then considering the question of substantial injustice. As will be
apparent, issues (1) and (2) can be dealt with relatively shortly given the concessions that
have been made by WWM, whilst issue (3) requires a more detailed consideration of the
Award as a whole, albeit that it is vital still to address (1) and (2) as they form the factual
context in which (3) stands to be considered, and are highly relevant to how (3) has to be
approached by a tribunal (given that the Counterfactual Case at (1) is recognised as a
central, if not the key, issue to be dealt with in relation to causation and loss).
71. Before doing so it is important to identify that WWM made a number of important
concessions (both in WWM's Skeleton Argument and in the course of Mr Edey KC's oral
submissions) which significantly reduce what is in issue between the parties in relation
whether there was a serious irregularity and whether it caused Kazakhstan substantial
injustice:
[Page 24]
the meaning of section 68. This itself is a recognition that if the Tribunal did not “deal”
with the Counterfactual Case, then there will be “substantial injustice" within the
meaning of section 68.
72. As identified by the Privy Council in RAV Bahamas, there is a distinction to be drawn
between “issues" on the one hand and “arguments”, “points”, “lines of reasoning" or
"steps" in an argument. Crucially for present purposes, a matter will constitute an “issue”
where the whole of the applicant's claim could have depended upon how it was resolved,
such that "fairness demanded” that the question be dealt with (see RAV Bahamas at [40]).
73. Accordingly, in accepting that the Counterfactual Case was an “issue”, WWM thereby
(rightly) acknowledges that the whole of WWM's claim (for loss) could have depended
upon how the Counterfactual Case was resolved such that fairness demanded that the
question be dealt with.
74. This concession, and in particular the concession that the whole of the Counterfactual Case
is an issue (the part before and the part after the “since”) is important, because (for example)
the consequence is that fairness demands that the part after the “since” be dealt with – i.e.
that but for the Export License Breach the Management Agreement would still have been
terminated and WWM's investment in TGK would still have been lost in any event.
75. It follows, that by its very nature the issue is “very important” and “the centrepiece” of
Kazakhstan's argument, being “definitive”/“determinative”, and it was an “essential”,
"key", "crucial” matter upon which Kazakhstan's defence was predicated. These are all
descriptions which recognise that “the whole of the applicant's claim could have depended
upon how it was resolved" (per RAV Bahamas at [40]). If made out, it was a complete
answer to the claim for loss. As Mr Edey KC rightly acknowledged, “if the Tribunal had
reached that conclusion that it would have been terminated in any event then I accept it
would be very difficult for the Tribunal to reach the conclusion that loss was caused by the
relevant breach".
76. I am satisfied and find that the Counterfactual Case was an "issue" which "fairness
demanded" should be dealt with (per RAV Bahamas at [41]).
77. I note, in this regard, that HHJ Pelling QC before me, himself clearly regarded the
Counterfactual Case as being one that fairness demanded be dealt with (at [53]-[54]):
"... it would be necessary for WWM to prove what loss had been
caused on the basis of the findings made by the tribunal in
relation to breach including in particular that WWM did not have
any rights to the Southern Mines and [Kazakhstan] was entitled
to terminate the Management Agreement. Had this exercise been
carried out the tribunal might well have reached a different
conclusion from that it reached in paragraph 587 of the Award,
particularly in light of the defendants' stance concerning the
importance of the Southern Mines to the overall viability of the
investment as a whole as summarised earlier in this judgment.
That WWM did not have any rights in relation to the Southern
[Page 25]
Mines may well have a substantial impact given that it was
WWM's own case that without access to the Southern Mines the
whole project was fundamentally loss making. It may well have
been loss making whether or not the export license sought had
been granted as and when it should have been granted".
...
“This may involve a careful investigation into what profits might
have been made had an export license been granted as sought.
How those profits would have impacted on the losses apparently
being made would involve some complexity as would the impact
of such profits on WWM's breach of the Management
Agreement and [Kazakhstan's] ability to terminate the
Management Agreement. Had [Kazakhstan] been given the
opportunity to consider and make submissions about these
points, the tribunal might well have reached a different
conclusion from that which it reached, perhaps after giving
further directions for the preparation of evidence and
submissions focusing on such issues".
78. As recognised by Aikenhead J in Raytheon (at [33(g)]), there is a degree of overlap between
the considerations relevant to whether there is an “issue” and whether it has been “put to”
the tribunal. As he states (and as is quoted with approval in RAV Bahamas at [42]):
"It is necessary to consider the arbitration proceedings as a
whole, including the pleadings and the written and oral
submissions. Having done do, in general, what is required is that
the tribunal's attention has been sufficiently clearly drawn to the
issue, as one which it is required to determine, that it would
reasonably be expected to deal with it".
79. WWM rightly accepts that the Counterfactual Case was “put to” the Tribunal, and so this
requirement is satisfied. However it is important to understand that the Counterfactual Case
was not simply an “issue” that was “put to” the Tribunal (as one of many issues put to the
Tribunal). Rather it was the centrepiece (as Mr Edey KC put it) of Kazakhstan's defence in
the Remitted Proceedings. It was an “essential issue” to use the language of the Privy
Council in RAV Bahamas (at [43]).
80. When considering whether there has been a failure by the Tribunal to deal with an essential
issue (the third question as addressed in Section F.4 below) that involves a fair, commercial
and commonsense reading (as opposed to a hypercritical or excessively syntactical) reading
of the award in question):
“in the factual context of what was argued or put to the tribunal
by the parties (and where appropriate the evidence) (Ascot
Commodities v Olam [2002] CLC 277 ... The court can consider
[Page 26]
the pleadings and the written and oral submissions of the parties
to the tribunal in this regard".
(emphasis added)
81. It is therefore important (for the purpose of the third question and whether the Tribunal
dealt with the essential issue that is the Counterfactual Case) to identify the factual context
of what was argued or put to the Tribunal by the parties, having regard to the pleadings, the
evidence and the written and oral submissions of the parties. When that is done (as
addressed below) it will be clear that the Counterfactual Case was at the very heart of the
pleadings, the evidence, the Oral Hearing, and the written and oral submissions of the
parties, which is the factual context in which the Award is to be read when considering
whether the Tribunal has dealt with the essential issue that is the Counterfactual Case.
82. In this regard:
"B. The Respondent's intended case as to the Export License
Breach
...
(a) The Export License Breach did not cause the total loss of
[WWM's] investment (or any loss), because even if it had not
occurred, [WWM Parties'] investment would have failed in any
event
...
18. ... The Management Agreement would therefore still have
been terminated by GKI on or around 1 August 1997, and (as the
Tribunal has found) this would not have breached the Treaty.
19. With respect to causation ... since [WWM Parties] would
have lost their investment even in the But For Situation, it
follows that no injury was caused to [WWM Parties] by the
Export License Breach".
“5. These remitted proceedings ultimately concern what would
have happened but for each of the Export License Breach and
the Bankruptcy Breach. The Tribunal is to ascertain, on the
evidence, the hypothetical state of affairs that would have existed
[Page 27]
if the relevant breach had not occurred (the “Counterfactual
Scenario"). This is then to be contrasted with what has in fact
occurred (the “Actual Scenario”). Here, the Respondent shows
that but for the Export License Breach, the evidence establishes
that the Claimants would have lost their investment in TGK in
any event, because the Claimants would have lacked the means,
resources, and will to remedy their (considerable) defaults under
the Management Agreement and avoid its termination in August
1997 even if the export license had been granted".
"[i] the establishment of the breach, followed by
[ii] the ascertainment of the injury caused by the breach,
followed by
[iii] the determination of the appropriate compensation for that
injury"
(3) Kazakhstan's Rejoinder on Causation and Quantum dated 13 May 2022 set out the
issues for determination. The background to the Rejoinder was identified by Mr Harris
KC, which was that Kazakhstan had not felt that the Reply from the WWM Parties fully
engaged with its case, and so it attempted to set out the key issues for determination for
the Tribunal with cross-references to the key passages in the parties' pleadings, the key
arguments and legal authorities. In this regard:
“(1) What were TGK's monthly funding requirements? ...
(2) What was the extent of Claimants' arrears under the
management agreement? ... (3) Had the Claimants already
decided to cease advancing further funds to TGK?”.
[Page 28]
“(1) When would the export license for the CE Contract have
been granted?”. This issue was dealt with. Then, “(2) Would
the Claimants have been able to fulfil the CE Contract? (3)
... Would the Claimants have been able to secure the
necessary financing to enable their investment to survive? ...
(4) Would the Claimants have successfully negotiated a joint
venture in relation to the Southern Mines, as contemplated
by the Strategic Alliance Agreement? ... (5) Without any
joint venture for the exploitation of the Southern Mines,
would the Claimants have continued to finance their
investment in Kazakhstan? ... (6) Would the Management
Agreement have been terminated in any event?”.
(4) The Remitted Proceedings culminated in the five-day Oral Hearing before the Tribunal
with both evidence and submissions. Kazakhstan's Counterfactual Case was the focus
of its written and oral submissions and evidence on causation. In this regard, three out
of the five days of the Oral Hearing included oral evidence and cross-examination of
experts in financing and uranium. The experts for financing were PwC (for Kazakhstan)
and Accuracy (for the WWM Parties). The experts in relation to uranium were Wardell
Armstrong (for Kazakhstan) and the Uranium Experts (for the WWM Parties). The
PwC and Wardell Armstrong experts addressed Kazakhstan's case on the
counterfactual and the matters within the Counterfactual Case. In this regard:
"As at either date of breach, WWM did not have sufficient fundsFrom 4.27 onwards, PwC analysed whether WWM had access to the funds
to be able to pay any more of its schedule 4 commitments, some
of which were already overdue, the future wages, ... or amounts
due to WWM or TGK's other creditors".
“... given my analysis of WWM's financial situation, in my
opinion it seems likely that it would have run out of money
regardless of whether or not it received the export license and so
[Page 29]
its ultimate financial position in both the Actual and
Counterfactual Scenarios would be the same".
"It appears unlikely that the stockpiled ore could have beenDr Newall's evidence was that given the nature of the ore it would have cost a great
processed in sufficient quantity to fulfill the CE Contract and that
significant costs would have been incurred in any attempt to do
so".
83. In the above circumstances, there can be no doubt whatsoever that the "issue" (the
Counterfactual Case) was “put to” the Tribunal. However the matters identified above are
of particular importance not only in showing that the “issue” was “put to” the Tribunal but
because they form the factual context of what was argued and put to the Tribunal by the
parties, for the purpose of considering whether the “issue” was “dealt with” by the Tribunal
in circumstances where (as shall be seen) none of this (for example in terms of the PwC
and the Wardell Armstrong evidence) is dealt with, in paragraph 293 or indeed anywhere
in the Award, in the context of the Counterfactual Case.
84. In order to determine whether the Tribunal failed to deal with the Counterfactual Case it is
necessary to undertake a fair, commercial and commonsense reading of the Award as a
whole in the factual context of what was argued before the Tribunal as identified above.
85. In this regard, whilst each of paragraphs 268 and 293 were at the heart of the submissions
before me, it was common ground that it was necessary to have regard to the Award as a
whole. It is to that I will now turn, before addressing each of paragraphs 268 and 293.
86. The Award runs to some 427 paragraphs over 174 pages. It is divided into 8 Sections:
Section I (Introduction), Section II (Procedural History), Section III (Requests for Relief),
Section IV (Scope of Matters Remitted), Section V (Causation), Section VI (Quantification
of Loss), Section VII (Costs) and Section VIII (Disposition). Of most direct relevance is
Section V (Causation).
87. In Section I (Introduction) it is stated at paragraphs 3 and 4 as follows:
[Page 30]
“3. On 23 November 2020, the English High Court granted an
application of 26 November 2019 by Respondent under Section
68 of the English Arbitration Act 1996, setting aside certain
paragraphs of the Final Award, and remitting to the Tribunal the
determination of “all issues concerning causation and the
quantification of loss referable to the findings of breach made by
the Tribunal in the [Final] Award”.
4. Pursuant to proceedings conducted in accordance with
directions issued in consultation with the Parties (the “Remitted
Proceedings") the Tribunal in this present Award determines
those matters remitted to it. This Award is to be read together
with the Tribunal's Final Award, and in the light of the Order of
the English High Court dated 23 November 2020."
88. Paragraph 3 footnotes the Pelling Judgment and paragraphs 1 to 3 thereof. It is clear
throughout the Award (as WWM accepted before me), that the Tribunal had read, and was
aware of the contents of, the Pelling Judgment as a whole.
89. At paragraphs 73 to 74 (as part of Section II: Procedural History) there is a reference to the
parties' experts “for examination at the hearings to be held on 11-15 July 2022” (i.e. at the
Oral Hearing).
90. The Tribunal sets out the scope of the matters remitted in Section IV. The Tribunal begins
by recording the parties' submissions and sets out the dispute. It summarises WWM's and
Kazakhstan's positions. There then follows the Tribunal's analysis of the issue. These
paragraphs are not the subject of the section 68 challenge, but are illustrative of the
approach adopted by the Tribunal to such issues, which stretches over 51 paragraphs and
23 pages of the Award. It is to be contrasted with Section V, and the very short part thereof,
that actually addresses causation.
91. At paragraph 222, the Tribunal sets out the “central task for this Tribunal” by reference to
the Pelling Order (at [2]), in the following terms which are of importance given the
Tribunal's own characterisation of its "central task":
"222. The central task for this Tribunal, as succinctly laid out in
paragraph 2 of the High Court Order, is ‘the determination by
new and/or existing evidence of all issues concerning causation
and the quantification of loss referable to the findings of breach
made by the Tribunal in the Award".
(emphasis added)
92. Section V of the Award is titled, “Causation”. It is then broken down into sections A to J.
Section A (commencing at paragraph 228) states as follows:
[Page 31]
"A. The Tribunal's task; breach
228. The Tribunal can thus proceed to its central task as
described in paragraph 222 above, namely ‘the determination ...
of all issues concerning causation and the quantification of loss
referable to the findings of breach made by the Tribunal in the
Award.' It goes without saying that the starting point for that
determination must be the Tribunal's findings of breach as set
out in the Final Award. This is a matter purely of identification.
The findings themselves are not open to challenge or dispute;
they are res judicata, and were treated as such in the High Court
Judgment".
93. Between paragraphs 228 and 230, having clarified negatively as well as positively, the
substance and nature of the relevant breaches it is then stated that, “the Tribunal can proceed
to its central task as set out above".
94. Section B is headed, “the establishment of the Claimants' injury". It is then stated at
paragraphs 232 and 233 as follows:
"232. The Tribunal begins with the existence and extent of any
injury to Claimants flowing from these breaches, bearing in mind
that this is one of the matters on which the burden of proof rests
squarely on the Claimants. The High Court Order uses the term
'loss', but the Tribunal understands this term, read in the light of
the Judgment, as referring generally to all forms of legally
relevant injury or damage, with the term 'loss' indicating only
that what is in question is exclusively injury or damage of a
directly quantifiable kind.
233. The establishment of the injury actually suffered is the
necessary starting point; without it, there is nothing on which to
hang an enquiry into causation or quantum. A claimant must, in
other words establish – as a question of fact – that it did indeed
suffer the injury on which it bases its claim. It must then establish
– as a mixed question of fact and of law – that that specific injury
was caused by the respondent's specific breach, and was not too
remote from that breach".
95. The Tribunal then identifies the three-step approach identified in the Pey Casado
(Resubmission) award (that both parties relied upon), namely:
"the assessment of the reparation due under international law for
the breach of an international obligation consists of three steps –
the establishment of the breach, followed by the ascertainment
of the injury caused by the breach, followed by the determination
of the appropriate compensation for that injury".
96. The Tribunal then continued:
[Page 32]
"As can be seen, the second of those three steps is 'the
ascertainment of the injury caused by the breach.' It might
however be said that this phrasing in fact conflates two ideas:
identifying the injury and, having done so, then verifying its
causation. The immediately following paragraph in Pey Casado
states this more precisely: “...the injury in question has to be that
caused by the specific breach. ... What must be proven is both
the existence of an injury to the claimant and that that particular
injury is the sufficiently proximate consequence of the specific
breach." This is at all events the approach which this Tribunal
will adopt".
97. At paragraph 234 (to which reference is made back in paragraph 293), the Tribunal
identified that the question may be raised whether WWM's injury had not already been
determined in the Tribunal's Final Award before noting that it had not and, “[a]t all events,
the absence of a specific finding as to the injury suffered is what the High Court identified
as deficient in the Final Award".
98. At paragraph 235 of the Award the Tribunal then noted that:
"In the previous Merits Phase [WWM Parties] cast very widely
the extent and nature of the injury or injuries they claimed to
have suffered. That corresponded in turn both to the scope of
what they claimed to be their protected investment and the wide
range of BIT breaches ... As just indicated, the rejection of most
of those claims in the [2019 Award], notably as to the scope of
[WWM Parties'] investment and the expropriation claim, means
that they must reformulate root and branch what they now assert
as their injury, so as to link it to the Tribunal's findings of breach,
but not to go beyond that.
As stated in the High Court Judgment (at paragraph 11), “any
damages would have to be quantified by reference to the
breaches in fact proved. Any claim based on the assertion that
the sum of the conduct complained about amounted to
expropriation had been rejected”.
99. At paragraph 236 of the Award, the Tribunal stated that, “[t]he Judgment and Order,
therefore, set the framework and limits for what is open to the [WWM Parties] to claim in
this resumed phase of the arbitration”.
100.The Tribunal then proceeded to summarise the three elements of injury ultimately asserted
by WWM in the Remitted Proceedings:
"(i) destroying the very essence and purpose of [WWM Parties']
investment, namely to export and to sell Kazakhstani uranium in
the global market; (ii) destroying [WWM Parties'] reputation in
the uranium market, and so depriving WWM of access to need
revenue from trading activities; and (iii) nullifying WWM's
ability to access debt financing or attract equity investors".
[Page 33]
101. It was noted that WWM had sought to argue that a paragraph in the Final Award (paragraph
391), and in particular a sentence in that paragraph to the effect that WWM's “inability to
obtain an export license effectively doomed the investment” was “a definite determination
which should control the issues of injury, causation and quantum, at least so far as concerns
the export license breach”. The Tribunal rejected this interpretation and made clear that the
Final Award did not make “any sort of legal judgment on what injury was caused to [WWM
Parties] by the export license breach, nor on the appropriate remedy for it. ... Paragraph
391 is thus of no determinative significance for the issues the Tribunal must now decide”.
102. At paragraph 244 (in Section D: Injury and Damage”), the Tribunal stated, amongst other
matters, as follows:
"a. There is no room in the law governing international
investment for a freefloating concept of 'injury'. The injury must
be shown to result from the particular breach, and the connection
between the breach and the injury must satisfy the law's
requirements as to causation. The onus of establishing both of
these elements on the basis of appropriate evidence lies, in the
usual way, with the claimant as the party advancing the injury”.
103. The Tribunal noted at 244(c) that the form of the reparation awarded by a tribunal will be
that found appropriate, in both its positive and negative sense, to the nature of the breach
found to have taken place. In this regard the Tribunal then stated in relation to breach of a
FET obligation as follows (at 244(c)(ii)):
"ii. breach of the FET obligation consists by definition in a
finding of treatment that was 'unfair' or ‘inequitable'; there is
nothing absolute about this, it requires the exercise of a measure
of judgement by the tribunal in ascertaining its existence and
extent from case to case".
104. The Tribunal then stated as follows at paragraph 245, rejecting the notion that causation
was synonymous with general expressions such as “followed in the wake of” or “was
suffered by" (foreshadowing its subsequent rejection of WWM's case in the same vein that
it need only show that the Export License Breach was “a” cause of loss):
"245. Within that framework, the Tribunal will now consider
what injury was 'caused' to the Claimants by the export license
breach. The term 'caused' has been put in quotation marks
principally because the Parties have found themselves
fundamentally at odds over the correct approach to be taken in
establishing causation. But it serves also to signal that
'causation' in this context is a term of art. As the citations above
from the Pey Casado (Resubmission) award show, it is not
synonymous with general expressions such as ‘followed in the
wake of' or 'was suffered by”.
105. In Section E (entitled “causation in international law"), the Tribunal then addressed
WWM's position and Kazakhstan's position (as to a two part or two-stage approach) as to
[Page 34]
causation and in each case thereafter rejected their position before (as shall be seen) setting
out the true position in paragraph 268, which did include a counterfactual analysis by way
of rebuttal of a claimant's case (as advocated by Kazakhstan).
106. At paragraph 246 and following the Tribunal set out WWM's position. WWM contended
that the test of causation has two parts. It submitted that the first part involved looking at
whether the state's wrongful conduct played, “some part in or was a cause of the injury", it
being submitted that “the wrongful conduct need not have been the only cause or even the
main cause, and that it suffices for it to have been a cause". It submitted that the second
part involved a “legal analysis of whether the wrongful act is sufficiently linked to, or is a
proximate cause of, the injury".
107. At paragraph 252 and following the Tribunal set out Kazakhstan's position. It was noted
that Kazakhstan concurred with WWM that the test of causation under international law
has two elements: a factual element and a legal element. It noted that according to
Kazakhstan, the Tribunal must “construct the Counterfactual Scenario, and identify 'the
situation which would, in all probability, have existed if [each of the Export License Breach
and the Bankruptcy Breach] had not been committed", in order to ascertain the injury – if
any – that was caused by each breach". This is the first reference to a counterfactual
scenario, but it is in the context of Kazakhstan's two element approach.
108. Under the heading the “Tribunal's Analysis", the Tribunal first summarises, at paragraph
260, WWM's two elements of a factual element and a legal element, and WWM's
contention that, under the applicable principles of international law, it is enough for the
breach to be no more than “a” cause of the injury. At paragraph 261 the Tribunal then
summarises Kazakhstan's two-stage approach:
"261. The Respondent, for its part, also accepts a two-stage
approach to the question, consisting of a factual test followed by
a legal test. It submits that, in the first stage, what injury (if any)
has been caused by a breach is most naturally established via
what it terms a counterfactual scenario. This involves
identification of the situation that would, in all probability, have
obtained had a given breach not been committed, which is then
compared with the actual situation following the breach, the
difference between the two representing the injury. The second
stage then tests the proximity or remoteness of the injury so
established to its causative event(s). Therefore, says Respondent,
"[t]he Tribunal's first (and principal) task in these Remitted
Proceedings is accordingly to construct the Counterfactual
Scenario...".
109. Pausing at this point, it is clear that what the Tribunal is addressing is WWM's “two
element approach” and Kazakhstan's “two-stage approach”. It is not (for example)
addressing whether a counterfactual scenario is of relevance to the question of causation (it
clearly is as the Tribunal was to go on to find at paragraph 268).
110. This explains what the Tribunal then says at paragraph 262. “The Tribunal is not able to
endorse either of these two approaches". Mr Edey KC sought to submit that the Tribunal
thereby rejected the relevance of a counterfactual to causation in international law. That
[Page 35]
submission is untenable. It is perfectly clear that what the Tribunal was not able to endorse
was "either of these two approaches" (my emphasis). Thus it was not able to endorse
WWM's two element approach (a factual element and a legal element) or Kazakhstan's
two stage approach (a factual test followed by a legal test). It was not rejecting the relevance
of a counterfactual to causation in international law. On the contrary it was in due course
(in paragraph 268) to recognise the relevance of a counterfactual to causation in
international law.
111. In paragraphs 263 to 267 the Tribunal explained why it could not endorse WWM's
approach to causation, stating (at paragraph 263) that it was “wholly unpersuaded by
[WWM's] theory of causation, according to which even the most minor contribution to
injury or damage would in principle give rise to liability for anything that follows,
seemingly on the basis of post hoc ergo propter hoc” (i.e. it follows therefore it is caused),
the Tribunal thereby rejecting WWM's “a” cause argument, before (in Section F at
paragraphs 266 and 267) rejecting WWM's reading of the principle of full compensation.
112. The Tribunal then deals with the relevance of a counterfactual test in Section G at paragraph
268, and (as already addressed above) far from rejecting a counterfactual test, recognises
the appropriateness of such a test. For ease of reference I will set it out again at this point
(with numbering for ease of discussion):
"[1] As to the Respondent's position, the Tribunal accepts that it
may in appropriate cases be convenient to apply a counterfactual
test to help determine the existence of injury and its cause, after
which a remoteness test might be applied to distinguish between
compensable damage and damage that is too remote. [2] The
Tribunal is not however persuaded that international law lays
down as a fixed requirement a two-stage process consisting of
those elements. [3] The true position is, as the Tribunal has
already remarked, that on standard principles it is the claimant
who must prove, by appropriate evidence, the loss or damage for
which it claims. That is best regarded as one single process
which may, according to particular circumstances, involve
considerations both of injury and its causation, and of proximity.
Once a claimant has produced its evidence and presented the
conclusions it draws from that, the respondent may of course set
out to rebut them by whatever means it chooses, which may well
include in an appropriate case a counterfactual analysis designed
to question whether the alleged injury was in fact suffered, or
whether it was in fact caused by the alleged breach. [4] The
adjudicator will then decide the issues in dispute on the basis of
the evidence and argument presented. [5] But, and especially in
respect of alleged breaches of the FET guarantee, these are
matters involving a measure of evaluation and assessment, and
not the application of rigid rules."
(emphasis added)
[Page 36]
113. It will be seen that set in the context of the preceding paragraphs (as addressed above) it is
even clearer that the Tribunal did not reject a counterfactual test, but rather rejected
Kazakhstan's two-stage approach (a factual test followed by a legal test) and then set out
the correct approach (the “true position”) in relation to causation, and identified the role
that a counterfactual analysis has in that regard in rebutting a claimant's case on causation
and loss, before setting out the Tribunal's Route Map: that the Tribunal will then decide
"the issues in dispute on the basis of the evidence and the arguments presented" (the central
argument being advanced by Kazakhstan, of course, being the Counterfactual Case).
114. As I have already foreshadowed, I am satisfied in this regard that Kazakhstan's construction
of paragraph 268 is the correct construction, and that WWM's construction is wrong and
does not reflect what the Tribunal says, and finds. Most importantly, for the debate as to
whether the Tribunal does deal with the Counterfactual Case (specifically at paragraph 293)
the Tribunal does not reject the relevance of a counterfactual analysis or the Counterfactual
Case in paragraph 268 and indeed (correctly) recognises that a respondent is entitled to
raise a counterfactual analysis which Kazakhstan of course did in its written submissions,
in its evidence, and in its oral submissions at the five day Oral Hearing, and (importantly)
the Tribunal made clear that it would then “decide the issues in dispute on the basis of the
evidence and argument presented” (i.e. the Route Map). In this regard, and as has now been
addressed above, the “evidence and arguments presented" indisputably included the
Counterfactual Case (indeed the Counterfactual Case was at the very heart of the evidence
and Kazakhstan's case and argument and was a major issue, if not the key issue, to be dealt
with).
115. Seen in context of what precedes paragraph 268, the correct construction of paragraph 268
does not change, and is even clearer. In this regard paragraph 268 has five identifiable
elements (as numbered above):
[Page 37]
form of the Counterfactual Case) which was designed to question whether the alleged
injury was in fact suffered or whether it was in fact caused by the breach given that on
the basis of such Counterfactual Case Kazakhstan submitted that WWM had suffered
no loss as the Management Agreement would have been terminated in any event.
(4) At [4], and crucially for the debate before me, the Tribunal then sets out that the
adjudicator (here the Tribunal) will “then decide the issues in dispute on the basis of
the evidence and argument presented” – i.e., the Tribunal's Route Map, which is both
logical, rational and what one would expect of any tribunal. Equally crucial, the
“evidence and arguments presented" included, and have at their heart, the
Counterfactual Case. Having set out that (conventional and appropriate) Route Map,
the Tribunal then have to deal with the evidence and arguments including the
Counterfactual Case. As is said by Aikenhead J in Raytheon at [33(g)(xi)] which was
quoted with approval by the Board in RAV Bahamas at [43], "it is up to the tribunal
how to structure an award and how to address the essential issues; if the issue does not
arise because of the route the tribunal has followed for the purposes of arriving at its
conclusion, Section 68(2)(d) will not be engaged. However, if the issue does arise by
virtue of the route the Tribunal has followed for the purposes of arriving at its
conclusion, Section 68(2)(d) will be engaged” (my emphasis). In the present case it is
indisputable that the issue reflected by the Counterfactual Case does arise by virtue of
the route the Tribunal has chosen to follow (the Route Map). This is not a case where
the Counterfactual Case does not arise because of the route the Tribunal has followed.
I would only add that it is difficult to conceive of any route that the Tribunal could
logically follow which would not involve it dealing with the Counterfactual Case, given
its central relevance as an issue that was (if demonstrated) fatal to WWM's submission
that it had suffered any loss.
(5) At [5], the Tribunal makes clear that, especially in respect of alleged breaches of the
FET guarantee, the matters (identified by them) involve a “measure of evaluation and
assessment, and not the application of rigid rules” (a phrase also repeated in paragraph
293 and elsewhere). The Tribunal is here reiterating the point it made at paragraph
244(c)(ii) of its Award, and refers to again at paragraph 381 (in the context of quantum)
about a breach of the FET obligation consisting by definition of a finding of treatment
that is "unfair” or “inequitable” and which requires the exercise of judgement in
ascertaining both the existence of a breach and its consequences, there being a measure
of discretionary assessment in determining the injury caused and the appropriate means
of compensation. Such observations are unobjectionable in the context of FET but,
contrary to WWM's submissions, this is not (and cannot be or be read as) a rejection
by the Tribunal of the counterfactual analysis that it has only just endorsed the
appropriateness of, or the “true position" it has just stated, or the Route Map that it has
just said it will adopt. The Tribunal was not thereby disowning, or departing, from all
that it had just said in the remainder of paragraph 268; it was not, as it were, “throwing
the baby out with the bath water". Equally such "evaluation and assessment" must
involve an evaluation and assessment of the evidence (much of which, as addressed
above, was directed, on both sides, at the Counterfactual Case). In this regard it is
important to bear in mind that the Tribunal had rejected in trenchant terms (at paragraph
263) WWM's theory of causation whereby it sufficed that the breach was only "a"
cause of the loss, and in the context of quantum, was to go on to reject (at paragraph
380) a suggestion arising from the Pelling Judgment that WWM's injury might be seen
as a “loss of a chance”. As a consequence, the Counterfactual Case cannot but arise for
[Page 38]
decision on the Route Map, based on the “evidence and argument presented”, at the
very heart of which, and as WWM accepts, was the Counterfactual Case.
116. It is against the backdrop of such construction of paragraph 268 (and the Tribunal's Route
Map) that paragraph 293 stands to be construed.
117. However, it is first relevant to note that at Section H, at paragraph 269 and following, the
Tribunal returns to what it had identified at paragraph 237 – namely that WWM asserts a
single global “catastrophic injury” with three components:
It being said that “Taken severally or jointly, ... these had the effect of destroying
[WWM's] investment".
118. The Tribunal stated (at paragraph 271) that in relation to each of these components of the
asserted injury it would examine whether the existence of that component was made out on
the evidence, if so it would determine (again on the evidence) whether the component could
be said to have resulted from the breach, and in the light of the outcome for all three
components, it would then determine what injury overall was caused to WWM by the
breach.
119. The Tribunal then stated (at paragraph 274) that they would address the three components
in reverse order. It is relevant to have regard to how the Tribunal dealt with the second and
third components, before turning to the three paragraphs in which the Tribunal addressed
the first (including paragraph 293) not least because there is a noticeable difference between
how the Tribunal addresses matters in relation to the second and third components and the
first.
120. The third component (and the first considered) related to WWM's ability to secure or attract
financing, and specifically whether it had been made out on the evidence that WWM lost,
or was deprived of, that ability in consequence of the Export License Breach. After
identifying the evidence that WWM had adduced at the merits phase, and had been
evaluated in the Final Award, and the Tribunal's finding that it was “not possible to know
whether WWM could have secured financing", the Tribunal considered the evidence that
had now been adduced (including the evidence of mining finance and the experts reports
on damages by Accuracy and PwC) and concluded that there was little that was new, and
found that the matters identified, “serve to show that [WWM] have plainly failed to meet
the burden on them of sustaining the third component of the trilogy said to constitute the
catastrophic injury caused by the export license breach” (at paragraph 281).
121. It is notable that in relation to this component (and the second as addressed below) the
approach of the Tribunal is methodological. It sets out the matter, deals with the parties'
submissions, refers back to the evidence, provides its analysis, and concludes on the issue.
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In these two components, the question of a counterfactual never arose because the WWM
Parties failed to discharge their burden of proof. The Tribunal in each case explicitly stated
that the "Claimants have plainly failed to meet the burden on them”. As already
foreshadowed, this is in stark contrast with the final issue, dealt with in only three
paragraphs, and in relation to which it is not stated that Kazakhstan had failed to prove that
the Management Agreement would have been terminated in any event (as Mr Edey KC
candidly acknowledged in the course of his oral submissions).
122. The second component (namely destroying WWM's credibility and reputation in the
uranium markets, thereby depriving WWM of access to needed revenue, not only from the
CE Contract, but also from future spot and long-term sales contracts with other purchasers)
was also addressed by the Tribunal at paragraphs 282 to 290 of the Award in a
methodological fashion, identifying the existing evidence, noting that the new evidence
was thin, and concluding that the WWM Parties had “plainly failed to meet the burden on
them of establishing the second component of their claim" (at paragraph 290).
123. The Tribunal then dealt with the third overriding component of WWM's asserted injury –
that is to say, "destroying the very essence and purpose of their investment” in Kazakhstan
– in a mere three paragraphs, of which the first (paragraph 292) merely introduces what
WWM is saying the loss is.
124. There is then the single paragraph (paragraph 293), and the specific sentence therein, on
which WWM places so much reliance in relation to causation which I will repeat below for
ease of reference (including the lettering added by WWM for ease of discussion):
“Reverting to paragraphs 234 and 271 above, [A] the Tribunal
must now give its attention to the question, what injury was
caused to the Claimants' investment in Kazakhstan by the export
license breach? [B] It is incontestable that the export license
breach cannot be found to be either factually or notionally a
confiscation of the Claimants' investment. That would be
incompatible with the Tribunal's res judicata finding that
Respondent's termination of the Management Agreement was
not in breach of the BIT, not to mention its finding of no
expropriation (paragraph 9 above). [C] Nor is it open to question
that Claimants' investment was already at serious risk of failure
by the time of the export license breach. This is so whichever is
taken to be the date of breach (see further, paragraphs 396-400
below). [D] The Parties vigorously disputed whether timely
grant of an export license would have remedied this situation.
[E] However, no license was in the event granted, making the
failure by Respondent to respect the FET guarantee in its
handling of Claimants' export license applications a decisive
factor that, together with others, caused the investment's
eventual demise. [F] As already laid down in paragraphs 244 and
268 above, the determination by the Tribunal of the injury and
damage caused by this breach of the FET guarantee are matters
involving a measure of evaluation and assessment, not the
application of rigid rules. [G] On that foundation, the Tribunal
will now consider afresh what remedy is warranted to redress the
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Claimants' injury, on the strength of the 'new and/or existing
evidence of all issues concerning causation and the
quantification of loss' as referred to in paragraph 2 of the High
Court Order".
(emphasis added)
125. I have already noted that it might be thought to be quite remarkable that in a 427 paragraph
Award running to some 174 pages, the Tribunal addresses the question of causation and
loss in one paragraph (paragraph 293), and even more than that, that each party places
particular focus on one sentence therein (highlighted in bold at letter [E]) as to where, if at
all, the Tribunal dealt with causation including the Counterfactual Case (albeit construed
with regard to paragraph 293 as a whole and indeed the Award as a whole).
126. Sight should not be lost of the fact that section 68 is all about “due process” and in this
regard there will be a failure to deal with an “issue” where the determination of that “issue"
is essential to the decision reached in the award (World Trade Corpn v C Czarnikow Sugar
Ltd [2005] 1 Lloyd's Rep 422 at [16]). An essential issue arises in this context where the
decision cannot be justified as a particular key issue has not been decided which is critical
to the result and there has not been a decision on all the issues necessary to resolve the
dispute or disputes (Weldon Plan Ltd v The Commission for the New Towns [2000] BLR
496 at para 21 (cited with approval in Raytheon at [33(iv]) and RAV Bahamas at [40]). The
Counterfactual Case is indisputably such an issue. Indeed it is the critical issue on
causation.
127. I am in no doubt whatsoever that the Tribunal did not deal with the Counterfactual Case
either in paragraph 293 or indeed, anywhere else in the Award. In this regard there is no
reference to the factual matters that Kazakhstan relied upon, the disputed issues of Kazakh
law that were addressed extensively by both parties in expert evidence (both in writing and
in cross-examination at the July 2022 oral hearing), the extensive submissions of the
parties' uranium experts which addressed (amongst other matters) whether WWM would
have been able to fulfil the CE Contract, or the submissions of the parties' quantum experts
addressing (amongst other matters) WWM's inability to fund TGK and satisfy its
outstanding liabilities. One would expect all such matters to be dealt with as part of
addressing the Counterfactual Case.
128. Most fundamentally of all, I am satisfied that the Tribunal simply does not deal at all with
the issue of whether the Management Agreement would have been terminated in any event,
which is at the very heart of the Counterfactual Case. Yet further, and far from there being
any statement to the effect that the Tribunal did not consider it necessary to determine this
issue, or that a determination of a logically anterior point meant the issue did not arise
(neither of which can be suggested still less established), the Tribunal has recognised at
paragraph 268 that Kazakhstan was entitled to rebut causation by any means it chose,
including by a counterfactual analysis, and the Tribunal had then expressly chosen a route
(the Route Map) by which it would “decide the issues in dispute on the basis of the evidence
and the argument presented" (which ex hypothesi inevitably involved dealing with the
Counterfactual Case and whether Kazakhstan would have terminated the Management
Agreement in any event). Yet the Tribunal simply has not done so, in paragraph 293 or
anywhere else in the Award).
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129. As for the highlighted sentence on which WWM places so much reliance, namely, “no license was in the event granted, making the failure by Respondent to respect the FET guarantee in its handling of Claimants' export license applications a decisive factor that, together with others, caused the investment's eventual demise", I agree with the submission made by Kazakhstan that this cannot possibly be construed as the Tribunal dealing with the Counterfactual Case. The words “no license was in the event granted” is simply a statement of the actual factual position (and indeed the basis for the Export License Breach itself). It is a given before one even considers the issues on causation that arose to be dealt with by reference to the Counterfactual. This cannot make “the failure by the Respondent to respect the FET guarantee in its handling of Claimant export license” a factor, still less a decisive factor, that caused the investment's eventual demise – that is the very issue the Tribunal was supposed to be dealing with, yet it does not do so in this sentence or anywhere else (not least given that the Tribunal has already (rightly) rejected WWM's case that it would suffice if the Export License Breach was a cause of the loss). Equally, “together with others" cannot possibly be a reference to the Counterfactual Case as on that Counterfactual Case it is a trump card that would have meant that WWM has suffered no loss (so it cannot be a factor that “together with others” causing the demise of the investment), and equally if it was demonstrated it would be a “knock-out” blow to loss being suffered by WWM at all. Weighed in the scales it would, by its very nature, outweigh all other factors.
130. In short, the Tribunal has failed to follow its own Route Map and has failed to deal with the Counterfactual Case. This is not a case where there is any ambiguity, whether in the sentence relied upon by the parties, or in paragraph 293, or in the Award as a whole. Nor is there any issue of “interpretation" of the Award that arises. It is clear that the Counterfactual Case has not been dealt with by the Tribunal.
131. Notwithstanding the skill and eloquence with which the submissions to the contrary were advanced by Mr Edey KC, the reality is that he had thin gruel to work with, and those submissions do not bear examination, still less do they lead to a contrary conclusion. First, WWM are wrong to submit that in paragraph 268 the Tribunal reject a counterfactual analysis. WWM are forced to make that submission for otherwise it is untenable to suggest either that there was no need to deal with Counterfactual Case in paragraph 293 or that the Tribunal did deal with the Counterfactual Case in paragraph 293, however briefly. But (as addressed above), as part of the “true position” as identified by the Tribunal, the Tribunal endorsed a counter factual analysis advanced by a respondent by way of rebuttal (such as the Counterfactual Case here), and then stated (in their Route Map) that it would, “decide the issues in dispute” (of which the Counterfactual Case was the central issue), “on the basis of the evidence and argument presented” (of which there was indisputably much expert evidence and much argument on the Counterfactual Case). Yet it did not do so, whether in paragraph 293 or at all, in circumstances where there was no prior anterior issue rendering it unnecessary to deal with Counterfactual Case, and the Tribunal was required to deal with the Counterfactual Case and yet it did not do so.
132. Secondly, Mr Edey KC's “salami slicing" of paragraph 293 does not provide WWM with any assistance on the question whether the Tribunal dealt with the Counterfactual Case. As to the points made:
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to reject that. Paragraph 271 is the paragraph in which they say they would examine whether a component was made out on the evidence and whether it resulted from the breach before determining what injury was caused overall, the Tribunal then identifying (at [A]) that the Tribunal must now give attention to the question of what injury was caused to WWM's investment in Kazakhstan by the Export License Breach. That statement was unobjectionable and shows this is the paragraph addressing causation, but that inevitably required the Tribunal to deal with the Counterfactual Case based on the evidence and arguments they had heard.
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be, a reference to factual matters relied on by Kazakhstan as part of its Counterfactual Case. Nor can it possibly be said that the Tribunal there “dealt with" the Counterfactual Case.
133. WWM also seek to rely upon subsequent paragraphs in the Award to support their construction of paragraph 293. But these amount to no more than reference back to the sentence in paragraph 293 that “no license was in the event granted, making the failure by [Kazakhstan] to respect the FET guarantee in its handling of WWM's export license applications a decisive factor that, together with others, caused the investment's eventual demise", most obviously at paragraphs 417 and the disposition at paragraph 427 which track the very same language:
134. In neither of these paragraphs does the Tribunal deal with the Counterfactual Case. Equally, simply to say that “[t]he Tribunal has heard the Parties' extensive evidence in these
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resumed proceedings” and “having considered together with the new evidence already on record, the new evidence tendered by the Parties” (as referred to in paragraphs 417 and 427) is not to deal with the central issue that was put to it, namely the Counterfactual Case. As was made clear in Raytheon at [33(g)(xi)], as approved in RAV Bahamas at [43], “if [as here with the Counterfactual Case] the issue does arise by virtue of the route the tribunal has followed for the purposes of arriving at its conclusion, section 68(2)(d) will be engaged".
135. Reliance is also placed by WWM on paragraph 422 in which it was stated, in the context of consideration of the incidence of costs, that “the Tribunal, on the basis of all the evidence, new and old, has not been persuaded that [WWM] suffered no materially assessable loss resulting from [Kazakhstan's] breaches”. This was said in the context of considering who was the successful party for the purpose of costs, and the Tribunal just having found (in paragraph 417) that the appropriate measure of loss was WWM's “sunk costs". On that finding WWM were clearly the successful party. In any event, and even postulating (as the Tribunal did) scenarios in which there was a “no damages outcome”, it cannot possibly be said that by stating that on the basis of all evidence old or new it had not been persuaded that WWM suffered no materially assessable loss, the Tribunal was dealing (and in a section on costs rather than causation) with the central issue that was put to it, namely the Counterfactual Case (as to which see also Buyuk, supra at [38] and Ascot Commodities N.V v Olam International Ltd [2002] 2 Lloyd's Rep. 277 at [284] as quoted below).
136. Nor is there any substance in WWM's submission that the Tribunal must have dealt with the Counterfactual Case “implicitly” on the basis that it would have had the Counterfactual Case "well in mind". The relevant factual context was a Counterfactual Case that was ventilated in a five-day oral hearing in front of the Tribunal, with hundreds of pages of submissions, expert evidence, cross-examination of experts and closing submissions on the Counterfactual Case, yet there is not one reference to any of this in paragraph 293, and (fundamentally) no reference whatsoever to the central aspect of the Counterfactual Case as to whether Kazakhstan would have terminated the Management Agreement in any event, an issue that arose, was put to the Tribunal, and the Tribunal had to deal with. It is also to be contrasted with the length and care with which the Tribunal dealt with other components where the Tribunal expressly found that “[WWM] have plainly failed to meet the burden on them", which is in stark contrast with the Counterfactual Case, in respect of which the Tribunal do not state that Kazakhstan had failed to prove that the Management Agreement would be terminated in any event (as Mr Edey KC realistically acknowledged).
137. As was said by Gavin Kealey KC (sitting as a Deputy Judge of the High Court) Buyuk, supra at [38], in terms which are apposite in the context of WWM's submission in the present case:
"It is not sufficient for an arbitral tribunal to deal with crucial issues in pectore, such that the parties are left to guess at whether a crucial issue has been dealt with or has been overlooked: the legislative purpose of section 68(2)(b) is to ensure that all those issues the determination of which are crucial to the tribunal's decision are dealt with and, in my judgment, this can only be achieved in practice if it is made apparent to the parties
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(normally, as I say, from the Award or Reasons) that those crucial issues have indeed been determined".
138. In the same vein, as was said by Toulson J in Ascot Commodities N.V v Olam International Ltd [2002] 2 Lloyd's Rep. 277 at [284], “... an Award should deal, however concisely, with all essential issues". It will be recalled that a matter will constitute an "issue” (for the purpose of section 68(2)(b)) where the whole of the applicant's claim could have depended upon how it was resolved, such that “fairness demanded” that the question be dealt with (see RAV Bahamas, supra, at [40]). It is common ground that the Counterfactual Case was such an issue.
139. Mr Edey KC also repeatedly made the crie de cœur that it was not likely that an experienced tribunal such as the present Tribunal would fail to deal with the Counterfactual Case or that, in other expressions used by him, the Tribunal would have “fumbled it" or "dropped the ball". Such submissions are commonly, if not invariably, rolled out by a respondent, and prayed in aid as to inherent probabilities, as an attempted rebuttal when it is said that a tribunal has failed to deal with an issue that was put to it. But that is, with respect, to look at matters from the wrong end of the telescope.
140. The reason why the Tribunal went wrong is because it went wrong. Experienced tribunals do fail to deal with issues that are put to them. With the greatest of respect to the eminent arbitrators in this case, even Homer nods, and experience does not bring with it infallibility, and even the most knowledgeable and skilled arbitrators can fall into error or have lapses of judgment. It is because experience shows that tribunals do fail to deal with issues that are put to them that Parliament has legislated that there will be a serious irregularity where there is "a failure by the tribunal to deal with all the issues that were put to it" (in the very words of section 68(2)(d)). This is a statutory recognition (if one were needed) that tribunals do, indeed, fail to deal with important issues that were put to them. Indeed the law reports are replete with examples where a tribunal has failed to deal with an essential issue that was put to it (or where a tribunal has dealt with a case on a basis that the parties have not had the opportunity to address the tribunal on – as indeed has already occurred in the present case in relation to this very Tribunal, with the first reference under section 68(2(a)).
141. The issue is whether, on a fair, commercial and commonsense reading of the Award in the factual context of what was argued by the parties having regard to the evidence and the written and oral submissions of the parties, the Tribunal has failed to deal with the issue (Raytheon at [33(g)(xii] as approved in RAV Bahamas at [43]). I am satisfied that on just such a reading of the Award the Tribunal has indeed failed to deal with the Counterfactual Case.
142. In the above circumstances it is not necessary to address Kazakhstan's further submission that WWM would not, of its own volition, have written to the Tribunal in the terms they did unless this was a recognition that there was a gap to be filled as a result of the Tribunal not having dealt with an issue that was put to it. Ultimately, it matters not why WWM wrote in the terms it did. It is for the Court to determine whether there has been a serious irregularity.
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143. In the above circumstances, I am in no doubt whatsoever that the Tribunal did not deal with Kazakhstan's Counterfactual Case in the Award. Accordingly, section 68(2)(d) is engaged.
144. In circumstances where there was, I am satisfied, no ambiguity or uncertainty, and there was a clear failure to deal with the issue (the Counterfactual Case), there is no scope for the operation of Article 35 of the 1976 UNCITRAL Rules and no basis for seeking an interpretation from the Tribunal. “Interpretation is not a mechanism for revisiting an issue ... that the tribunal should have decided but did not” (Carno and Caplain in their commentary on the UNCITRAL Rules, as quoted with approval by Foxton J in Diag at [200]). WWM acknowledge the same at paragraph 58 of their Skeleton Argument.
145. I accordingly reject WWM's submission that Kazakhstan could or should have applied to the Tribunal to provide an interpretation of the Award. The submission that Kazakhstan has failed to comply with section 70(2) of the Arbitration Act 1996 is without substance and is dismissed.
146. It is well established that there will be substantial injustice where, had the irregularity not occurred, the outcome of the arbitration might well have been different. As was said by the Privy Council in RAV Bahamas at [34]:
"34 There will be substantial injustice where it is established that, had the irregularity not occurred, the outcome of the arbitration might well have been different: see, for example, Vee Networks Ltd v Econet Wireless International Ltd [2005] 1 All ER (Comm) 303, para 90 (Colman J). It is not necessary to show that the outcome would necessarily or even probably be different: Cameroon Airlines v Transnet Ltd [2006] TCLR 1, para 102 (Langley J). As stated by Akenhead J in Raytheon [2014] EWHC 4375 (TCC) at [33(i)]:
"For the purposes of meeting the substantial injustice test, an applicant need not show that it would have succeeded on the issue with which the tribunal failed to deal or that the tribunal would have reached a conclusion favourable to him; it [is] necessary only for him to show that (i) his position was reasonably arguable, and (ii) had the tribunal found in his favour, the tribunal might well have reached a different conclusion in its award...”.
In the present case, it is indisputable that had the irregularity not occurred the outcome of the arbitration might well have been different – if Kazakhstan's Counterfactual Case were to succeed WWM will have suffered no loss.
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147. In fact, the present case is one where the irregularity is so serious that substantial injustice is inherently likely and likely by the very nature of things, and is of the type addressed in RAV Bahamas at [35]:
"35 Some irregularities may be so serious that substantial justice is inherently likely or likely in the very nature of things to result. As Toulson J stated in Ascot Commodities NV v Olam International Ltd [2002] CLC 277, 284F—285A:
"Since the whole process of arbitration is intended as a way of determining points at issue, it is more likely to be a matter of serious irregularity if on a central matter a finding is made on a basis which does not reflect the case which the party complaining reasonably thought he was meeting, or a finding is ambiguous, or an important issue is not addressed, than if the complaints go simply to procedural matters ... "It is inherently likely to be a source of serious injustice if irregularities occurred of the kind to which I have referred. Since the purpose of arbitration is to determine central issues between the parties, if there has been a flaw in that this has not been done, that is likely in the very nature of things to be a matter of serious injustice”.
(emphasis of the Privy Council)
148. As recognised in RAV Bahamas (at [36]) in such cases substantial injustice may be inferred from the nature of the irregularity and that inference may be so strong that “[i]t almost goes without saying” (see Raytheon at [61]).
149. WWM accepted that if the Tribunal “completely overlooked" the Counterfactual Case there will be substantial injustice within the meaning of section 68. That was this case. In any event, if that irregularity had not occurred the outcome of the arbitration might well have been different (if the Counterfactual Case had been accepted WWM would have suffered no loss). The reality, however, is that this is one of those cases where the irregularity is so serious that substantial injustice is inherently likely.
150. I am satisfied, and find, that the irregularity has caused Kazakhstan substantial injustice within the meaning of section 68.
151. If ever there was a case where there was a failure to comply with the due process of the arbitral proceedings by a tribunal failing to deal with a central issue that was put to it, then this was it, with the failure of the Tribunal to deal with the Counterfactual Case. In such circumstances, justice calls out for that serious irregularity to be corrected.
152. Accordingly, Kazakhstan's challenge to the Award under section 68(2)(d) succeeds, and is upheld.
153. The parties were in agreement that if the section 68 challenge succeeded, as it has, they would each wish to address me as to the appropriate relief that should be ordered, and it
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was agreed that I should reserve such matters to be dealt with upon the handing down of judgment at which such consequential matters will be dealt with. I accordingly reserve the question as to the appropriate relief to be granted until that time.