Seacrest v BCPR: High Court rejects s.68 challenge over exchange rate calculation in arbitration

The High Court has dismissed a challenge under section 68 of the Arbitration Act 1996, finding that an arbitral tribunal did not commit a serious irregularity when it declined to address new arguments raised for the first time in written closing submissions. The case provides important guidance on the limits of procedural fairness in arbitration and the treatment of late-raised issues.

Seacrest Group Ltd challenged a final arbitration award concerning deferred compensation payable under an investment agreement with BCPR Pte Ltd and Bangchak Corporation. The dispute centred on calculating the "Received Proceeds" figure, which required converting Norwegian krone to US dollars. BCPR had pleaded that conversion should use the average exchange rate over a 60-day pricing period (1:10.4510), producing US$184,614,434.83.

Critically, Seacrest's Statement of Reply confirmed there were only two outstanding disputes regarding the Received Proceeds calculation, neither of which concerned the exchange rate methodology. BCPR's Statement of Rejoinder treated this as agreement on the conversion approach.

The exchange rate controversy

Only in written closing submissions—served six weeks after a four-day hearing—did Seacrest argue that conversion should occur at the prevailing rate on the four-year anniversary date, not the 60-day average. This new position contradicted its earlier pleaded case and would have increased Seacrest's entitlement by approximately US$3 million.

The tribunal made no reference to these late submissions in its award, stating instead that the US$184,614,434.83 figure was "common ground." Seacrest then sought correction under Article 38 of the UNCITRAL Arbitration Rules, which the tribunal refused, explaining that no new issues could be raised in closing submissions without permission to amend.

Trower J's analysis

The judge rejected Seacrest's claim that the tribunal's approach constituted a serious irregularity. He emphasised that the tribunal had made clear on Day 1 of the hearing that "there won't be new issues introduced into Closings" absent any amendment application. This direction was "a relatively obvious reflection of what fairness required."

The exchange rate issue was not merely a new argument but "a significant new point, which should have been pleaded if it was to be run." Seacrest had contradicted its own positive assertion in its Statement of Reply identifying the disputes in issue. The natural consequence was that Seacrest needed to apply to amend its memorials if it wished to advance this case.

The judge found nothing unfair about leaving it to Seacrest to apply for permission to amend if in doubt, rather than requiring the tribunal to raise the matter proactively. The tribunal's requests for assistance on exchange rates during the hearing concerned only "the correct rate on any particular day," not the period over which conversion should be calculated.

Substantial injustice

Even if there had been an irregularity, Seacrest failed to demonstrate substantial injustice. The tribunal's Article 38 decision made clear it would have reached the same conclusion on the exchange rate issue regardless. Following Margulead and Doglemor, this decision constituted admissible evidence of what the award would have said absent any irregularity.

The judge also declined to grant declaratory relief regarding the Article 38 decision's status, finding it had legal effect as a decision under the agreed UNCITRAL rules, even if not forming part of the award itself.

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