Essay on Flying High

Submitted By Khanh19
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Westland Helicopters Ltd v Sheikh Salah Al-Hejailan
9 July 2004 Colman J Commercial Court [2004] EWHC 1625 [2004] ArbLR 65 Arbitration award—Challenge—Jurisdiction—Arbitrator allowing reinstatement of previously waived claim for interest—Arbitrator deciding quantum on notional basis rather than on invoices or evidence of time spent—Whether arbitrator had jurisdiction (yes)—Arbitration Act 1996, s 67 Arbitrationaward—Challenge—Proceduralirregularity—Excessofpowers— Arbitrator allowing claim for interest over period during which no interest claimed—Whether serious irregularity (yes)—Arbitration Act 1996, s 68(2)(b) Arbitration award—Challenge—Procedural irregularity—Right to be heard—Arbitrator allowing reinstatement of claim for interest—Arbitrator proposing valuation methodology, but not mentioning interest—Whether party deprived of right to state its case on interest (no)—Whether serious irregularity (no)—Arbitration Act 1996, s 68(2)(a) Arbitration award—Challenge—Loss of rights—Failure to object to reinstatement of claim for interest—Failure to raise objection to valuation methodology in commencing challenge proceedings—Whether loss of rights (yes)— Arbitration Act 1996, s 73 Methodology for arbitrator’s evaluation of quantum of damages not limited Mr Hejailan, a Saudi lawyer, acted for Westland in relation to disputes with the Arab Organisation for Industrialisation (‘AOI’). In 1985, Mr Hejailan and Westland concluded an Engagement Letter which provided for an agreed hourly rate and a contingency fee in the event of settlement of Westland’s claims against AOI. It was governed by English law and provided for London arbitration. Westland terminated the Engagement Letter in 1987. The disputes between Westland and AOI settled in 1994. Mr Hejailan claimed a success fee under the terms of the engagement letter as well as fees for time incurred on the matter since 1987. The claim expressly excluded any separate claim for interest. The dispute was referred to a sole arbitrator who dismissed the claim for a success fee or for quantum meruit. The partial award found a clear basis for additional fees earned after the date of the contract and left open Mr Hejailan’s claim on the basis 757
[2004] ArbLR  Oxford University Press

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Arbitration Law Reports and Review 2004 of an invoiced amount. The sole arbitrator was then replaced. In the subsequent proceedings, Mr Hejailan asserted a claim for compensation for services rendered and interest from 1995 onwards. In a communication to the parties, the arbitrator decided that Mr Hejailan had undertaken activities in Westland’s interests for which he should be compensated. Finding that it was not possible to value the services on an hourly basis, the arbitrator invited the parties to address valuation by reference to an annual rate for a general retainer. Westland objected to the arbitrator’s jurisdiction to investigate a general retainer method. The arbitrator found that he had jurisdiction to apply a general retainer valuation because the first award had not imposed any limitations or rules on the assessment of the claim. The arbitrator used an annual retainer of US$50,000 over nine years for a total of US$450,000. He awarded interest at 8 per cent for half the period up to 1994 and on that total at 6 per cent from 1995 to the date of the second award. The total amount of interest awarded was US$455,760. Westland challenged the award on grounds of jurisdiction and procedural irregularity. Westland contended that the arbitrator had no jurisdiction to assess any amount on a notional annual retainer or to award interest. Westland also contended that the parties had not been permitted to make submissions on interest that had earlier been excluded by Mr Al-Hejailan and that no interest was claimed for the period 1985 to 1994. Held: The applications were dismissed except in relation to the award of