Arbitration award - contract specifying currency of account and governing law - arbitrator not to exercise statutory procedural powers so as to negative substantive contractual provisions

Lesotho Highlands Development Authority v Impregilo Spa and others: CA (Lords Justice Brooke and Latham and Mr Justice Holman): 31 July 2003

An engineering contract provided that the currency of the account for the purpose of any award should be Lesotho maloti, and the contract was governed by the laws of Lesotho.

An arbitral tribunal in London, applying section 48(4) of the Arbitration Act 1996, made an interim award in European currencies, which was beneficial to the defendant contractors, and purported to exercise its powers under section 49 of the Act to award interest.

The judge allowed the claimant's appeal and remitted the matter for rehearing on the grounds that the tribunal had exceeded its jurisdiction in applying those two sections.

The defendants appealed.

Ian Glick QC and Neil Kitchener (instructed by Slaughter and May) for the defendants; Andrew White QC and James Howells (instructed by White & Case) for the claimant.

Held, dismissing the appeal, that where a contract provided for the application of a particular system of law for the purpose of the 'currency of account' it was inappropriate for an arbitrator to invoke his procedural power under section 48(4) of the 1996 Act to make an award 'in any currency' and thereby ignore the contractual term; and that when the governing law of the contract provided for the award of interest from the time when the debt became payable, the arbitrator would exceed his power if he invoked his procedural power under section 49 of the 1996 Act to add on interest.