Lesotho Highlands Development Agency v Impreglio [2005] 3 WLR 129

• Lesotho (L) had a contract with Impreglio (I), governed by Lesotho law and with an arbitration clause for arbitration in London under ICC rules, to build a dam.

• I claimed additional costs, and the decision went to arbitration.

• The arbitrators found for I, awarding additional damages and interest rates, worked out on a “normal commercial basis”.

• The issue before the House of Lords was whether the arbitrators had acted in excess of their powers, by making an award in foreign currencies and with interest chosen at their discretion, when there were contractual provisions which apparently conflicted with this. The appeal was under s.68 Arbitration Act (serious irregularity).

• HL held that while this was an error of law and an erroneous exercise of power, it involved no excess of power, and hence no serious irregularity. 

Lord Steyn

• An error of law, while a possible grounds for saying that a tribunal or inferior court overstepped its jurisdiction, is not the case in arbitration, where the list of “serious irregularities” under which a s.68 claim can be made is set out exhaustively in the Arbitration Act.

• This is a useful conclusion, since it narrows the grounds for appealing an arbitral award, which is intended to be a “one stop” judgment.