## Facts

- Two buyers entered into two English-law shipbuilding contracts with Hyundai Corporation for newbuilding vessels.
- Each contract provided for arbitration in London.
- A dispute arose concerning alleged defects in the vessels’ hatch covers.
- The parties agreed to conduct technical investigations into the alleged defects on a “without prejudice” basis.
- In the subsequent arbitration, materials from the investigations were put before the arbitral tribunal.
- Hyundai objected that the “without prejudice” agreement made the investigation materials inadmissible.
- The arbitrators rejected the objection and ruled that neither party was barred from relying on the investigation documents.
- Hyundai applied to the Commercial Court during the arbitration for an interlocutory declaration that the arbitrators had “misconducted themselves” under the Arbitration Act 1950 by admitting the materials.

## Issues

1. Whether a “without prejudice” agreement governing technical investigations barred either party from adducing the resulting documents and reports in arbitration.
2. Whether the court could intervene mid-reference under the Arbitration Act 1950 by declaring arbitrator “misconduct” based on an evidentiary ruling.

## Decision

- The court refused Hyundai’s application for an interlocutory declaration.
- The arbitrators had not misconducted themselves by admitting the technical investigation materials.
- The arbitral ruling allowing reliance on the investigation documents stood, and the arbitration proceeded without court interference.

## Legal Principles

- The “without prejudice” label does not automatically render non-settlement technical investigation materials inadmissible; the effect depends on the parties’ objectively ascertained intention to create an evidentiary bar.
- Decisions on admissibility and use of evidence are generally within the arbitral tribunal’s procedural discretion.
- Judicial supervision under the Arbitration Act 1950 is limited, and the court will be slow to intervene during an ongoing reference on contested procedural or evidentiary points.
- An arguable procedural error in an evidentiary ruling, without more, does not amount to arbitrator “misconduct” warranting interlocutory court intervention.

## Conclusion

The Commercial Court declined to intervene in an ongoing London arbitration and held that admitting documents from a “without prejudice” technical investigation did not constitute arbitrator misconduct; absent clear intent to bar later use, such materials could be used in evidence and procedural control remained with the tribunal.


K/S A/S Bill Biakh & K/S A/S Bill Biali v. Hyundai Corp., 1 Lloyd's Rep. 187 (Q.B. 1988)