## Facts

- Sumukan Ltd (successor to Asset Management Shop Ltd) contracted with the Commonwealth Secretariat (CMS) to supply e-commerce/auction software and related services.
- The contract contained an arbitration clause referring disputes to the Commonwealth Secretariat Arbitral Tribunal (CSAT) under its Statute.
- A CSAT tribunal issued an award (Apr. 25, 2005) for CMS, including a determination that title in certain software vested in CMS.
- Sumukan challenged the award in the Commercial Court under Arbitration Act 1996 ss. 67 (substantive jurisdiction) and 68 (serious irregularity), alleging defects in the tribunal’s appointment process under the CSAT Statute and raising concerns about perceived partiality.
- The appointment mechanism involved appointments by the Commonwealth Secretary-General, with consultation requirements intended to ensure representativeness; Sumukan alleged consultation was not properly carried out and that the process made the tribunal “effectively appointed” by CMS.
- Sumukan participated in the arbitration without making a timely objection to the appointment process, despite claiming concerns about independence.
- Toulson J dismissed the ss. 67 and 68 challenges; Sumukan appealed to the Court of Appeal.

## Issues

1. Whether alleged defects in appointment under the CSAT Statute deprived the tribunal of “substantive jurisdiction” under Arbitration Act 1996 s. 67.
2. Whether the appointment circumstances constituted a “serious irregularity” under s. 68 and caused “substantial injustice.”
3. Whether Sumukan lost the right to object under s. 73 by proceeding with the arbitration without timely objection despite knowledge (or constructive knowledge) of the grounds.
4. Whether the appointment process created a disqualifying perception of partiality inconsistent with the arbitration agreement.

## Decision

- The Court of Appeal dismissed the appeal and upheld the dismissal of the ss. 67 and 68 applications.
- The court held that the alleged appointment defects did not negate “substantive jurisdiction” under s. 67 because the parties had agreed to arbitration before CSAT and the tribunal that sat was a CSAT tribunal.
- The court held that s. 68 was not satisfied: any appointment irregularities did not meet the statutory threshold for “serious irregularity,” and Sumukan failed to show substantial injustice.
- The court held that, in any event, s. 73 barred the challenges because Sumukan proceeded without timely objection when it knew or could reasonably have discovered the relevant grounds.

## Legal Principles

- For Arbitration Act 1996 s. 67, “substantive jurisdiction” concerns whether the tribunal had authority to decide the dispute at all; departures from an agreed appointment procedure generally go to regularity rather than jurisdiction when the tribunal is still the one designated by the arbitration agreement.
- Arbitration Act 1996 s. 68 sets a high threshold: the challenger must establish both a qualifying “serious irregularity” and resulting “substantial injustice.”
- Allegations framed as perceived structural partiality in an appointment mechanism require a concrete basis showing a real risk to impartiality or unfairness and, for s. 68, resulting substantial injustice.
- Under Arbitration Act 1996 s. 73, a party that participates in arbitration without timely objection, despite knowing or being able with reasonable diligence to discover the basis of objection, may lose the right to raise the objection later.

## Conclusion

The Court of Appeal upheld the CSAT award, holding that claimed appointment defects were not jurisdictional under s. 67, did not satisfy the high s. 68 standard (including substantial injustice), and were in any event barred by waiver under s. 73 due to Sumukan’s participation without timely objection.


Sumukan Ltd. v. Commonwealth Secretariat, [2007] EWCA Civ 1148 (Eng. Ct. App. 2007)