To misquote Chekhov, knowledge is of no value unless it is deployed. This proved true in the recent case of Radisson Hotels APS Danmark v Hayat Otel Işletmeciliği Turizm Yatırım Ve Ticaret Anonim Şirketi  EWHC 892 (Comm), where the Claimant’s strategic decision to ‘bank’ grounds of objection to an arbitral award for later use resulted in its s.68 challenge being dismissed.
The Claimant (“Radisson”) is part of an international hotel management group and the Defendant (“Hayat”) is the owner of a Turkish hotel managed by Radisson. Hayat alleged that the hotel had been mismanaged and commenced arbitral proceedings (the “Arbitration”).
In March 2021, a three member Tribunal comprised of two KCs and an industry professional identified in the Judgment as “CD” rendered a Partial Award on liability and causation, with issues of quantum to be determined. The Partial Award found Radisson liable to Hayat for breach of contract, breach of fiduciary duty, negligence and breach of duty as a bailee.
In December 2020, Hayat’s former in-house counsel with responsibility for the Arbitration, Dr Durman, contacted Radisson to offer his services as a lawyer “even against [Hayat’s holding company]” . The following then took place during the quantum phase of the Arbitration:
Between 24 September 2021 and 26 January 2022, representatives of Radisson (including its internal counsel, Ms Cambré, and external counsel, Quinn Emanuel) attended a number of meetings and telephone calls with Dr Durman. During those discussions, Dr Durman alleged that CD had engaged in ex parte communications with representatives of Hayat.
On 1 December 2021, Radisson engaged Dr Durman as “a legal adviser for matters relating to Turkey” .
Dr Durman put Radisson in touch with Hayat’s former expert, Mr Önkal. Radisson’s discussions with Mr Önkal included his “previous work for Hayat and whether [he] could assist Radisson in the Arbitration” . Mr Önkal also informed Radisson that CD had been a former student of his and that he had put her forward to Hayat as a possible arbitrator .
On 22 December 2021, the President of the Tribunal (the “President”) resigned for health reasons.
In January 2022, Radisson engaged Mr Önkal to assist it with the quantum phase of the Arbitration. On 4 January 2022, Mr Önkal provided Ms Cambré with a USB drive of documents pertaining to his work for Hayat. These included a Word document reproducing the text of an email exchange between members of the Tribunal during March 2019 (the “March Emails”). Ms Cambré forwarded the contents of the USB drive to Quinn Emanuel.
Quinn Emanuel discovered the March Emails on 13 January 2022. The following day, Radisson filed its Rejoinder on quantum (the “Rejoinder”).
On 25 and 26 January 2022, Mr Önkal gave Radisson native copies of the March Emails, which showed that they had been provided to him by CD. Two days later, Radisson issued a Claim Form alleging actual and/or apparent bias on the part of CD and applying to set aside the Partial Award pursuant to ss.68(2)(a), (c) and (g) of the Arbitration Act 1996 (“AA 1996”)1.
Shortly thereafter, Hayat disclosed a small number of further communications between Mr Önkal and CD (the “April and May Emails”).
Hayat denied that the March, April and May Emails evidenced either actual or apparent bias. In particular (and inter alia), it was not clear whether CD had appreciated that Mr Önkal was engaged by Hayat at the relevant time.
Dame Moulder DBE (sitting as a Judge of the High Court) considered the following (inter alia):
While a “credible source”  had informed Radisson of the existence of ex parte contacts between CD and a representative of Hayat as early as September 2021, Radisson had waited a further four months to issue its s.68 challenge and had participated in the Arbitration in the intervening period. Hayat argued that, as a consequence of this continued participation, Radisson had waived its right to challenge the Partial Award pursuant to s.73(1) of the AA 1996.
In light of this, it was necessary for the Court to consider: (i) what Radisson’s grounds of objection were; and (ii) when it knew or with reasonable diligence could have discovered them. In particular, the Court was required to determine whether the April and May Emails constituted separate grounds of challenge to the March Emails. If so, s.73(1) could not apply to the April and May Emails, as Radisson had taken no steps in the Arbitration after their disclosure.
Radisson asserted that: (i) s.73(1) did not apply where a ‘final’ arbitral award had been issued; (ii) in this case, the Partial Award was “final” as to liability and causation, whereas any steps taken by Radisson after it became aware of its grounds of challenge took place in the quantum phase of the Arbitration; and (iii) as such, s.73(1) did not apply.
The Judge began by considering whether s.73(1) applied to the Partial Award.
S.73(1) provides as follows:
“If a party to arbitral proceedings takes part, or continues to take part, in the proceedings without making, either forthwith or within such time as is allowed by the arbitration agreement or the tribunal or by any provision of this Part, any objection—
(b) that the proceedings have been improperly conducted,
(c) that there has been a failure to comply with the arbitration agreement or with any provision of this Part, or
(d) that there has been any other irregularity affecting the tribunal or the proceedings,
he may not raise that objection later, before the tribunal or the court, unless he shows that, at the time he took part or continued to take part in the proceedings, he did not know and could not with reasonable diligence have discovered the grounds for the objection.”
Hayat relied on Thyssen Canada Ltd v Mariana Maritime SA & Anr  EWHC 219 (Comm), where Cooke J noted that s.73 is “broadly worded”, with a view to ensuring that any objection to an award is raised as soon as the challenging party is, or reasonably ought to be, aware of it. This is to ensure that a party does not “participate in proceedings which [it] believes to be fundamentally irregular, with the intention of taking advantage of any decision in his favour, whilst keeping up his sleeve an objection to an irregularity, which he will only produce in the event of an unfavourable decision ”.
Upon considering Thyssen and the language of the statute, the Judge concluded that s.73 applied “until all aspects of the arbitration have been resolved and not merely part of the proceedings, even where there have been determinations of some or part of the issues” . She did not accept Radisson’s submission that the finality of the Partial Award on the issues of liability and causation meant that there was no card it could have kept up its sleeve; Radisson’s own disclosure demonstrated that it had continued to look for grounds to challenge the impartiality of the arbitrators throughout the course of the Arbitration. S.73(1) therefore applied.
The grounds of objection
The Judge rejected Radisson’s submission that the April and May Emails amounted to different grounds of objection to the March Emails, on the basis that “the irregularity that [Radisson] considers renders the whole arbitral process invalid” and “the entire foundation of [its] case” was that, unbeknown to it, CD had communicated with Mr Önkal, such that it was to be inferred that she was biased . The March, April and May Emails were evidence of this, as opposed to distinct grounds in and of themselves.
There was no dispute that the grounds of objection had arisen in March 2019, when the March Emails were sent, and it was not contested that Radisson participated in the Arbitration after that date. The Court was therefore required to establish when Radisson had knowledge of the grounds, or, alternatively, when with reasonable diligence it would have been able to discover them.
Radisson’s knowledge of the grounds
Where the claimant to a s.68 challenge continued to take part in arbitral proceedings after its grounds of objection had arisen, it is for them to prove that they did not know, and could not with reasonable diligence have discovered, those grounds at the relevant time (Rustal Trading Ltd v Gill & Duffus SA  C.L.C. 231). The Judge rejected Radisson’s assertion that it only acquired the requisite knowledge of the grounds on 25 January 2022, when it obtained native copies of the March Emails, finding that:
“[t]he question is not when Radisson had the ‘cogent evidence’ necessary to bring its s.68 Challenge… but when it believed it had grounds for objecting whereupon it was obliged to raise the objection promptly” .
Upon a review of the evidence, the Judge considered that Radisson “had knowledge of the grounds and should have raised the issue” by 13 January 2022 at the very latest. This was apparent from an email circulated amongst lawyers at Quinn Emanuel on that date:
“…The obvious inference is that [CD] was feeding Tribunal correspondence to [Hayat]. If that’s right, then surely we must apply to set the award aside…” .
Rather than doing so, Radisson submitted its Rejoinder and then continued to engage with Hayat and the ICC Secretariat on procedural matters. The Judge rejected Radisson’s submission that it had required time to consider the March Emails before bringing its s.68 challenge. It was clear that Quinn Emanuel had immediately recognised their value and that a strategic decision had been taken to withhold them.
Accordingly, Radisson had failed to discharge its burden of demonstrating that it had not had the requisite knowledge to issue the s.68 challenge while it continued to participate in the Arbitration. It was therefore precluded from objecting to the Partial Award.
Did Radisson exercise “reasonable diligence”?
Dame Moulder further considered whether Radisson had shown that it could not with reasonable diligence have discovered the grounds of objection before issuing its s.68 challenge. She noted that Ms Cambré had considered Dr Durman to be a “credible source” and had obtained quotations from investigations firms to look into his allegations. Radisson had not, however, proceeded with this line of enquiry, as it considered CD’s dismissal from the Tribunal “would not bring any solution”  unless it could also find evidence to discredit the President. It therefore opted to investigate the President (against whom there was no suggestion of wrongdoing) instead of CD, in an attempt to find “any possible evidence to undermine his appointment” [140e]. Radisson’s strategy only changed when it was notified of the President’s resignation.
While Radisson maintained that Dr Durman’s allegations were vague and unparticularised, the Judge noted that it had failed to make obvious enquiries of Dr Durman and Mr Önkal or taken steps to procure witness statements from them in relation to the allegations. In particular, on Radisson’s own case it had failed to make obvious enquiries of Mr Önkal as to the ex parte contacts, notwithstanding his admission that he knew CD.
Radisson had therefore failed to show that it had used reasonable diligence to discover the grounds of objection. As a consequence, it was also precluded from objecting to the Partial Award on this basis.
In light of the Judge’s findings on waiver, it was not necessary for her to consider whether CD had been biased, whether Dr Durman’s knowledge of the ex parte contacts was attributable to Radisson upon his engagement by it, or whether Radisson should be granted a discretionary extension in which to bring its s.68 challenge pursuant to s.80(5) of the AA 1996 and CPR r.62.9.
The Judge did, however, make a number of findings as to Radisson’s credibility. She considered Ms Cambré’s written and oral evidence to be unreliable and found it “surprising” that no one at or representing Radisson (including “experienced litigators” at Quinn Emanuel) had taken any notes of its meetings and telephone calls with Dr Durman and Mr Önkal . Further, the deletion of WhatsApp messages by various individuals at Radisson suggested that documents pertaining to the “key issue of knowledge” had not been put before the Court. It was particularly surprising and unsatisfactory that messages had been deleted by the lawyer at Quinn Emanuel handling the Arbitration on Radisson’s behalf [140d].
A party alleging bias on the part of an arbitrator may be surprised to learn that its own conduct may also be subject to scrutiny. There are, however, important policy reasons behind the s.73 waiver principle. It cannot be right that time and money is expended on an Arbitration after grounds of objection come to light – nor should the complaining party be permitted to keep its objections in reserve until such a time as their deployment works to its advantage.
Where there is a delay, the claimant should keep a clear and detailed record of: (i) the date it acquired the requisite knowledge; and (ii) any steps it took to investigate its allegations. While it is rare for orders for disclosure and oral testimony to be made in a Part 8 arbitration claim, it should not be assumed that the Court will not do so where there is any suggestion that the claimant has waived its right to object by dint of its continued participation in the proceedings. This is particularly so given that it is the claimant who bears the burden of proving that it did not have the knowledge it required to issue its challenge at the relevant time.