Understanding Section 68 of the Arbitration Act: Key Considerations for Commercial Agreements

Commercial disputes are an inevitable part of doing business in the UK, but how you resolve those disputes can make all the difference to your time, finances, and peace of mind. Arbitration is a popular alternative to court litigation for many businesses, especially where confidentiality and efficiency are key priorities. But what happens if something goes wrong during arbitration-perhaps the process feels unfair or you suspect a serious procedural mistake?

That’s where Section 68 of the Arbitration Act comes in. This provision gives parties a potential safety net if an arbitral award is tainted by “serious irregularity”. But as useful as it is, Section 68 comes with strict limits-and some important pitfalls you’ll want to avoid when drafting your commercial contracts. Whether you’re preparing a new agreement or reviewing an existing one, understanding how Section 68 works can help keep your business protected from day one.

In this guide, we’ll break down what Section 68 means, when and how it applies, and what you need to keep in mind when negotiating and managing commercial agreements that include arbitration clauses.

What Is Section 68 of the Arbitration Act 1996?

Let’s start with the basics. The Arbitration Act 1996 is the legislation that governs most arbitration proceedings in England, Wales, and Northern Ireland. Section 68 is a crucial part of this framework-it allows a party to apply to the court to “challenge an award in the courts on the ground of serious irregularity affecting the tribunal, the proceedings or the award”.

Put simply, Section 68 is a fail-safe. If an arbitrator makes a mistake of such magnitude that it undermines the integrity of the process-for instance, by failing to deal with all the issues, not following agreed procedural rules, or acting unfairly-then the court may step in to remedy or set aside the problematic award.

When Does Section 68 Apply in Commercial Agreements?

Section 68 applies in almost all commercial arbitrations that are seated in England, Wales, or Northern Ireland. If your contract contains an arbitration clause and the parties choose a UK seat, the Arbitration Act (including Section 68) typically governs it automatically.

Common scenarios where you might see Section 68 come into play include:

• Your contract calls for disputes to be resolved by arbitration, rather than through the courts.
• The arbitration clause specifies England, Wales, or Northern Ireland as the legal “seat” (the location that supplies the rules for the arbitration).
• Other procedural rules (like those of the LCIA, ICC, or different arbitral institutions) are subject to the mandatory provisions of the Arbitration Act.

While parties are free to shape many of their own procedures in their commercial agreement, Section 68 is one of the non-excludable, mandatory provisions of the Act. This means you cannot contract out of its protections-even if both parties want to (though the scope of its application is still tightly restricted in practice).

What Counts as “Serious Irregularity” Under Section 68?

Not every slip-up by the tribunal or a procedural hiccup will trigger Section 68. The threshold is deliberately set high to ensure finality and efficiency in arbitration proceedings. Section 68 lists specific examples of “serious irregularities,” including:

• Failure by the tribunal to act fairly and impartially (such as not giving both parties a reasonable opportunity to present their case).
• Failure to conduct the proceedings in accordance with the agreed procedures.
• Failing to address all issues put to the tribunal (sometimes called “failure to deal with all the issues”).
• Exceeding the tribunal’s powers granted under the arbitration agreement.
• Improper delegations, fraud, or improper conduct.

To succeed in a Section 68 challenge, you must show not only that there was a serious irregularity-but also that it caused “substantial injustice”. Minor mistakes, technical breaches, or disagreements about the facts or law aren’t enough. The error must have had a real impact on the outcome.

How Does Section 68 Differ From Section 67 Arbitration Act?

It’s easy to confuse Section 68 with Section 67 of the Arbitration Act, but they address different types of challenges:

• Section 67: Concerns the jurisdiction of the tribunal-whether the arbitrator had the authority to hear the case in the first place (for example, if one party argues the arbitration clause doesn’t cover this dispute).
• Section 68: Focuses on serious irregularity in how the process was run, not whether the tribunal had jurisdiction.

This distinction is important because the remedies, time limits, and grounds for challenge are different. If you’re unsure which avenue might apply to your situation, it’s always wise to get a legal expert to review your contract and explain your options.

What Are the Remedies if Section 68 Is Breached?

If a court finds that there was a serious irregularity under Section 68, it can:

• Remit the award back to the arbitral tribunal for reconsideration (this is the most common remedy).
• Set aside the arbitral award (cancel it).
• Declare the award to be of no effect (void).

The general aim is to preserve the parties’ original agreement to arbitrate as much as possible, rather than simply overturn the arbitrator’s decision except in the most serious cases. The court will only intervene where there’s a real risk of injustice-so most Section 68 applications are only successful in extreme situations.

Why Does Section 68 Matter When Drafting Commercial Agreements?

You might be wondering-why focus on Section 68 now, before any dispute has even arisen? The answer is simple: the way you draft your commercial agreements today can dramatically affect your ability to challenge or defend an arbitral decision in future.

Here’s what you need to keep in mind:

• Choice of Seat: By specifying England, Wales, or Northern Ireland as the seat of arbitration, you ensure the Arbitration Act applies-including Section 68 safeguards. If you pick another country, you may lose these protections.
• Clear Procedures: Well-drafted arbitration clauses should set out agreed procedures (for example, timeframes, documentation, conduct of hearings). The more clarity you have, the easier it is to spot if those rules are breached later.
• Institutional Rules: If using rules from a body like the LCIA or ICC, make clear whether and how these interact with the Arbitration Act. Most will defer to mandatory statutory requirements like Section 68.
• Limit “Surprise” Arguments: Try to think ahead about possible sources of procedural unfairness and address them in your agreement. A robust arbitration clause can prevent tactical gamesmanship and make it less likely a Section 68 challenge will be needed.
• Tailored Dispute Resolution Choices: Arbitration isn’t “one size fits all”-think carefully about whether you want the extra layer of court challenge via Section 68, or if business priorities dictate keeping things more final.

Getting advice as you draft or review your contracts will help ensure your arbitration clause offers the right level of flexibility and control. For more practical tips, see our guide on essential contract clauses for protecting your business interests.

What Should I Do If I Suspect a Serious Irregularity?

If you think your arbitration process has been compromised by serious irregularity, don’t delay-there are strict time limits for making an application to the court (usually within 28 days of the award being issued).

Here’s what to do:

• Gather all correspondence, procedural records, and the arbitral award itself.
• Consult a specialist solicitor experienced in arbitration and dispute resolution.
• Carefully review whether the facts match one of the limited grounds under Section 68.
• Act within the time limit-late applications are rarely accepted.

Remember, Section 68 is not a “backdoor appeal” for unfavourable outcomes. Courts will reject applications that are essentially attempts to re-argue the case on its merits or legal substance. Focus on whether there was a genuine procedural defect that caused substantial injustice.

What Other Legal Protections Should I Consider?

Arbitration clauses are only one piece of your overall risk management strategy. Make sure your commercial agreements are fully up to scratch by:

• Including clear dispute resolution clauses-don’t rely on generic templates.
• Setting out governing law, jurisdiction, and procedural details for all major contracts.
• Having professionally-drafted agreements that reflect your business’s unique structure and risks.
• Reviewing your documents whenever your business model, partners, or regulatory environment changes.
• Getting advice early-before a dispute arises-to give yourself the broadest range of options and best chance at a fair result.

Can I Exclude Section 68 in My Arbitration Agreement?

No. Section 68 is a mandatory provision of the Arbitration Act-you cannot contract out of or exclude a party’s right to challenge an arbitral award for serious irregularity. Any clause purporting to do so is likely to be struck out by the court. This is a deliberate feature of the Act designed to protect the integrity of the arbitration system and ensure fair outcomes for all parties involved.

What Are the Risks of Ignoring Section 68?

Failing to consider Section 68 and its implications can pose serious risks if things go wrong, including:

• Wasting time and resources on an arbitration process that could later be challenged and reopened in court.
• Unnecessary disputes about whether the correct procedure was followed-triggering delay and uncertainty.
• Possibly missing out on a remedy for genuine unfairness or misconduct if you’re not aware of the 28-day deadline.
• Loss of goodwill or trust if counterparties feel “locked out” of fair recourse due to poorly drafted agreements.

By planning ahead and understanding the boundaries of Section 68, you give your business the best chance to resolve disputes efficiently and move forward-without the risk of expensive, drawn-out litigation.

Key Takeaways

• Section 68 of the Arbitration Act enables parties to challenge arbitral awards for serious procedural irregularity that causes substantial injustice.
• Common grounds include unfair procedures, failure to address key issues, or exceeding authority-minor errors and simple disagreements usually don’t qualify.
• You cannot exclude Section 68 from arbitration agreements seated in England, Wales, or Northern Ireland-it’s a mandatory safeguard built into UK law.
• Drafting clear, specific arbitration clauses and commercial agreements helps minimise disputes about procedure and maximises your ability to rely on Section 68 if truly needed.
• If you believe there has been a serious irregularity, act quickly and seek advice within 28 days of the arbitral award being released.
• Early legal advice is essential-whether you’re drafting contracts, structuring a dispute resolution process, or responding to an arbitral decision.

If you’d like expert guidance on arbitration clauses, contract drafting, or understanding your rights under the Arbitration Act, you can reach us at team@sprintlaw.co.uk or 08081347754 for a free, no-obligations chat. We’re here to help your business stay protected from day one.