Case No: 2002 Folio 198
Neutral Citation Number: [2002] EWHC 2435 (Comm)

IN THE HIGH COURT OF JUSTICE
QUEEN’S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London WC2A 2LL
Date: 15 November 2002

Before:

THE HON MR JUSTICE MORISON
- - - - - - - - - - -
LESOTHO HIGHLANDS DEVELOPMENT
AUTHORITY (“LHDA”)
Claimants

(1)	IMPREGILO S.P.A.
(2)	HOCHTIEF AG
(3)	BOUYGUES S.A.
(4)	KIER INTERNATIONAL LIMITED
(5)	STIRLING INTERNATIONAL CIVIL ENGINEERING LIMITED
(6)	CONCOR HOLDINGS (PTY) LIMITED
(7)	GROUP FIVE CONSTRUCTION (PTY) LIMITED
(in joint venture as HIGHLANDS WATER VENTURE (“HWV”))
Defendants

- - - - - - - - - - -
- - - - - - - - - - -
Mr A White QC and Mr J Howells (instructed by White & Case for the claimants)
Mr I Glick QC and Ms L Lake (instructed by Slaughter & May for the defendants)

Hearing Date: 17 October 2002
- - - - - - - - - - -
JUDGMENT
Morison J:

Preliminary

1.	This is an application by the applicants, whom I shall call LHDA, to set aside or to remit back to the arbitral tribunal a partial award dated 25 January 2002, in respect of two matters:

(1)	The award of £1.6 million odd and £5.97 million odd “without reference to the requirements of the contract as to the currency in which an award should be made or to the arbitration agreement”; and

(2)	the award of interest “without reference to the law of Lesotho being the agreed or proper law of the contract regulating the right to be paid interest and/or the amount of interest payable.”

2.	The basis of the application is that the award was in excess of the arbitrators’ substantive jurisdiction and/or was the result of a serious irregularity in the conduct of the reference and/or was made without jurisdiction. Reliance is placed on both sections 67 and 68 of the Arbitration Act 1996. In view of the provisions of the ICC Rules a challenge under section 69 of the Act, for which permission of the court is required, is not available to the applicants.

3.	The arbitration arose out of a contract between the parties under which the respondents [the claimants in the arbitration] whom I shall call HWV undertook obligations in relation to the construction of the Katse Dam in Lesotho. The Works commenced on 1 February 1991 and on 26 February 1998 a Taking Over Certificate was issued in respect of the whole of the Works. The project was successfully completed on time. Initially, a dispute arose as to whether HWV were entitled to claim reimbursement from LHDA in respect of the higher wages it contended it had to pay their workers pursuant to a memorandum of understanding which they said formed part of the contract. In 1997 HWV gave notice of their intention to submit the dispute to arbitration. The claim [Claim 37] was estimated by them as equivalent to US$12,000,000 at the cross-exchange rates prevailing at the time of the contract (1990) together with interest and financing charges. There were seven other additional claims associated with increases in costs with regard to various items. In fact, as a result of the determination by the arbitrators, out of the seven, there were only three successful claims (if one lumps claims 53 and 66 together) so that the award was made as follows:

	Claim 37 - a claim for reimbursement of extra labour costs;
Claim 12 - a claim for the increase in Lesotho vehicle licence fees during the period of the contract;
	Claims 53/66 - claims arising out of variations to the Works;
	Claim 62 - a claim for the cost of extra ‘shotcrete’ that was allegedly ordered too late.

Relevant provisions of the Arbitration Act 1996

4.	Section 48, under the heading Remedies provides:

“(1)	The parties are free to agree on the power exercisable by the arbitral tribunal as regards remedies.

(2)	Unless otherwise agreed by the parties the tribunal has the following powers. 
…..

(4)The tribunal may order the payment of a sum of money, in any currency.

5.	Under the heading Interest section 49 of the Act provides:

“(1) The parties are free to agree on the powers of the tribunal as regards the award of interest.

	(2) Unless otherwise agreed by the parties the following provisions apply.

	(3) The tribunal may award simple or compound interest from such dates at such rates and with such rests as it considers meets the justice of the case-….”

6.	The words ‘agree’ and ‘agreed’ in sections 48 and 49 mean, in order to be effective, an agreement contained in a written agreement or in an exchange of communications in writing: section 5(1).

7.	Under the heading Challenging the award: substantive jurisdiction Section 67 gives the court jurisdiction to consider a challenge by one of the parties on the basis that the arbitrators had exceeded their “substantive jurisdiction”. Section 82(1) of the Act defines “substantive jurisdiction” by reference to the matters set out in section 30(1)(a) to (c). Those matters are: whether there is a valid arbitration agreement; whether the tribunal is properly constituted; and what matters have been submitted to arbitration in accordance with the arbitration agreement.

8.	Section 68 of the Act provides, so far as is relevant:

(1)	A party to arbitral proceedings may ... apply to the Court challenging any award in the proceedings on the ground of serious irregularity affecting the tribunal, the proceedings or the award. A party may lose the right to object (see section 73).

(2)	Serious irregularity means an irregularity of one or more of the following kinds which the court considers has caused or will cause substantial injustice to the applicant…

(b) the tribunal exceeding its powers (otherwise than by exceeding its substantive jurisdiction)

(c) failure by the tribunal to conduct the proceedings in accordance with the procedure agreed by the parties

(d) failure by the tribunal to deal with all the issues that were put to it.

(h) failure to comply with the requirements as to the form of the award.

9.	Section 73(1) deprives a party to the arbitral process of a right to complain of irregularity under sections 67 and 68 if he continues to participate in the arbitral process without making objection forthwith “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.”

The Terms of Reference

10.	These were signed both by the parties and the arbitrators at their meeting on 29 September 1999. The terms recited a summary of the parties’ respective claims and defined the issues “to be tried”. Included within the definition of issues which the arbitrators were asked to determine were questions relating to the currency or currencies in which any award in respect of claim 37 was to be made in, and, in relation to the other items, “what currency or currencies are applicable to them”. There was also an issue as to whether the claimants or respondents were entitled “to recover interest and/or financing charges and if so, in what amounts?”

11.	The parties had agreed a new arbitration clause [in substitution for that contained in the standard term contract] prior to arbitration and this was set out in the terms of reference.

12.	Clause 6.4 of the terms of reference provided as follows:

“Subject to these Terms of Reference the parties have agreed that this arbitration will be governed by the following arbitration clause in the contract.

Relevantly, the clause required the law of Lesotho to be applied by the arbitrator to the merits of the dispute; the arbitrators were to have power to open up review and revise any decision of the Engineer; the place of arbitration was recorded as Geneva, Switzerland, unless otherwise agreed. The parties subsequently agreed that the place of arbitration should be designated as London.

13.	Clause 7 of the terms of reference, under the heading Applicable procedural rules provided that “the dispute is to be finally settled in accordance with the provisions of the Arbitration Act 1996 (UK) (which will apply in lieu of the Arbitration Act No 12 of Lesotho) and the rules of arbitration of the [ICC] in force as from 1 January 1998.

14.	Under the heading Other Matters the arbitrators were empowered to make an award to the extent to which the tribunal considered to be appropriate specifying a single net amount to be paid by one party to another.

15.	Clause 8(3) of the terms of reference provided that “[b]y signing the Terms of Reference, the parties accept the validity of the appointment of the Tribunal and of the Proceedings and acknowledge the jurisdiction of the Tribunal over all matters in dispute therein”. The three arbitrators were the late Patrick Twigg QC, eventually replaced by John Blackburn QC, Mr Gordon Jaynes and John Uff QC, as the appointed Chairman. It was an experienced panel, chaired by a very experienced arbitrator.

The contractual provisions

16.	The contractual provisions which relate to the currency issues are to be found in clauses 60 and 72.

60.11: The currency of account shall be Maloti and for the purposes of payment, conversion between Maloti and the currencies stated in the contract shall be made in accordance with the rates of exchange determined in accordance with Clause 72.

60.12: All payments to the contractor by the Employer shall be made:

(a)	in the case of a claim for additional payment under the contract where the contractor is due reimbursement of cost, in the currencies stated in the contract, but in the proportions as far as possible in which costs were incurred as agreed with the Engineer; 

(b)	in the case of payment for any Provisional Sum item, in the currencies stated in the contract but in the proportions applicable to the item as agreed with the Engineer at the time when the Engineer gives instructions for the work covered by the item to be carried out;

(c)	in any other case, including any increase or decrease in price under Sub-Clause 70.1 in the currencies and proportions stated in the contract which proportions shall remain fixed for the duration of the contract.

72.1 Rates of Exchange Payments to the contractor shall not be subject to variations in the rates of exchange between Maloti and the foreign currencies that have been stated in the contract, The rates of exchange to be used for the contract shall be the selling rates applicable at close of business of the Central Bank of Lesotho 42 days before the closing date for submission of tenders, which rates shall have been notified to the contractor by the Employer prior to submission of tenders and included in the contract.

72.2 Currency Proportions Payments shall be made to the contractor by the Employer in the currency proportions stated in the contract subject to the provisions of Sub-Clause 60.12.”

17.	As a supplement to the tender the parties agreed what were described as “currency requirements” namely the foreign currencies and proportions referred to in the Conditions in the following table:

	Total
 Equivalent
 Maloti	Maloti/
 Rand	DMs	Fr Francs	Italian
 Lira	Pounds
 Sterling	
Currency proportions of payment	100.00 per cent	58.35 per cent	6.96 per cent	13.38 per cent	10.97 per cent	10.34 per cent	
Clause 72.1
 Exchange
 Rates		1.0000	0.6571	2.2206	484.8643	0.2355	
							
18.	The parties also agreed rates of interest which varied according to the particular currency. The Maloti, the unit of currency in Lesotho, is tied to the South African Rand [1 Maloti = 1 Rand] and the rate of interest applicable to unpaid sums in local currency was stipulated to be 1 per cent over prime overdraft rate charged by First National Bank of South Africa; and for the other currencies, at the rate of 2 per cent in excess of the Commercial Interest Rate applicable, on the due date, to the respective currencies in which payment is to be made.

What the tribunal did

19.	Paragraph 13 of the partial award is headed “Currency and Interest”. The structure of the paragraph is as follows: sub-paragraphs 13.1 to 13.13, inclusive, set out an accurate summary of the parties’ cases on this topic; in sub-paragraphs 13.14 and 13.15 the tribunal dealt with the principles upon which interest would be awarded; and sub-paragraph 13.17 dealt with the principles regarding the currency of the award.

20.	For the purposes of this hearing, the crucial sub-paragraphs in the partial award are 13.15 and 13.17. The relevant passages are these:

“13.15 “As regards interest the submissions of the parties raise the fundamental question whether the right to interest is a matter governed by the procedural law of the arbitration, being English law, or whether it is governed by the law applicable to the substance of the dispute, being the law of the Kingdom of Lesotho. Whilst it is possible that in different jurisdictions the right to interest may be regarded as governed by the substantive law ... there can be no doubt that the right to interest is regarded as a matter of procedure under English law. The tribunal received no evidence as to the applicable rules of conflict of law in Lesotho and therefore must presume this to be the same as English law. This would lead the tribunal to conclude that interest is governed by English law. The issue is, in any event, placed beyond doubt by the agreed Terms of Reference which state expressly [para 7.1].

13.17 As regards the currency in which sums should be awarded, the tribunal is of opinion that this issue is also a matter of procedural law ... For the reasons set forth in paragraph 13.15 above, the tribunal is of opinion that the powers under section 48 of the Arbitration Act 1996 are, prima facie, available. As in the case of section 49, section 48 applies “unless otherwise agreed by the parties”. The respondent contended that the matter of currencies was dealt with under the contract. Whilst this may provide for the currencies in which payment under the contract is to be made, the contract is silent to the currency in which any arbitral award is to be given. The tribunal is of the opinion that the parties have not “otherwise agreed” on the powers available to the tribunal, and the tribunal accordingly concludes that it has the power to order payment of any sum of money found to be due in any currency. Accordingly, while the tribunal takes careful note of the contract currencies and their stated proportions, the tribunal will express its awards in such currencies as are considered appropriate in the circumstances.”

21.	Paragraph 14 of the partial award is headed “Conclusion as to Amounts Due and Currencies”. In sub-paragraph 14.1 they set out the principal sums in relation to each head of claim, which succeeded, expressed in Maloti. To these sums the tribunal added interest in purported exercise of their powers under section 49 of the Act. They concluded that interest should run ‘on a normal commercial basis’ from the dates which they then determined in relation to each claim. The table below shows the sums expressed in Maloti and the date from which interest was to run.

Claim No.	Value of the Claim in Maloti	Date from which Interest runs	
Claim 12	46,659	1 Jan 1997	
Claim 37	14,321,105	1 July 1996	
Claim 53/66	3,000,713	1 July 1996	
Claim 62
 TOTAL	1,532,522
 18,900,099
 ~	1 July 1997	
22.	Paragraph 14.4 of the partial award deals with the question of currencies. “The tribunal must decide in what currencies the foregoing sums are to be awarded and when any conversion is carried out, in order to determine the applicable interest rates in respect of each currency on an average basis. ... Having considered [the parties’] submissions and the powers available to the tribunal, the tribunal is of opinion that it would be appropriate that the final award should be rendered in European currencies and not in Maloti. For the purpose of conversion, the tribunal determines that sums presently stated in Maloti should be converted in the same ratio, inter se, as the four European currencies are stated. This gives rise to the following percentages:

Currency	Percentage	
Italian Lira	26.34 per cent	
UK pounds	24.83 per cent	
French Francs	32.12 per cent	
Deutsche Marks	16.71 per cent	
	100 per cent	
	The tribunal then converted the non-UK currencies into Euros and expressed their partial award in Euros and pounds sterling.

The parties’ arguments

23.	LHDA say that:

(1)	The main error made by the tribunal was in deciding that it had power under sections 48 and 49 of the Act when it did not. By purporting to exercise powers which they did not have, the tribunal exceeded the jurisdiction conferred on it [section 67(1)(b) of the Act] or exceeded the powers conferred on them [section 68].

(2)	The tribunal was wrong to characterise the question of the currency of the award as a question for the procedural law of the arbitration. [paragraph 13.17 of the partial award]; it is, first, a question of looking at the parties’ agreement and respecting the parties’ bargain: see Jugoslavenska Oceanska Plovidba v Castle Investment Co. Inc [1974] QB page 292, at pages 298, 303 and 305; and Miliangos v George Frank (Textiles) Ltd [1976] 1 Lloyd’s Rep. page 201, at page 208. Rule 209 of Dicey & Morris reads as follows:

(1)	“where there is doubt as to the currency in which a debt is expressed (money of account), ... the money of account must be ascertained by construing the contract in accordance with the applicable law
	……
(3)The currency in which damages for breach of contract are to be calculated, must be ascertained in accordance with the law applicable to the contract.” See for example, The Despina R [1979] AC 685, the second holding.

(3)	The fact that the arbitrators were given the powers conferred on them by the Arbitration Act 1996 as a matter of procedural law cannot override their duty to decide the issue of currency by reference to the applicable law of the contract. The parties had agreed, first, that the substantive law of the dispute was the law of Lesotho; and secondly, that the disputes would be governed by the arbitration clause set out in the terms of reference at paragraph 6.4 which provided that the law to be applied to the merits of the dispute “shall be the law of Lesotho” and that the arbitrator shall “in any award of amounts payable to the contractor distinguish between amounts in respect of the source of goods and services ... and award in the respective currencies.” Thus, the power of the arbitrator to decide the question of currency was constrained by the terms of the arbitration agreement.

(4)	The question whether the tribunal had power to make an award in the currencies they chose is a matter of jurisdiction. In this case, no claim had been made to the tribunal that it should make an award in currencies other than those required in the contract. The tribunal itself treated the question as a matter of jurisdiction. But that if it was not a section 67(1)(b) case it was one which fell with in section 68 [serious irregularity]. Under the contractual terms the Tribunal were required to make an award in relation to claims 12 and 37 in Maloti and the other claims in the proportion agreed in the currency of account [that is, split between Maloti and the nominated European currencies]. It would have been fairer and better if the tribunal had put to the parties the way they proposed to approach the matter since they adopted an approach to currency for which neither party had made contended. The argument that this point was not taken was wrong, on the evidence.

(5)	As to interest, again this is a matter not of procedural law but rather of the substantive law of the contract, save that the rate of interest might be a matter of procedural law. Reliance was placed on Rule 196 [Dicey & Morris l3th edition]

“(1) The liability to pay contractual interest and the rate of such interest payable in respect of a debt, eg in respect of a loan, are, in general, determined by the law applicable to the contract under which the debt is incurred, eg by the law applicable to the contract under which the loan is made.

(2) The liability to pay interest as damages for non-payment of a debt is determined by the law applicable to the contract under which the debt is incurred, but (semble) the rate of such interest is determined by English law.

		(3)	The rate of interest awarded by virtue of clause (2) of the Rule is a matter for the discretion of the court pursuant to section 35A of the Supreme Court Act 1981, and in the exercise of that discretion the court will, prima facie, award the rate applicable to the currency in which the debt is expressed.”

	The editors note that there is one decision to the contrary namely a decision of Hobhouse J (as he then was) in Midland International Trade Services v Al-Sudairy (unreported but the transcript is dated 11 April 1990). They assert, firmly, that the view expressed by Hobhouse J should be rejected. They note that the right to interest is regarded by the Rome Convention as a right which is part of the “consequences of breach” within Article 10(l)(c) and which are governed by the applicable law. The editors continue “The existence of a right to claim interest is, it is submitted, a substantive question for the law which governs the contract, though the view may legitimately be taken that the rate of such interest as is available under the applicable law is a matter of procedure determined by the lex fori.” The tribunal were obliged to apply the law of Lesotho to ascertain the entitlement to interest and they were wrong not to do so. There was an error which went to the Tribunal’s jurisdiction or an irregularity under section 68(2)(d) of the Act. It was sufficient for LHDA to argue that the terms of the contract over-rode the application of section 49 of the Act. It could not be said that the point at issue had not been taken at the first available moment.

(6)	LHDA will suffer substantial injustice if the matter is not remitted back to the arbitrators. The Loti fell substantially after the arbitration hearings and before the partial award and, as a result of the tribunal’s decision, LHDA will be paying very substantially more than if the Tribunal had followed the regime regarding currency and interest in accordance with the terms of the contract and the application of the law of Lesotho.

24.	In an interesting oral submission, supplemented by a 146 paragraph written presentation, Mr Glick QC on behalf of HWV contended, and, perforce, I summarise his main arguments:

(1)	The application did not fall within either section 67 or 68 of the Act and was an attempt to avoid the provisions of the ICC rules which excluded the operation of section 69. Whether or not matters of currency and interest were matters of substantive law the tribunal had power under the Arbitration Act to make an award in any currency and to award interest as they saw fit. The impact of the diminution in value of the Loti/rand fell upon LHDA as it should have done.
(2)	As to section 67, the only conceivable basis for suggesting that the present application related to the tribunal’s substantive jurisdiction was that there was an issue as to “what matters have been submitted to arbitration in accordance with the arbitration agreement.” Assuming that the tribunal were wrong to have exercised their powers under section 48 and 49 of the Act, that error or those errors did not stem from any argument or doubt about the nature of the tribunal’s jurisdiction. The “matters” submitted to arbitration are clearly spelt out in the agreed terms of reference and incorporate both the arbitration clause which the parties were agreed upon and, what might be called neutrally, the residual powers of the tribunal. If the tribunal erred in their view of the relationship between the arbitration clause and the residual powers that did not make the error one which gave rise to a challenge to the tribunal’s substantive jurisdiction.

(3)	As to section 68, the only possible argument related to an alleged excess of power. But there is no doubt that the tribunal had the powers conferred by the Arbitration Act; if they exercised those powers wrongly then that was an error of law rather than a matter falling with section 68(2)(c). In particular, Mr Glick QC drew attention to paragraph 6.4 of the Terms of Reference where the parties had agreed “subject to these terms of reference” that the arbitration would be governed by the arbitration clause as then set out. Part of what the arbitration clause was subject to was clause 7.1 of the Terms of Reference, which expressly empowered, if not required, the tribunal to settle the dispute in accordance with the provisions of the 1996 Act.

(4)	The mere fact that the currency of account was stipulated to be Maloti says nothing about the currency or currencies in which any award should be made. Indeed, although the currency of account was Maloti, the contract itself contemplated that monies would be paid under the contract partly in other currencies.

(5)	As to interest, it is not clear, at the least, that interest is a matter of substantive law. In Kuwait Oil Tanker v Al Bader unreported, 16 November 1998, the Court of Appeal declined to express a view as to whether the award of interest under section 35A of the Supreme Court Act was a substantive or procedural matter. (6) Clause 60.10 deals with interest payable by LHDA in the event that LHDA failed to make payments to HWV in accordance with the Engineer’s interim certificate. It does not deal with the power of the arbitrators to award interest.

The decision

25.	(1) The court is astute to ensure that what is, in substance and reality a section 69 challenge, for which permission is required, is not dressed up as a challenge under section 68, or 67: see, for example, Petroships Pte Ltd of Singapore v Petec Trading & Investment Corporation [2001] 2 Lloyd’s Rep 348, 351. A section 67 challenge is a challenge to the tribunal’s substantive jurisdiction as defined. It seems to me that this application is not concerned with “substantive jurisdiction”. Neither of the first two statutorily defined matters of substantive jurisdiction arise at all; in any event, the dispute between the parties concerns the way the tribunal dealt with matters which had been referred to them rather than whether those matters had been so referred. In other words, this must either be a section 68 case or the application must fail.

	(2) As noted above, the terms of the arbitration clause empowered the arbitrators to carry out the function previously held by the Engineer. Their function was to ascertain what sums were due and owing under the contract. This was more a case of ascertaining the value of a contractual debt than of assessing damages.

(3) The way the tribunal approached the currency and interest issues was different from the way that either party had presented their case. Whilst I do not consider that there was any irregularity in this, it might have been more helpful if the method they were minded to adopt were put to the parties for their comments; although it was fair to say that HWV had invited the Tribunal to exercise its powers under sections 48 and 49 of the Act.

(4) The arbitrators chose, as they were quite entitled to do, to give the parties’ representatives little time in which to make oral representations and they managed to resolve a dispute which involved technical matters within an admirably short time span. Whilst the tribunal appreciated that the questions presently in issue were, essentially, jurisdictional, the oral and written submissions of the parties were not as helpful to the tribunal as they might have been. It is to be noted that the arbitrators do not rely upon Mr Glick QC’s argument based upon the words “subject to these terms of reference “. It would appear from their reasons that they regarded both the currency and interest issues as matters of procedural law. For them it was a jurisdictional question: substantive or procedural? If they were right then they were obviously entitled to move to that part of the Terms of Reference headed “Applicable Procedural Rules” and apply the discretion conferred on them by section 48 and 49 of the 1996 Act. It seems to me that Mr Glick QC is seeking, in part, to support the tribunal’s position by reference to a point which was neither argued explicitly nor relied upon expressly by the tribunal. He reinforced this part of his argument with the proposition that the arbitrators had the power to exercise their discretion under the Act and that the real complaint in this case is that the tribunal were wrong to exercise it the way they did, having regard to the contract provisions. Thus, he said, this was a section 69 case and not a section 68 case.

(5) With great respect to the tribunal I consider that they did not have the power to make an award in a currency different from that provided for in the contract. The currencies stipulated for, based in part on the currencies in which costs had been incurred, were the currencies which the Engineer was required to adhere to in any certificate he gave. The arbitrators were in no different position in relation to non-procedural matters. The law to be applied was the law of Lesotho, which for this purpose must be assumed to be the same as English law. As a matter of English law, the currency of the award is a matter to be determined by the applicable law of the contract, as Mr White QC correctly submitted. The arbitrators were required by the terms of reference to “award in the respective currencies”, that is, in the currencies stipulated for in the contract, save to the extent that the parties otherwise agreed. The tribunal were right not to follow the argument presented by Mr Glick QC. The words “subject to these terms of reference” do not permit the tribunal to treat what was a matter of substance [or rather, a matter governed by the substantive or applicable law] as a matter of procedure. The words contemplate that on [properly called] procedural matters the Arbitration Act will apply. They do not mean, and cannot reasonably be thought to mean, that the provisions of the Act predominate over the arbitration clause on matters of substance. In other words, the phrase “subject to these terms of reference” mean, and, I think, can only mean, subject to matters of procedure being governed by clause 7.1. I do not consider that the parties can have thought that Mr Glick’s construction was right; and the tribunal itself did not adopt it.

(6) Having mistakenly concluded, as I think, that the currency of the award was a matter of procedure, the partial award was made in error. But that still leaves the question whether their error can be described as a matter falling within section 68 of the Act or whether it is simply an error of law. I think the tribunal’s error does amount to them exceeding the powers conferred on them. For the reasons I have given, I do not think that the Tribunal had the power to make an award in currencies other than those stipulated for in the contract and that by purporting to exercise a discretion which they wrongly believed was conferred on them by the Act, they were asserting a power which they did not possess. Accordingly, in relation to the currency of the award, I should remit the matter back to the tribunal so that they may produce an award which accords with the contractual provisions. I reject Mr Glick’s further submission that it is good justice that the effect of the devaluation of the currency should fall on the shoulders of LHDA. On the contrary, it seems to me that the parties have very carefully provided for currency fluctuations in their contract and that the application of the contractual regime to the currency of the award will properly give effect to the parties’ bargain and that the precise effect of the devalued local currency is not something otherwise to be taken account of.

(7) The question of interest is less clear, in the sense that there is still a debate as to whether matters of interest as part of damages are matters of substance or procedure. Or, more precisely, whether such interest is a matter determined by the applicable law or by the lex fori. If it was a matter of procedure, then the tribunal were entitled to award interest as they did; but if not, then not. This is an area where the views of the higher courts will be required. My judgment on this issue is as follows:

(1)	In this case the tribunal was dealing with a Dicey & Morris Rule 196(1) case, namely the liability of LHDA to pay contractual interest. It is true that there is no express provision which applies to awards as opposed to certificates of the Engineer, but, for the reasons given, that is not a fair point since the tribunal were acting as though they were performing the Engineer’s function. As I have said, the amount due to HWV is in the nature of a contractual debt rather than an entitlement to damages. If so, then, as the sub-rule states, both the liability to pay and the rate of interest is that determined by the applicable law of the contract, namely the law of Lesotho. By that law, it appears to be the case that interest is only payable when LHDA could be said to be in culpable default; and in any event the amount of the interest cannot exceed the amount of the principal [respectively, the in mora and duplum principles]. The rates of interest are those set out in the contract.

(2)	If this were a question of the obligation to pay interest as damages for breach of contract, then I would agree with the editors of Dicey & Morris and prefer the judgment of Bristow J on this point in Miliangos to that of Hobhouse J in the Sudairy case. It goes without saying that the latter’s judgments deserve the greatest respect. However, it seems to me that the law has moved on since his decision. The contracts (Applicable Law) Act of 1990 was passed after Hobhouse J’s judgment [judgment dated 11 April 1990; Act passed on 26 July 1990 and came into force as from 1 April 1999] as was the Private International Law (Miscellaneous Provisions) Act 1995. The editors’ analysis of this Convention [which of course does not apply to this matter] is convincing and it appears that the law of England, if it were as stated by Hobhouse J would be out of kilter with the law of other Convention States. I also agree that a right to claim interest by way of damages in tort case is not, in a Private International Law sense a matter of procedure to which the 1995 Act would not apply but is, rather, an issue of tort and thus governed by the appropriate substantive law. Like the editors, I can see no good reason why, if the issue of interest under a contract is a matter for the applicable law, it should cease to be so where the claim is for interest damages. Where a claim is for interest by way of damages then the rate will, in such a case, be a matter for the applicable procedural law, and, in general, the rate will be that which is appropriate to the currency of the award.

(3)	Again, for the same reasons as applied to the currency of the award, I consider that the tribunal have exceeded their powers under section 68 of the Arbitration Act and the issue of interest will have to be re-considered by them having regard to the terms of this judgment.

26.	That leaves the question whether LHDA have lost the right to complain because they did not adequately take the currency and interest points before the tribunal. On this issue, the position seems to me to be clear. At the end of the parties’ submissions to the tribunal the position was as follows:

(1)	HWV accepted that claims 12 and 37 should be quantified in Maloti, but is said that because of the delay it had no use for Maloti and contended that the award under these two heads should be in the currencies of the contract, which, of course, included Maloti. It claimed that the Tribunal had the right to do this under section 48 of the Arbitration Act. In relation to the other two claims [53/66 and 62] HWV sought an award in the currencies of the contract [including a proportion in Maloti]. In relation to interest, HWV claimed interest on all sums awarded under section 49 of the Arbitration Act. (2) LHDA’s position was that claims 12 and 37 had to be quantified in Maloti and that any award in relation to those claims had to be in Maloti in accordance with the stipulations of the contract. They agreed that the awards under the other heads should be split between the currencies of the contract, as stipulated in the contract and that interest could not be awarded under section 49 of the Act.

27.	It seems clear to me that LHDA took the point that the currency of the award had to be that stipulated for in the contract which overrode the statutory power. Further, they made the same point in relation to ‘interest’ saying that the contract overrode the provisions of section 49. Indeed, it was of the essence of LHDA’ s submissions that the principles of in mora and duplum should be applied. The tribunal itself obviously regarded the two issues as matters of jurisdiction. In these circumstances the argument that the points were not argued at the time is hopeless.

28.	I will hear the parties on the precise wording of the Order which must follow.