Arbitral award scrutiny and continuing breach waiver principles led to setting aside damages and rejecting the counter-claim.

A later deletion of High Court reference rules did not retrospectively invalidate a third-Judge reference made while those rules were in force, so the reference order remained procedurally sustainable. An arbitral award may nevertheless be set aside where it is based on misreading of material documents, ignores vital evidence, reflects non-application of mind, or rests on an error of law apparent on the face of the record. The court also noted that waiver is not perpetual where breaches continue, and a party in continuing default cannot insist on performance or claim damages for non-performance caused by its own breach. Applying these principles, the damages award was set aside and the counter-claim was rejected.

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Issues: (i) Whether the order of reference to a third Judge under the applicable civil procedure rules was valid and could be acted upon in the High Court appeal. (ii) Whether the arbitral award and the decree made in terms of it were liable to be set aside for errors of law apparent on the face of the award and whether the State's counter-claim should be rejected.

Issue (i): Whether the order of reference to a third Judge under the applicable civil procedure rules was valid and could be acted upon in the High Court appeal.

Analysis: The reference was made by the Division Bench in the course of its judicial order, and the governing High Court rules were in force when that order was passed. A later deletion of the rules could not retrospectively invalidate an order already made or destroy rights and obligations arising from it. The subsequent hearing before the third Judge was therefore procedurally sustainable.

Conclusion: The challenge to the High Court order on this ground failed.

Issue (ii): Whether the arbitral award and the decree made in terms of it were liable to be set aside for errors of law apparent on the face of the award and whether the State's counter-claim should be rejected.

Analysis: An arbitral award is vulnerable where it is founded on misreading of material documents, ignores vital evidence, reflects non-application of mind, or proceeds on a patently erroneous understanding of the governing law. Waiver is not permanent where the defaulting party continues to commit recurring breaches, and a party in continuing default cannot insist upon performance by the other side or claim damages for non-performance caused by its own breaches. On the facts, the award of damages was found to rest on perverse and unsupported assumptions, while the State's counter-claim also did not warrant acceptance in full in the peculiar circumstances of the case.

Conclusion: The award in favour of the appellants was set aside and the State's counter-claim was rejected.

Final Conclusion: The procedural challenge to the High Court's reference order was rejected, but the substantive award was interfered with and the matter was finally resolved by setting aside the damages award and declining the counter-claim, with each side left to bear its own costs.

Ratio Decidendi: An arbitral award may be set aside when it is vitiated by an error of law apparent on the face of the record, misreading of material documents, or non-application of mind; and a waiver of breach does not become perpetual so as to preclude action against continuing defaults.

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