What happens when the arbitral tribunal ignores the expert evidence?

18/06/2018

On several occasions, the Superior Court of Justice of Lima/Perú has annulled awards for defects in the motivation of arbitration awards. I want to refer today to one of the most frequent cases: when the arbitral tribunal does not take seriously the expert evidence admitted in the framework of the process. For all, I will cite the case of MachuPichu Electric Generation Company EGAMSA with GYM S.A. (Resolved under File No. 43-2015 by the Second Commercial Court).

EGAMSA requested the annulment of the award in a controversy over the rehabilitation of its hydroelectric plant. In the course of the arbitral process, expert reports were offered and acted upon, which were taken to a hearing of expert debate, after which new arguments and evidence were admitted.

For the Chamber of Lima, the problem arose when such evidentiary means were not assessed in the award, resulting in the violation of the fundamental right to proof, in addition to having contravened the principle of procedural congruence. The arbitral tribunal at the time of the arbitration did not motivate why it decided to endorse the contractor's expert opinion, reason why it decided to annul the award.

Expert evidence is one of the ways in which a court/tribunal has to approach the scientific or technical knowledge it lacks. It is necessary, therefore, to understand and value it. But it often happens that some courts, not understanding the technical or scientific details of it, renounce their vocation to understand in depth the nature of the dispute. Renouncing it, they also renounce to solve it rationally.

That resignation has for practical effect two contrary alternatives, or simply the arbitrators ignore the expert evidence and nothing about it say in the award or, on the contrary, they are linked to their conclusions, deciding in the sense indicated by the experts, without submitting such information/knowledge to the rules of rational criticism. Both "exits" are simply irrational because they are not justified or meet a minimum standard of motivation, causing the decision on the respective fact is not motivated.