The DIFC Courts have delivered two significant judgments on setting aside arbitral awards for procedural unfairness. In Princeton v Persephone and Oheo Bank v Parker, the Courts considered whether a party had been given a fair opportunity to address the case on which the tribunal ultimately based its award.
On 14 August 2026, the DIFC Court of First Instance set aside the award in Princeton v Persephone in full. The tribunal’s majority had relied on issues that neither party had advanced, without first inviting submissions. In reaching its decision, the Court applied the guidance given earlier that year by the Court of Appeal in Oheo Bank v Parker[2025] DIFC CA 006, where parts of an award were set aside after a successful claim emerged in post-hearing submissions.
The judgments explain how the Courts will examine setting-aside applications of this nature while maintaining the high threshold for intervention in arbitral proceedings.
Case 1: Princeton v Persephone
The dispute concerned Princeton’s sale of 65,000 metric tonnes of ultra-low sulphur diesel to Persephone. Although Persephone paid approximately 85.7% of the USD 52.5 million purchase price, it failed to pay the balance. Princeton maintained that the non-payment entitled it to terminate the contract and resell the cargo.
Persephone commenced a DIAC arbitration, arguing that Princeton had wrongfully terminated the contract. Its position was that the shortfall did not amount to a breach of condition or a repudiatory breach, particularly given the substantial payment already made, and that Princeton’s remedy for delayed payment was contractual interest.
The tribunal, by majority, awarded Persephone approximately USD 18.49 million, together with interest and costs. Princeton applied to set aside the award under Articles 41(2)(a)(ii) and 41(2)(a)(iii) of the DIFC Arbitration Law.
The Court of First Instance’s decision
The Court examined the case the parties had actually presented to the tribunal. Both had proceeded on the basis that payment was contractually due and that Persephone had failed to pay the full amount. Their disagreement concerned whether that failure entitled Princeton to terminate.
The majority had approached the dispute differently. Relying on the parties’ conduct, including Princeton’s acceptance of delayed payments, it concluded that there was no agreed deadline for payment of the full price. It also relied on findings concerning Persephone’s ability to pay the outstanding balance.
Persephone had not argued that the payment deadline had been varied or waived, or that Princeton was prevented by estoppel from relying on it. Princeton had therefore not been called upon to answer those issues before they became part of the majority’s reasoning.
The tribunal’s procedural directions were also relevant. They required the parties to set out their full factual and legal cases and provided for the tribunal to request additional evidence or submissions. The Court considered that this created a legitimate expectation that any further issue requiring consideration would first be put to the parties.
Had Princeton been given that opportunity, it could have addressed the express payment terms, the entire agreement clause, the requirements of waiver or estoppel, and the evidence concerning Persephone’s ability to pay. Those responses were reasonably arguable and could have affected the outcome.
The Court considered whether the affected parts could be severed but concluded that the disputed reasoning formed the foundation of the majority’s decision. The award was consequently set aside in full.
Case 2: The Earlier Decision in Oheo Bank v Parker
The Court of Appeal had considered a similar matter in Oheo Bank v Parker.
Parker had approached the Bank for assistance in financing the purchase of a vessel. The proposed arrangements involved acquiring bonds to be used as collateral. Parker alleged that one bond could not be used to secure the financing and was worthless, resulting in a loss of EUR 1 million.
The tribunal dismissed Parker’s other claims but, by majority, awarded it EUR 1 million for breach of regulatory duties requiring the Bank’s communications to be clear, fair and not misleading. The successful claim concerned the Bank’s failure to explain why it required Parker to sign an indemnity, rather than the advice on which Parker’s earlier case had focused.
That basis of liability emerged in Parker’s post-hearing brief. In its own brief, the Bank identified allegations it considered unpleaded and explained that it was not addressing them substantively. It expressly asked the tribunal to direct a supplemental brief if it wished to hear the Bank’s response.
The majority nevertheless upheld the claim, considering that the Bank had been given a fair opportunity to address it. On 18 July 2025, the Court of First Instance dismissed the Bank’s application to set aside the relevant parts of the award.
The Court of Appeal’s decision
The Court of Appeal allowed the Bank’s appeal on procedural fairness grounds. It was accepted that the successful claim represented a substantial departure from Parker’s earlier case and that, in the circumstances, the Bank had reasonably asked for directions before responding.
If the tribunal intended to rely on the new claim, it should have given the Bank that opportunity. The Bank could have raised defences, including contributory negligence and voluntary assumption of risk, which could realistically have affected the result. The relevant parts of the award were therefore set aside under Article 41(2)(a)(ii).
The Court rejected the separate challenge under Article 41(2)(a)(iii). It assessed the scope of the arbitration “in the round”, taking account of the pleadings, issues, evidence and submissions. Although the claim was not outside the scope of arbitration, the Bank had been denied a fair opportunity to answer it.
What the Decisions Establish
Article 41 of the DIFC Arbitration Law provides the exclusive means of challenging a DIFC-seated award before the Court. The two grounds considered in these cases concern a party’s inability to present its case under Article 41(2)(a)(ii), and decisions beyond the scope of the submission to arbitration under Article 41(2)(a)(iii).
The distinction between those grounds is important. As Oheo demonstrates, an issue may fall within the tribunal’s mandate but still be decided through a process that does not give a party a fair opportunity to respond. Conversely, the absence of an argument from the formal pleadings does not automatically place it outside arbitration.
Neither judgment requires tribunals to follow the parties’ reasoning without exercising their own judgment. Arbitrators may draw their own conclusions from the evidence and submissions. Where, however, a new issue becomes essential to the decision and the parties have not had a fair opportunity to address it, the tribunal must give them that opportunity before relying on it.
An applicant must also explain why the procedural failure mattered. It should identify the submissions it would have made and show that they were reasonably arguable and could realistically have made a difference. It need not prove that the tribunal would necessarily have reached another result.
Practical Considerations
For counsel, the judgments underline the importance of making the procedural position clear while the arbitration is ongoing. A party faced with a new argument should identify its objection and seek directions on how it is to be addressed. The Bank’s express request for a supplemental brief was significant in Oheo, although the decision should not be taken as general permission to leave an opponent’s argument unanswered.
Parties introducing new arguments should ensure that the change is clearly explained and that the other side has sufficient opportunity to respond. This is particularly relevant to post-hearing submissions, where a point may alter the basis of the claim after the evidence has closed.
Princeton presents a different difficulty: the affected party could not object to reasoning that first appeared in the award. In that situation, the tribunal must recognise when its proposed approach raises an issue the parties have not addressed and invite their submissions. The procedural order, and the expectations it creates about how issues will be introduced, may be relevant to that assessment.
These decisions remain consistent with the DIFC Courts’ support for arbitration and the finality of awards. The Courts did not reopen the disputes to decide whether the tribunals’ conclusions were correct. They examined whether the parties had been fairly heard on the issues that determined the outcome, and whether the lost opportunity could have made a material difference.
For advice on setting aside arbitral awards, procedural fairness and the grounds for challenging awards under Article 41 of the DIFC Arbitration Law, please reach out to Merline Dsouza at merline@alsuwaidi.ae