The case establishes that under the Arbitration Act 2005, arbitral awards cannot be set aside purely for errors of law unless they substantially affect the rights of the parties involved, emphasizing minimal court intervention.

[176] With cancellation of the 1998 allotment, Far East was put back to the share structure of 16,685,099 (Far East) and 8,218,033 (Majlis). Or rather, Far East was put back to the share structure of 16,685,099 + 151,616 (Far East) and 8,218,033 less 201,650 (Majlis). Cancellation of the 1998 allotment put the total issued shares capital of KAOP back to 24,853,098 shares.

[177] Section 56 (1)(c) of the Companies Act 1965 (since repealed by the Companies Act 2016) provided that a company may "pay dividends in proportion to the amount paid up on each share where a larger amount is paid up on some shares than on others". KAOP could only pay dividends in proportion to the amount of its issued share capital. But KAOP would have paid dividends in proportion to the then issued share capital of Far East - 38,933,583 (16,685,099 + 22,096,868 +151,616) and Majlis - 8,016,383 (8,218,033 less 201,650). But with cancellation of the 1998 allotment, only the dividends paid in proportion to 24,853,098 shares would have been validly paid. That was not discerned by the arbitrator who only perceived that dividends were not paid to Majlis in accordance with its rightful equity. The arbitrator attempted to put that right.

[178] But in his attempt to put things right, the arbitrator failed to appreciate that all dividends were paid from profits of KAOP (see s 365 of the Companies Act 1965 ). With cancellation of the 1998 allotment, Far East could not retain the dividends paid to 22,096,868 shares (1998 allotment). In Re Cleveland Trust plc, Cleveland Trust plc (Cleveland) had a wholly-owned subsidiary (Gunnergate) which in turn had a wholly-owned subsidiary (McInnes). McInnes, as a result of its sale of property on which realised a substantial capital profit, declared a dividend which was ultimately passed on to Cleveland. As a result of the receipt of the money, Cleveland made a bonus issue of fully paid shares to be capitalised out of its profit and loss account. McInnes was not empowered to use its capital surplus from the sale of assets to declare a dividend. It was claimed that since McInnes had no capacity to so declare a dividend, Gunnergate was liable as a constructive trustee to repay to McInnes the dividend which it had received and Cleveland in turn was liable to account to Gunnergate. On the consequences of an ultra vires dividend payment, Scott J referred to Precision Dippings Ltd v. Precision Dippings Marketing Ltd [1985] BCLC 385, where Dillon LJ said:

"The payment of the dividend of £60,000 was therefore an ultra vires act by the company, just as if it had been paid out of capital or in any other circumstances in which under any of the other provisions of s 39 and the following ss there were not profits available for dividend. In those circumstances, can Marketing have any defence to the companys claim for repayment of the £60,000 with interest?

I would put the position quite shortly. The payment of the £60,000 dividend to Marketing was an ultra vires act on the part of the company. Marketing when it received the money had notice of the facts and was a volunteer in the sense that it did not give valuable consideration for the money. Marketing accordingly held the £60,000 as a constructive trustee for the company: see Rolled Steel Products (Holdings) Ltd v. British Steel Corp [1985] 3 All ER 52 at 8788, 91, [1984] BCLC 466 at 509-510, 514 per Slade and Browne-Wilkinson LJJ."

[179] Scott J held that McInnes lacked capacity to pay a dividend out of capital surpluses arising out of the sale of its assets, and that Gunnergate, to the extent that the dividend was unauthorised, was a constructive trustee to hand back the dividend.

[180] The arbitrator should order Far East to return all ultra vires dividends to KAOP. But the arbitrator did not order Far East to return the ultra vires dividends to KAOP. Instead, the arbitrator ordered Far East to pay damages to Majlis. The arbitrator held that Majlis lost total dividends of