By Daniel Harrison

The recent case of Enterprise Insurance Company Plc v U-Drive Solutions (Gibraltar) Limited [1] illustrates the reluctance of courts to intervene in arbitrations despite the parties agreeing otherwise. The court dismissed an attack on two procedural orders pursuant to sections 68 and 69 of the Arbitration Act 1996 (Act) because there was no award for the purposes of the Act and the consent of both parties was not sufficient to establish the court’s jurisdiction.

The Facts

U-Drive Solutions (Gibraltar) Limited (U-Drive) commenced an arbitration against Enterprise Insurance Company Plc (Enterprise) for breach of a distribution agreement. Enterprise claimed that no agreement between the parties existed and challenged the jurisdiction of the tribunal on that basis before the tribunal and the court, which both dismissed the challenge.

The tribunal issued Procedural Order 10 ordering U-Drive to provide security for costs. When U-Drive failed to provide security, the tribunal issued a peremptory order compelling U-Drive to pay the security for costs and then directed that U-Drive must comply with the order and provide security within two weeks, failing which its claim would be dismissed. Within two weeks, counsel for U-Drive gave an undertaking to provide security, which was eventually provided seven days after the two weeks limit had expired.

Enterprise applied to the tribunal for an order dismissing U-Drive’s claim under section 41(6) of the Act, which provides that the tribunal may dismiss a claim if a claimant fails to comply with a peremptory order to provide security for costs. Enterprise also requested an affirmation that the claim had already been struck out because the tribunal had already given a direction that if U-Drive failed to comply with the peremptory order its claim would be dismissed (and U-Drive had failed to comply). The tribunal issued Procedural Order 14 refusing to strike out the claim.

Enterprise applied to court to challenge / appeal against: (i) Procedural Order 10 (ordering U-Drive to provide security for costs); and (ii) Procedural Order 14 (refusing to strike out the claim), both on the basis of a serious irregularity under section 68 of the Act and on the basis of an error of law under section 69 of the Act. Enterprise alleged that there had been a persistent, flagrant and systemic failure to comply with the tribunal’s orders, and that U-Drive’s claim had already been struck out by its failure to comply with the tribunal’s directions to provide security by a certain date.

The Judgment

The court dismissed the challenges holding that it did not have jurisdiction because:

  • despite the fact that U-Drive consented to the challenge, the parties’ agreement alone was not enough to grant the court jurisdiction where it otherwise would not exist;
  • the procedural orders were not “awards” for the purpose of the Act. The court referred to a 2014 case [2] distinguishing an award (a “final determination of a particular issue or claim”) from an order (“which addresses the procedural mechanisms to be adopted”). The procedural orders here were not awards because they were not finally determinative of a claim and were matters of discretion. It did not matter that Procedural Order 14 was in the form of an award (in that it had features of an award including reasons and stating the place of the arbitration) and Procedural Order 14 constituted a decision not to dismiss and therefore did not affect the “rights” of Enterprise as required under section 69;
  • in any event, there was no error of law or serious irregularity. The wording of Procedural Order 14 did not provide for the claim automatically to be struck out if U-Drive failed to provide security. The court considered that the wording was not expressed in the manner that, for example, an ‘unless order’ under the Civil Procedure Rules (CPR) would be expressed and the wording did not mean that if U-Drive failed to comply, the claim would be struck out without any further action. It was not an error of law for the tribunal to accept counsel’s undertaking as compliance especially where compliance did ultimately occur (late). Further, there was no serious irregularity because the tribunal still had discretion over what to do given U-Drive’s failure to comply and did not fail to stand by its previous orders; and
  • with regards to Procedural Order 10, Enterprise had argued that the tribunal erred: (i) in treating the burden of proof as being on Enterprise to establish the level above which the claim would be stifled when considering the amount for security of costs; (ii) in the alternative, in treating the burden as being capable of being discharged without any evidence; and (iii) in failing to consider the amount of costs Enterprise would be likely to recover if successful and/or in reaching his own conclusion as to the level of security which would not stifle the claim. However, the court noted that the Act does not specifically state how the tribunal should order security for costs and so the tribunal had a broad discretion to do so. The tribunal had correctly balanced various factors in its decision to order security and so the section 69 and section 68 claims would, in any event, have failed.


This judgment highlights the reluctance of courts to intervene in arbitration except as expressly provided for the in Act, even with the parties’ agreement. The court did not want to expand the right to appeal, instead supporting the finality of arbitral awards. Further, the court reinforced the distinction between awards and procedural orders; the latter may not be appealed under sections 68 or 69 of the Act.

[1]              [2016] EWHC 1301

[2]              Brake v Patley Wood Farm LLP [2014] EWHC 4192 (Ch)

This post was prepared with the assistance of Eleanor Scogings in the London office of Latham & Watkins.