Arbitration Act

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Decision confirms parties’ statutory right to challenge awards under s.67 and s.68.

By Oliver E. Browne

The Court of Appeal has overturned a High Court decision which granted a stay of an application challenging an award pending the determination of related further arbitrations (the Second Arbitration Proceedings), pursuant to s.67 and s.68 of the Arbitration Act 1997 (the Arbitration Act).

The Court’s decision in Minister of Finance (Inc) v International Petroleum Investment Co [2019] EWCA Civ 2080 is a helpful reminder that parties agreeing to an arbitration with a London seat cannot circumvent the mandatory provisions of the Arbitration Act. Parties have a statutory right to challenge an award under s.67 for lack of substantive jurisdiction and s.68 for serious irregularity and cannot contract out of these provisions, notwithstanding any written agreement to the contrary.

The Court recognised that challenges under the mandatory provisions often “lack merit and are nothing more than an attempt by the losing party to put off the day of reckoning”. In such cases, the courts have “adequate powers to bring the challenge to a prompt end”. Indeed, the requirement of proving serious irregularity and substantial injustice is a high hurdle to overcome.

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.

By Robert Price

A recent High Court decision provides a timely reminder that parties to an arbitration agreement must take care to ensure that arbitration proceedings are properly served to avoid an award being set aside or refused enforcement due to defective service.

In Sino Channel Asia Ltd v Dana Shipping and Trading PTE Singapore & Anor [1], the English High Court set aside the award under section 72 of the Arbitration Act 1996 (the Act) and ruled that the award was made without jurisdiction because the claimant served its notice of arbitration on an agent of the respondent who was not authorised to accept service.

Service Under the Act

Section 76(1) of the Act allows the parties to “agree on the manner of service of any notice or other document required or authorised to be given or served in pursuance of the arbitration agreement…” Parties can therefore select institutional rules which set out requirements for commencing arbitration and properly notifying the other party.

By Daniel Harrison

A recent Supreme Court decision raises issues over the extent of court intervention in the arbitration process and reminds us of the importance of carefully selecting institutional rules so as to avoid (if necessary) the ability of parties to appeal against arbitral awards on points of law.

This decision also reinforces the finality of arbitral awards and makes it clear that it is difficult successfully to appeal an arbitral award. In many cases institutional rules of arbitration (such as the LCIA and ICC Rules) do not permit appeals on points of law and this highlights the importance of selecting institutional rules. Had the parties adopted the LCIA or ICC Rules, NYK would not have been able to make this section 69 appeal at all, saving time and money.

By Daniel Harrison

Appealing High Court decisions under the Arbitration Act 1996 (the Act) may be restricted following a recent ruling by the Court of Appeal. In Integral Petroleum SA v Melars Group Limited (2016 EWCA Civ 108), the Court of Appeal confirmed the High Court’s wide discretion in relation to the way in which it chooses to deal with challenges to arbitral awards and confirmed the strict limitations on granting permission to appeal challenge decisions.

The claimant, a Swiss oil and petroleum trading company, originally challenged an arbitral award on the basis of the lack of jurisdiction of the tribunal (s67 of the Act). Although the High Court judge found that the tribunal had incorrectly declined jurisdiction, the judge nonetheless, as matter of discretion, refused to make an order for relief and, in turn, refused permission for the claimant to appeal the High Court’s decision.