arbitration

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A rare example of the English High Court varying an arbitral award.

By Oliver E. Browne and Eleanor M. Scogings

In Dakshu Patel v. Kesha Patel [2019] EWHC 298 (Ch), the English High Court upheld an appeal under section 69 of the Arbitration Act 1996 (the Act) against an arbitral award. The court concluded that the tribunal had erred in law in finding that there had been a variation of the profit-sharing provisions of two partnership agreements. The court also indicated that a related section 68 challenge would have succeeded (had it been necessary to decide the point). The court varied the award and held that the parties were entitled to share the profits and losses equally under the partnership agreements.

The case highlights the very high threshold for permission to appeal an award, and is a rare example of an appeal under section 69 succeeding in the English courts. On the facts, there was no conduct or agreement that could be interpreted as a variation. While courts do not usually interfere in the arbitration process, the tribunal had reached what the court described as a “very surprising conclusion” that warranted intervention.

Non-parties are entitled to obtain documents related to an arbitration if the case falls within the “interests of justice” exception.

By Eleanor M. Scogings

In The Chartered Institute of Arbitrators v B, C and D,[1] the English High Court granted the Chartered Institute of Arbitrators (Institute) access to documents related to an arbitration for use in disciplinary proceedings. Applying CPR 5.4C(2), the court balanced the Institute’s legitimate interests in obtaining copies of the documents with the duty of confidentiality in arbitration proceedings. The court held that the general public interest “in maintaining the quality of and standards of arbitrators” outweighed the need to preserve confidentiality of the arbitration.

The case highlights the tension between the public interest in accessing documents related to an arbitration and the confidentiality of the proceedings. On the facts, the quality and standard of arbitrators was of public importance, and minimal harm, if any, would be caused by allowing the Institute access to the documents.

Parties must draft arbitration agreements with Chinese parties clearly and precisely to ensure validity and avoid unwanted litigation.

By Oliver E. Browne and Isuru Devendra

A Beijing court recently adopted a pro-arbitration approach in upholding the validity of an arbitration agreement designating a non-existent arbitral institution. While the decision reflects the increasingly pro-arbitration attitude of Chinese courts, the case also highlights the importance of drafting arbitration agreements involving Chinese parties clearly and precisely.

Background and decision

In Chinalight International Trade Co. Ltd v Tata International Metals (Asia) Ltd, the Beijing No. 4 Intermediate People’s Court was asked to determine the validity of an arbitration agreement designating a non-existent arbitral institution to administer disputes submitted to arbitration under the agreement.

Arbitral tribunal had jurisdiction despite the lack of an express arbitration clause.

By Eleanor M. Scogings and Robert Price

In Sonact Group Limited v Premuda Spa [2018] EWHC 3820, the English High Court confirmed that an arbitral tribunal had jurisdiction over a dispute arising from an informal settlement agreement — despite the fact that the agreement did not contain an arbitration clause. The court held that the arbitration clause in the charterparty applied to the settlement agreement. On the facts, the settlement agreement was no more than an informal routine arrangement to settle sums under the charterparty. The parties clearly intended the arbitration clause to apply to claims relating to the settlement agreement and, therefore, the challenge to jurisdiction was rejected.

The case highlights the English court’s pragmatic and pro-arbitration approach, but also serves as a reminder of the importance of always including express dispute settlement provisions in settlement agreements and other ancillary contractual documents.

An arbitration award cannot be enforced in England against a foreign State without serving the proceedings on that State through the diplomatic channels.

By Robert Price

In General Dynamics UK Ltd v Libya [2019] EWHC 64 (Comm), Males LJ, sitting in the Commercial Court, set aside parts of an order granting permission to enforce an arbitration award against Libya because the order was not served on the State in the manner required by the State Immunity Act 1978 (SIA). The court held that section 12(1) SIA, which provides for service through the Foreign and Commonwealth Office (FCO) of any “writ or other document required to be served for instituting proceedings against a State” is mandatory and the court is not permitted to validate an alternative method of service that does not comply with section 12 SIA.

Facts

The Claimant, a UK company, successfully brought claims in arbitration resulting in an award of nearly £16 million award against the State of Libya (Award). The underlying dispute arose out of a contract between the parties for the supply of communications systems. Although Libya had participated in the arbitration proceedings which took place in Geneva, by the time of the enforcement proceedings in England it had made no effort to satisfy the Award.

The Court allows an application to extend time for bringing arbitration proceedings under section 12(3) of the Arbitration Act 1996.

By Robert Price and Eleanor Scogings

In the recent case of Haven Insurance Company Limited v EUI Limited (T/A Elephant Insurance)[i], the English Court of Appeal dismissed an appeal against a High Court decision granting EUI Limited (Elephant) an extension of time to bring arbitration proceedings after the expiry of a time bar. The Court of Appeal confirmed that it is only willing to grant an extension under section 12(3) of the Arbitration Act 1996 (the Act) in exceptional circumstances, and then only if the circumstances in which the request was made were outside the reasonable contemplation of the parties when they agreed upon the time bar provision.

In Haven, the Court of Appeal held that the lack of clarity in the dispute resolution procedures of the Motor Insurers Bureau (MIB) meant that Elephant had not acted unreasonably and ought to have the opportunity to pursues its claim out of time.

The decision serves as a useful reminder to litigants and counsel of the importance that the English courts attach to complying with time limits and the courts’ unwillingness to interfere with parties’ agreed procedures for an arbitration, even if those procedures relate to the time period after the arbitral award.

Judgment clarifies the exceptional circumstances in which anti-arbitration injunctions against foreign-seated arbitrations might be granted.

By Oliver E. Browne and Robert Price

In Sabbagh v Khoury, Justice Knowles in the High Court issued an anti-arbitration injunction to restrain arbitration proceedings commenced in Lebanon on the basis that, contrary to the Lebanese arbitral tribunal’s findings, the tribunal did not have jurisdiction to hear the case.

Background

The claimant, Sana Sabbagh, is the daughter of the late Hassib Sabbagh who founded the Consolidated Contractors Company (CCC) group of companies, the largest group of engineering and construction companies in the Middle East. She claimed that after her father’s stroke, the defendants, which include her two brothers, conspired to misappropriate assets and shares belonging to her father that lawfully belonged to his estate following his death (and in which Ms. Sabbagh was entitled to inherit a one-third interest).

Judgement clarifies that the Brussels Recast Regulation does not reverse the West Tankers decision.

By Oliver E. Browne and Robert Price

In Nori Holdings v Bank Otkritie, Justice Males in the High Court issued an anti-suit injunction to restrain court proceedings commenced in Russia in breach of an arbitration clause, but refused to issue an anti-suit injunction to restrain similar court proceedings commenced in Cyprus on the grounds that he was bound by the Court of Justice of the European Union’s (CJEU) decision in West Tankers, affirmed in Gazprom, which prevented the grant of such anti-suit injunctions.

Background

Prior to the CJEU’s West Tankers decision, the English courts had the authority to grant, and indeed did grant, anti-suit injunctions restraining court proceedings commenced in breach of an arbitration clause, see for example The Angelic Grace cited with approval by the Supreme Court in AES Ust-Kamenogorsk. The CJEU in West Tankers however held that such anti-suit injunctions were in breach of EU law as such injunctions undermine the effectiveness, or effet utile, of the Brussels Regulation by “obstructing the court of another Member State in the exercise of the power conferred on it by [the Brussels Regulation]”.

The decision confirms that UNCITRAL Rules do not impose a higher procedural fairness burden than the Arbitration Act and that the foreign act of state doctrine applies in arbitrations.

By Oliver E. Browne

The Commercial Court considered various challenges to an arbitral award under the Arbitration Act 1996 (the Act) in Reliance Industries Ltd and another v Union of India [2018] EWHC 822 (Comm). Practitioners will welcome the Court’s important decisions on a technical difference between the UNCITRAL Arbitration Rules 1976 (the Rules) and the Act, and on the applicability of the foreign act of state doctrine in arbitration proceedings in England.

Introduction

The claimants entered into two production sharing contracts with the Indian government for the exclusive right to exploit a number of petroleum resources. These contracts provided for disputes to be referred to arbitration under the Rules, with London as the seat of arbitration.

Decision encourages a deferential approach to enforcing foreign awards in England and confirms narrow interpretation of the public policy exception under the New York Convention.

By Oliver E. Browne and Samuel Pape

The English Court of Appeal has confirmed the enforcement of a China International Economic and Trade Arbitration Commission (CIETAC) award rendered in Beijing, despite the award creditor having presented forged bills of lading to the award debtor’s bank. The decision in RBRG Trading (UK) Limited v Sinocore International Co Ltd [2018] EWCA Civ 838 confirms the English Court’s narrow approach to the public policy exception to the enforcement of New York Convention awards under Section 103(3) of the Arbitration Act 1996.

The underlying CIETAC arbitration

The dispute arose out of a contract between Sinocore International Co Ltd (Sinocore) and RBRG Trading (UK) Ltd (RBRG) for the sale of steel coils to be shipped from China to Mexico. RBRG was required to pay for the shipment through a letter of credit from its bank, payable on condition that the coils were shipped by 31 July 2010.