Source: https://globalarbitrationreview.com/jurisdiction/1000187/england-&-wales
Timestamp: 2018-01-23 04:12:07
Document Index: 463785998

Matched Legal Cases: ['EWCA ', 'UKSC ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'EWCA ', 'UKSC ', 'EWCA ', 'EWCA ']

GAR Know how: Commercial Arbitration 2017: England & Wales
Last verified on Tuesday 27th June 2017
Nigel Rawding QC and Elizabeth Snodgrass
The United Kingdom (UK) (which incorporates Great Britain and Northern Ireland) signed and ratified the New York Convention in 1975, subject to the "reciprocity" reservation, viz: the UK courts will enforce awards made in a state which is also party to the Convention.
The UK is party to the Geneva Convention on the Execution of Foreign Arbitral Awards 1927. However, very few states are signatories to the Geneva Convention and not to the New York Convention. With regard to other reciprocal arrangements, the Foreign Judgments (Reciprocal Enforcement) Act 1933 provides for the enforcement of arbitral awards from certain former Commonwealth countries. The Arbitration (International Investment Disputes) Act 1966 makes provision for the recognition and enforcement of ICSID awards.
Arbitration proceedings in England and Wales and Northern Ireland are governed by the Arbitration Act 1996 (the Act). Arbitrations in Scotland are governed by the Arbitration (Scotland) Act 2010. Under section 99 of the Act, the Arbitration Act 1950 (Part II) remains in effect with regard to the enforcement of certain awards that do not fall under the New York Convention.
The Act brought English law significantly closer to the UNCITRAL Model Law, but it is not a wholesale adoption. Unlike the Model Law, the Act is not limited to international commercial arbitration. For a helpful summary of other key differences between the Act and the Model Law, see Merkin and Flannery, Arbitration Act 1996 (2024, 5th ed.) pp.3–4.
The LCIA (formerly known as the London Court of International Arbitration) is a renowned international arbitration institution with popular rules, which will also act as an appointing and administrative authority in respect of arbitrations under its own Rules or the UNCITRAL Rules. The LCIA issued revised Arbitration Rules in 2014. The Chartered Institute of Arbitrators administers arbitrations under its own rules and acts as an appointing authority. The Centre for Effective Dispute Resolution acts as an appointing authority and administrator in arbitrations governed by the UNCITRAL Rules. The London Maritime Arbitrators Association promotes maritime arbitration in London and can act as an appointing body. There are also a number of institutions catering for disputes arising in a particular trade area or industry, such as the Insurance and Reinsurance Arbitration Society (ARIAS (UK)) for insurance disputes. Commodity disputes are regularly conducted under the rules of, inter alia, the Grain and Feed Trade Association, the Federation of Oils, Seeds and Fats Associations and the London Metal Exchange (LME) (each of which acts as an appointing authority).
5.Foreign institutions
Can foreign arbitral providers operate in your jurisdiction?
International arbitrations are routinely conducted in London under the rules of numerous arbitral institutions, including the ICC, the SCC, the AAA/IDRC and other bodies.
There is no specialist arbitration court. However, the judiciary in the Commercial Court is familiar with (and supportive of) the law and practice of international arbitration. Applications in respect of arbitrations will be heard at first instance by the Commercial Court (usually with a right of appeal to the higher courts).
An arbitration agreement must be ‘in writing’ or evidenced in writing to fall within the scope of the Act (sections 5(1),(2)). What constitutes in writing or evidence in writing is broadly defined (see sections 5(2),(4),(5) and (6)), and includes an oral agreement to arbitrate by reference to ‘terms which are in writing’ (section 5(3)). Save for the exception in section 5(3), oral arbitration agreements are recognised only by the common law.
An arbitration agreement can cover future disputes (section 6(1)).
The Act clarifies that both contractual and non-contractual disputes (section 6(1)) may be submitted to arbitration. Commercial disputes arising under a valid arbitration agreement (including competition disputes) are generally arbitrable. The Act does not list or delimit matters which are not capable of settlement by arbitration (section 81(1)(a)). Matters that are deemed non-arbitrable under English law include criminal and family law matters.
Under English law, a third party cannot be bound by an arbitration clause without its consent. If a third party seeks to enforce substantive rights in a contract that provides for arbitration of disputes, any such rights of the third party are considered to be conditioned by the arbitration clause of the contract, such that the third party must comply with the arbitration clause in seeking to enforce such rights.
Indeed in an April 2016 decision the Court of Appeal confirmed that an anti-suit injunction should be issued to restrain proceedings brought by a third party to enforce rights that were subject to an arbitration clause, without any need to make a higher showing that the proceedings are "vexatious and oppressive" (Shipowners’ Mutual v Containership Denizcilik (Yusuf Cepnioglu) [2016] EWCA Civ 386).
A third party may participate in an arbitration only with the consent of all parties concerned. Consent may be given by adopting institutional rules that provide for joinder (eg, the LCIA Rules).
A tribunal cannot consolidate proceedings without the consent of all parties concerned. Parties may provide for consolidation in the relevant contract(s) or agree to consolidation once a dispute has arisen. Recent amendments to the LCIA Rules and other sets of institutional arbitration rules clarify the power of the arbitral tribunal to order consolidation in certain circumstances, but consolidation beyond those circumstances still requires the consent of all parties.
Is the "group of companies doctrine" recognised in your jurisdiction?
English law does not recognise the group of companies doctrine. An award based on this doctrine may be challenged (see, eg, Peterson Farms Inc v C&M Farming Ltd [2004] EWHC 121 (Comm)). Accordingly, group companies will normally be recognised as parties to an arbitration agreement only where this is expressly agreed. However, the corporate veil may be "pierced" to bind a third party group company to an arbitration agreement where a court or tribunal is persuaded that the existence of a separate corporate entity is merely a façade (Trustor AB v Smallbone and Others [2001] EWHC 703 (Ch)).
Unless otherwise agreed by the parties, an arbitration agreement is treated as a distinct agreement and is not regarded as invalid, non-existent or ineffective because the wider contract is invalid, non-existent or ineffective (section 7 of the Act). The Commercial Court has recently confirmed that the separability of an arbitration agreement providing for arbitration in England is governed by English law, even where the law governing the underlying contract is foreign law, and that, due to separability, the arbitration agreement is unaffected by alleged corruption or bribery affecting the underlying contract (National Iranian Oil Company v Crescent Petroleum Company International Ltd and another [2016] EWHC 1900 (Comm). However, in certain limited cases (eg, forgery), the arbitration agreement may be declared invalid on the same grounds as the wider contract (Fiona Trust Corporation and Ors v Privalov and Ors [2007] All ER (D) 233).
Unless otherwise agreed by the parties, the tribunal may rule on its own “substantive jurisdiction”, viz: whether there is a valid arbitration agreement; whether the tribunal is properly constituted; and what matters have been submitted to arbitration (section 30(1) of the Act). A party may challenge such a ruling (section 30(2)).
A party may apply to the court to determine the tribunal’s substantive jurisdiction (section 32(1)). However, such an application will not be considered unless it is made either: with the agreement of all the parties; or with the permission of the tribunal and the court is satisfied, inter alia, that there is “good reason” why it should decide the matter (section 32(2)). An example of where an application might be made to the court is when the arbitration clause precludes a tribunal deciding on its own jurisdiction. This statutory mechanism does not formally remove the English courts’ residual jurisdiction to make a declaration as to the existence of a valid arbitration agreement, but in principle the court should not entertain such an application where it is open to the party seeking the application to commence arbitration and allow the arbitral tribunal to rule on any jurisdictional issue in the first instance (HC Trading Malta Ltd v Tradeland Commodities SL [2016] EWHC 1279 (Comm)).
In the context of enforcement proceedings (see questions 44 and 45 ), the English courts may revisit the question of the tribunal’s jurisdiction if the party resisting enforcement seeks to prove that there was no arbitration agreement binding upon it under the law of the country where the award was made (Dallah Real Estate and Tourism Holding Company v Ministry of Religious Affairs, Government of Pakistan [2010] UKSC 46).
14.Drafting
Are there particular issues to note when drafting an arbitration clause where your jurisdiction will be the seat of arbitration or the place where enforcement of an award will be sought?
The English courts generally take a liberal and "arbitration-friendly" approach to the construction of poorly worded arbitration clauses (see, eg, Fiona Trust Corporation & Ors v Privalov & Ors [2007] All ER (D) 233; Paul Smith Ltd v H&S International Holding Inc [1991] 2 Lloyd’s Rep 127). However, a clearly worded arbitration clause is obviously preferable. Parties should consider how (if at all) they wish to vary or carve out the Act’s non-mandatory provisions, eg, the right of appeal under section 69 (NB, this right may be deemed waived by the adoption of certain institutional rules, eg, the LCIA Rules) or the right to the determination of a preliminary point of law under section 45.
Institutional international arbitration is often preferred to ad hoc arbitration for complex and/or high-value commercial disputes. That said, ad hoc international arbitrations are common, particularly in the shipping, construction, commodities and real estate sectors. Parties to ad hoc arbitrations often adopt standard rules of procedure (eg, the UNCITRAL Rules).
A multi-party clause may provide for the arbitration to be commenced as a multi-party proceeding and/or for the tribunal or parties to have the power to involve additional parties once proceedings have commenced, either through joinder (see question 9) or consolidation (see question 10).
In multi-party agreements the clause must specify the procedure by which the tribunal is to be constituted. In order to ensure that all parties have an equal opportunity to participate in the constitution of the tribunal, recommended practice is to provide that the claimant parties collectively and the respondent parties collectively may each nominate one arbitrator and that in default of any parties doing so, all members of the tribunal will be appointed by the appointing authority. It is worth noting that the main arbitration rules now permit the institution to appoint the entire tribunal where the multiple parties fail to agree (see, eg, article 8 of the LCIA Rules). It is also worth noting that the fact that a pre-dispute agreement establishes a procedure for appointment of a tribunal that does not provide each party with equivalent rights with respect to appointment is unlikely to render the arbitration agreement unenforceable as a matter of English law.
Unless the parties agree otherwise (eg, by adopting institutional rules that provide for a different procedure), arbitral proceedings are commenced by written notice to the other party/parties or (if applicable) the appointing authority (see further sections 14(2)-(5) of the Act).
The same limitation periods apply to arbitrations as to other legal proceedings (see section 13 of the Act together with the Limitation Act 1980 and the Foreign Limitation Periods Act 1984). In summary, in contractual and tortious claims the relevant period will be six years from accrual of the cause of action.
The tribunal will decide the dispute: in accordance with the law chosen by the parties; or if the parties agree, in accordance with such other considerations as are agreed by them or determined by the tribunal (section 46(1)). A choice of law by the parties shall be understood to refer to the substantive law of a country and not its conflict of law rules (section 46(2)). This is to avoid the situation where such conflict of law rules could lead to the substantive law of another jurisdiction being applied. In the absence of such a choice or agreement, the tribunal will apply the law determined by the conflict of laws rules it considers applicable (section 46(3)).
The 2012 Court of Appeal decision in Sulamerica CIA Nacional de Seguros SA and others v Enesa Engenharia SA and others [2012] EWCA Civ 638 provided guidance on the relationship between the choice of law governing the parties’ substantive agreement and the law governing the separable arbitration agreement contained in the larger contract. There the court was unwilling to interpret the general choice of law clause as intended to choose the law governing the arbitration agreement, when the arbitration agreement would have been invalid under that law. Instead, the Court of Appeal held that the law governing the arbitration agreement was English law, the law of the seat of the arbitration. The decision on separability highlighted above (see question 12) also suggests that a general choice of law clause will not necessarily determine the law governing the arbitration clause.
English law has traditionally placed few limits on a party’s choice of arbitrator, although specific criteria in the arbitration agreement may fetter that choice. Parties are free to agree on the number of arbitrators and the procedure for their appointment (sections 15 and 16 of the Act). However, note that a party may apply to the court (or relevant arbitral institution) to remove an arbitrator if, inter alia, it has justifiable doubts as to the arbitrator’s impartiality (section 24; see further question 24).
The appointment of a non-national arbitrator would be proscribed only by an agreement between the parties. The appointment of non-nationals is common and may even be required by institutional rules in some circumstances (see, eg, article 6.1 of the LCIA Rules).
Nationals of any member of the European Economic Area (EEA) are at present free to enter the UK to visit and work; it remains to be seen what the position will be following UK withdrawal from the EU. However, non-EEA arbitrators will be subject to standard immigration requirements, which may include obtaining a visa and work permit (see the UK Border Agency website for further details).
Section 17 sets out the procedure by which a party that has appointed its arbitrator may give to a party in default notice of its intention to appoint such arbitrator as the sole arbitrator. Section 18 provides a further mechanism by which any party may apply to the court to exercise its powers inter alia to give directions relating to arbitral appointments or to make the arbitral appointment(s) itself.
Finally, section 16 sets out a procedure for the appointment of various types of tribunal (including sole arbitrator and three arbitrator tribunals) where no procedure for the appointment of arbitrator(s) has been agreed.
Where the seat of arbitration is in England and Wales, an arbitrator is not liable for anything done or omitted in the discharge of his or her functions except where the act or omission is shown to have been in bad faith (section 29 of the Act).
The tribunal will generally require the parties to provide advance deposits in respect of its fees and expenses. The tribunal may refuse delivery of an award if its fees and expenses have not been met (section 56(1) of the Act). The LCIA operates a fundholding service that ensures that the funds received cover the costs incurred throughout the arbitration. This service is available for arbitrations conducted under the LCIA Rules, the UNCITRAL Rules, or ad hoc.
A party may challenge an arbitrator in the courts if circumstances give rise to justifiable doubts as to his/her impartiality (section 24(1)(a) of the Act). The test applied by the courts is whether a fair-minded and informed observer would conclude that there was a real possibility of bias (see, eg, A and others v B and another [2011] EWHC 2345). The other grounds on which an arbitrator may be challenged are lack of qualifications required by the arbitration agreement; physical or mental incapacity; or a refusal or failure properly to conduct proceedings or to use reasonable despatch in conducting the proceedings or making an award (where this has caused or will cause substantial injustice to the applicant) (section 24(1) of the Act).
The applicant must first exhaust any available recourse under inter alia institutional rules to remove an arbitrator before applying to the court (section 24(2)). While the IBA Guidelines are non-binding, they are regarded as a "first port of call" for arbitral institutions considering a challenge and are likely to be given some weight before the courts. That said, the Commercial Court criticised the IBA Guidelines and declined to set aside an award notwithstanding an arbitrator’s failure to disclose a circumstance on the Non-Waivable Red List of the Guidelines, indicating that the Guidelines may not be followed to the letter (W Ltd v M SDN BHD [2016] EWHC 422 (Comm)).
Both the tribunal and the courts have the power to grant interim relief (sections 38 and 44 of the Act), although the powers of the court do not extend to ICSID arbitrations, where any relief should be sought from the tribunal (ETI Euro Telecom International NV v Republic of Bolivia and Anor [2008] EWCA Civ 880).
However, once the tribunal is constituted, the court will act only where the tribunal has no power or is unable to act effectively (section 44(5)). In 2016, the Commercial Court addressed the interplay between section 44 and the "emergency arbitrator" provisions of the LCIA Rules (which are also found in other sets of institutional arbitration rules) in terms that some have taken to imply that section 44 powers are limited by the possible availability of relief from an emergency arbitrator – although in that case the court also found that the situation was not sufficiently urgent to require immediate interim relief, so it is unclear how the court would rule if, even though the arbitral institution or emergency arbitrator had declined to act, the court itself determined that the matter was sufficiently urgent to warrant interim relief (Gerald Metals SA v The Trustees of the Timis Trust and others [2016] EWHC 2327 (Ch)).
The interim relief available from the tribunal includes an order for security for costs (section 38(3)) and directions in relation to the inspection, preservation, custody or detention of the subject matter (section 38(4)). The tribunal may also make interim awards, including a provisional order for the payment of money between the parties (section 39). The court’s powers under section 44 are more extensive and extend to orders against third parties (eg, freezing injunctions and orders relating to the taking of evidence).
Following the ECJ decision in Allianz SpA and Others v West Tankers Inc C-185/07 [2009] AC 1138, the English courts may not grant an anti-suit injunction to restrain proceedings commenced in the court of another EU member state. This position was not changed by the recast Brussels I Regulation, but in Gazprom OAO C-536/13, the ECJ (now known as the Court of Justice of the European Union (CJEU)) has confirmed that anti-suit injunctions issued by arbitral tribunals are not impacted by EU law. Anti-suit injunctions remain available in respect of proceedings brought outside the EU (see, for example, Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66; Shashoua and ors v Sharma [2009] EWHC 957 (Comm)), and, of course, the position will have to be revisited following UK withdrawal from the EU.
If no arbitration proceedings have commenced and none are intended (thereby precluding an application under section 44 of the Act), but a party nonetheless seeks to protect its rights under an arbitration agreement, the courts have jurisdiction to award a final anti-suit injunction under section 37 of the Senior Courts Act 1981 (AES Ust-Kamenogorsk Hydropower Plant LLP v Ust-Kamenogorsk Hydropower Plant JSC [2011] EWCA Civ 647).
Unless the parties agree otherwise, the tribunal has the power to order the claimant to provide security for costs (sections 38(2)-(3) of the Act), which include both the costs of the arbitrators and the parties’ own costs (section 39). Under the Act, the position is that this relief is now available only from the tribunal (save in court proceedings relating to the arbitration, eg, under sections 67-69).
The Act lists in a separate schedule those of its provisions that are mandatory and will have effect whatever the parties have agreed. For example, the tribunal must act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting its case and dealing with that of its opponent and adopt procedures that avoid unnecessary delay or expense (section 33(1)). Further key mandatory provisions to note include the following: the parties must do all things necessary for the proper and expeditious conduct of the arbitral proceedings (section 40); and the courts may suspend legal proceedings brought in breach of an arbitration agreement (section 9) and may remove arbitrators from office (section 24).
Under the Act, where a respondent fails to participate in an arbitration, the tribunal may proceed to an award on the basis of the evidence before it (section 41(4)). This is in line with the approach set out in article 25(c) of the Model Law and prevailing practice. The party in default will typically be given every opportunity to participate before the tribunal allows the arbitration to proceed in its absence. The tribunal may ask the non-defaulting party to attend a merits hearing and present its case (including witness evidence) in order that the tribunal is able to render a fully reasoned award. It remains open to the defaulting party subsequently to challenge the award on the usual grounds (see further under questions 41 and 42).
What types of evidence are usually admitted, and how is evidence usually taken? Will the IBA Rules on the Taking of Evidence in International Arbitration generally be taken into account?
The prevailing practice is for written and oral factual and expert witness evidence to be admitted as well as documentary evidence. Ultimately, it is for the tribunal to decide all evidential matters, except where the parties have agreed otherwise (section 34(1) of the Act). Such matters include whether to apply strict rules of evidence (or any other rules) as to the admissibility, relevance or weight of any material produced (section 34(2)(f)).
The parties may agree that the IBA Rules will apply to the proceedings, in whole or in part, and this is common in practice. Absent such an agreement, tribunals frequently look to the IBA Rules for guidance in any event.
Questions of privilege are complex. In summary, a tribunal with a seat in this jurisdiction applying English law will frequently allow parties to rely on the common law rules relating to privilege in respect of requests or orders for the production of documents.
Unless otherwise agreed by the parties, the courts may make orders inter alia for: the taking of witness evidence; the preservation of evidence; and the inspection of property (sections 42 and 44 of the Act). Notwithstanding any contrary agreement, a party may apply to the court to secure the attendance of witnesses (section 43).
Unless the parties agree otherwise, it is for the tribunal to decide on the scope of document production (section 34(2)(d) of the Act). Procedures regulating document production are set out in the IBA Rules and may be adopted by agreement of the parties or order of the tribunal. Parties generally produce those documents upon which they rely and, if necessary, request the production of certain documents or categories of documents from the opposing party. If a party fails to comply with a peremptory order for document production, the tribunal may inter alia draw adverse inferences and/or make appropriate orders as to costs (section 41(7)). Alternatively, the tribunal may seek an order from the court (section 42(1)).
While not mandatory, it is standard practice, to have a final hearing on the merits. This is reflected in the major institutional rules (see, eg, article 19.1 of the LCIA Rules).
Seat or place of arbitration
The seat is the legal – rather than physical – place of the proceedings. Accordingly, hearings and procedural meetings may be conducted elsewhere.
Yes. Unless the parties have agreed otherwise, where there are three or more arbitrators, decisions are made by majority (section 20(3) of the Act). Where the tribunal is unable to reach a majority decision, the chairman’s vote will prevail (section 20(4)).
The parties are free to agree on the remedies or relief that the tribunal may grant (section 48(1) of the Act). Accordingly, subject to public policy restrictions, parties can provide that a remedy not available under English law (eg, punitive damages) may be awarded by the tribunal. With respect to public policy, the High Court has rejected a challenge to an award enforcing a penalty clause in a foreign law-governed contract (that would have been unenforceable had the contract been governed by English law), finding no public policy impediment to enforcement – instead, the public policy of refusing to enforce penalty clauses was held to be outweighed by the public policy in favour of enforcing international arbitration awards (Pencil Hill Ltd v US Citta di Palermo Spa (Case BA40MA198) (unreported)).
For the remedies that a tribunal has the power to award by default, see sections 48(2)-(5). These include: declaratory relief; an order for the payment of a sum of money; an order that a party do or refrain from doing something; an order for specific performance of a contract (other than a contract relating to land); and/or the rectification, setting aside or cancellation of a deed or other document.
Dissenting opinions are permitted under English law, although they continue to be relatively rare in practice. In the case of B v A [2010] EWHC 1626, which was a challenge to an award before the English courts, it was held that a dissenting opinion might be admissible as evidence in relation to procedural matters or it might inform the decision of the court where the proper law of the dispute is English law and there is an appeal on a point of law. However, the court held that a dissenting opinion does not form part of the award.
The parties are free to agree on the form of the award (section 52(1) of the Act). The default position under the Act is that the award must: be in writing and signed by all arbitrators (or those assenting to it); contain reasons, unless it is an agreed award or the parties have agreed to dispense with reasons; and state the seat of the arbitration and the date on which it is made (sections 52(3)-(5)). The grounds upon which recognition of a New York Convention award may be refused are set out in sections 103(2)-(3). Section 102 indicates the evidence to be produced by a party seeking recognition or enforcement of a New York Convention award.
The tribunal is not subject to a time limit in rendering its award. If the arbitration agreement imposes such a time limit, this may be extended by the court if it is satisfied that a "substantial injustice" would otherwise result (section 50 of the Act).
The tribunal may correct an award on its own initiative or on the application of either party. Any application must be made within 28 days of the award (sections 57(3)-(4)). Any correction must be made within 28 days of receipt of the application or, where made by the tribunal of its own motion, within 28 days of the award (section 57(5)). The parties are free to agree on different time limits (eg, by adopting institutional rules), which time limits can themselves be extended by the court pursuant to section 79. The Commercial Court recently used the power under section 79 to extend the time limit set by the LCIA Rules for an application for correction of an award (see Xstrata Coal Queensland Pty Ltd and others v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd [2016] EWHC 2022 (Comm)).
Are parties able to recover fees paid and costs incurred? Does the "loser pays" rule generally apply in your jurisdiction?
Unless otherwise agreed, the tribunal may make an award allocating the costs of the arbitration (including legal fees) between the parties and will generally require the unsuccessful party to pay the reasonable costs of the successful party (sections 61(1)-(2) of the Act).
In a recent notable case the Commercial Court held that costs of the arbitration may include the costs of obtaining third-party funding. (Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd [2016] EWHC 2361 (Comm)) This case should not, however, be taken to stand for the proposition that funding costs can be recovered in every case, since there the court stressed that in the circumstances, including circumstances caused by conduct on the part of the respondent found to be oppressive, the claimant required third-party funding in order to be able to bring its claims, making an award of funding costs as costs of the arbitration reasonable and appropriate. But the potential recoverability of funding costs in arbitration differs from the position in litigation in England and Wales, where pursuant to the so-called Jackson reforms that came into force in 2013, success fees in conditional fee agreements and deferred contingent premiums for after-the-event insurance are not recoverable as costs.
The parties are free to agree on the tribunal’s power to award interest (section 49 of the Act). The default position under the Act is that the tribunal may award simple or compound interest at such rates and with such rests as it considers appropriate, up to the date of the award and from the date of the award to the date of payment, on: the whole or part of any amount awarded in respect of the principal claim; and any award as to costs. No mandatory or customary rate of interest is applicable.
Unless otherwise agreed, an award may be appealed before the courts on a question of English law (section 69 of the Act). Note that an agreement between the parties to adopt arbitration rules such as the LCIA Rules or the ICC Arbitration Rules constitutes an agreement to exclude the right of appeal on a question of English law under section 69. Before it will hear such an appeal, the court must be satisfied that: the determination of the question will substantially affect the rights of one or more of the parties; the question is one that the tribunal was asked to determine; on the basis of the tribunal’s findings of fact, its decision on the question is obviously wrong, or the question is one of general public importance and the decision of the tribunal is at least open to serious doubt; and it is just and proper for the court to determine the question notwithstanding the parties’ agreement to arbitrate (section 69(3)). On appeal, the court may: confirm the award; vary the award; remit the award to the tribunal, in whole or in part, for reconsideration; or, where the latter would be inappropriate, set aside the award, in whole or in part (section 69(7)).
A party may apply to the court to challenge an award on the grounds that: the tribunal lacked substantive jurisdiction (section 67 of the Act); or there has been a serious irregularity affecting the tribunal, the proceedings or the award (section 68). An exhaustive list of ‘irregularities’ is provided at section 68(2) (including the tribunal’s failure to act fairly and impartially as between the parties). In each case, the court must be satisfied that the irregularity has caused or will cause substantial injustice to the applicant. Both sections 67 and 68 are mandatory provisions of the Act, ie, they cannot be excluded by agreement.
43.Modifying an award
Is it open to the parties to exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
As noted above, the parties may agree to exclude the right of appeal on a question of law under section 69 of the Act, but cannot agree to exclude their right of challenge under section 67 and/or section 68.
The courts retain the discretion to enforce an award that has been set aside or suspended by the courts in the seat of arbitration (section 103(2)(f) of the Act), but this is rare in practice.
In a 2015 decision the Court of Appeal for the first time allowed enforcement of an award pending set aside proceedings at the seat of the arbitration due to “catastrophic” delays in the courts of the seat and notwithstanding reasonable prospects that the set aside application would succeed (IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2015] EWCA Civ 1144).
As indicated in question 37, the Act incorporates into English law the provisions for the recognition and enforcement of awards which are found in the New York Convention (sections 101-103). The courts favour the enforcement of awards and will only rarely refuse to enforce on public policy grounds (see, eg, Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1999] 3 WLR 811, where enforcement was ordered despite public policy considerations relating to alleged illegality). Enforcement of an ICC award was refused in the case of Dallah Estate and Tourism Holding Company v Ministry of Religious Affairs, government of Pakistan [2010] UKSC 46, although this was on the grounds, inter alia, that the government of Pakistan had not been a party to the operative arbitration agreement. The Supreme Court applied French law as the governing law, concluding that there was no evidence of a common intention on the part of Dallah and the government of Pakistan to make the government a party to the arbitration agreement.
The relevance of issue estoppel to enforcement has twice been considered by the English courts in recent years in a way that appears to complicate the multi-jurisdictional enforcement of awards, in both Yukos Capital Sarl v OJSC Rosneft Oil Co [2012] EWCA Civ 855, then more recently in Diag Human SE v Czech Republic [2014] EWHC 1639 (Comm). At issue in both cases was whether a decision by another state’s courts not to enforce an arbitral award gave rise to an issue estoppel as to enforceability of the award that had to be taken into account in enforcement proceedings in the English courts. In Yukos, issue estoppel did not bar enforcement on the basis that the issue previously decided (the application of Dutch public policy) was not the same as that before the English courts (the application of English public policy). In Diag Human, issue estoppel was held to apply and, for what is understood to be the first time, to bar enforcment of a foreign arbitral award by the English courts. The judgment in Diag Human, in particular, has been controversial, but it has not been appealed.
Pursuant to section 9(1) of the State Immunity Act 1978, where a state or state entity has agreed in writing to submit a dispute to arbitration, it will be deemed to have waived any jurisdictional immunity. In London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Span and another [2013] EWHC 3188 (Comm), the Commercial Court ruled that a state making a third-party claim under an insurance policy containing an arbitration clause (a) thereby becomes a party to the arbitration agreement for purposes of the Arbitration Act 1996; and (b) has “agreed in writing” to submit a dispute to arbitration within the meaning of section 9(1) of the State Immunity Act 1978.
Waiver of jurisdictional immunity will not extend to immunity from execution, which must be expressly waived (section 13(2)(b) of the State Immunity Act). The courts will, however, allow execution against assets that are used solely for commercial purposes.
There is no provision relating to confidentiality in the Act. However, under English common law it is an implied term of the arbitration agreement that the arbitration is private and that, as discussed in response to question 48, certain documents generated in relation to it are confidential (Michael Wilson & Partners Ltd v Emmott [2008] EWCA Civ 184). However, the implied terms relating to confidentiality are subject to certain exceptions. The details of arbitral proceedings may, for example, become public if the courts make an order for disclosure in the interests of justice or for the protection of the legitimate interests of an arbitrating party in respect of a claim against or brought by a third party (Michael Wilson & Partners Ltd) or where the award is challenged in the courts.
Under English law, parties to an arbitration are obliged as an implied term of the arbitration agreement to keep the evidence produced and pleadings filed during it confidential (Ali Shipping Corporation v ‘Shipyard Trogir’ [1999] 1 WLR 136). This obligation is not limited to commercially confidential information (Michael Wilson & Partners Ltd). In addition, certain institutional rules (eg, the LCIA Rules) expressly provide for confidentiality in respect of evidence and pleadings.
Except where they are publicly available, materials produced in an arbitration may be used in other proceedings only with the relevant party’s consent or if the court makes an order for disclosure (see answer to question 47).
Lawyers conducting proceedings in this jurisdiction (whether as counsel or arbitrator) will primarily be subject to any applicable ethical codes or professional standards in their own jurisdiction. Solicitors of England and Wales, registered foreign lawyers and registered European lawyers are bound by the Solicitors’ Regulation Authority (SRA) Handbook 2011 (including the SRA Code of Conduct 2011), which integrates the Code of Conduct of the Council of Bars and Law Societies of Europe (CCBE) in relation to European cross-border activities. Barristers of England and Wales are bound by the Code of Conduct of the Bar of England & Wales (administered by the Bar Council) and by the CCBE Code of Conduct insofar as it is not inconsistent with the Bar Code of Conduct. These codes apply whether the solicitor or barrister is acting as counsel or arbitrator in the proceedings. There are also a number of non-binding ethical codes for arbitrators and counsel (including the IBA’s Rules of Ethics for International Arbitrators and its Guidelines on Conflicts of Interest in International Arbitration).
Subject to the mandatory procedural rules in the Act (see question 27), tribunals generally adapt the procedure to suit the arbitration and the parties involved. There is no ‘standard’ procedural framework.
Is third-party funding permitted in your jurisdiction?
Third-party funding is permitted in arbitration in England and Wales. The provision of funding remains subject to the common law doctrines against champerty and maintenance, but these have been interpreted in such a way as to apply (and invalidate funding agreements) only if an element of impropriety can be shown. This requires a case-by-case analysis that turns on a range of factors, including: the degree of control the funder has over the conduct of the litigation; the extent to which the funded party retains access to information and instructions to solicitors; the amount of return the funder stands to obtain; whether the funder is regulated; and whether there are other factors present that suggest a risk of damages being inflated, evidence being distorted or justice otherwise “sullied” by virtue of the funding agreement.
In our experience, third-party funding is increasingly prevalent in arbitrations in England and Wales.
Third-party funders in England and Wales are regulated pursuant to a voluntary Code of Conduct that is enforced by the Association of Litigation Funders.
As noted above (see question 39), the English courts have endorsed the recovery by a successful party of the costs of funding in an appropriate case.
GAR know-how provides reliable cross-jurisdictional insight to help cement the building blocks of international practice. In this section, select experienced practitioners answer commonly asked questions for key jurisdictions so allowing readers to be better-placed to solve the challenges of their working days.
Dr K Chrysostomides & Co LLC (Nicosia) Foley Hoag
Freshfields Bruckhaus Deringer (Berlin)
M&P Bernitsas Law Offices Foley Hoag
Moravčević Vojnović and Partners
YKVN LLP