The English High Court has upheld a challenge to an arbitration award on the grounds of serious irregularity, in Fleetwood Wanderers Ltd (t/a Fleetwood Town Football Club) v AFC Fylde Ltd  EWHC 3318 (Comm). The Court held that the sole arbitrator’s conduct in making independent investigations after the substantive hearing, without notifying the parties and without giving them an opportunity to respond, breached the tribunal’s general duty under s33 of the UK Arbitration Act 1996 (the “Act“), and amounted to a serious irregularity under s68 of Act. The award was remitted back to the arbitrator for reconsideration.
Category: Challenges to awards
The English High Court has refused an application under s.103 of the Arbitration Act 1996 (“AA 1996“) to set-aside an order allowing for the enforcement of an ICC award in England. The decision is the culmination of a long-running dispute in which the award debtor has sought to set-aside the award and prevent enforcement in France, the Seychelles and England. The judgement is the latest illustration of the pro-enforcement approach of the English courts with respect to international arbitral awards, particularly where an award debtor has made efforts in multiple jurisdictions to prevent enforcement against it. While the outcome is not surprising, the level of attention given to the grounds raised by the award debtor, even in the face of issue estoppel, demonstrates the importance placed by the English Court on its New York Convention obligations.
The odds of successfully challenging an arbitral award in the English Courts on the basis of s68 of the Arbitration Act 1996 (serious irregularity) remain low. In the recent past over 95% of s68 challenges have been unsuccessful and in the period from 2015 to 2017 only 3 out of 112 s68 appeals succeeded, approximately 2.7% of applications made.
However, the English High Court has recently set aside an arbitral award for serious irregularity under s68(2)(a) in the case of RJ and another v HB  EWHC 2833 (Comm). This case is a relatively rare and interesting example of a successful s68(2)(a) challenge.
In its recent decision in Union of India v Hardy Exploration and Production (available here), the Supreme Court of India found that a contractual clause stipulating Kuala Lumpur as the ‘venue’ of arbitration did not amount to a choice of juridical seat. While the Indian courts’ jurisdiction to hear set-aside applications will be excluded if the seat of the arbitration is outside India, the Supreme Court found that in this case there was no chosen seat (and the tribunal had not determined a seat), notwithstanding the choice of Kuala Lumpur as the venue for the arbitral proceedings, and the fact that the award was signed in Kuala Lumpur. Since this was a case where the arbitration agreement pre-dated 6 September 2012 (the date of the key Supreme Court ruling in BALCO), it appears that the Court did not find it necessary to positively determine that the seat was in India; the fact that an overseas seat had not been established appears to have been sufficient for the Indian courts to have jurisdiction to hear the application.
The English Court (the “Court“) has dismissed an application by Ukraine to set aside a court order permitting Russian investor, PAO Tatneft, to enforce an arbitral award against Ukraine. Ukraine argued that it was immune from the Court’s jurisdiction by virtue of the State Immunity Act 1978. The Court found that Ukraine had not waived its right to rely on state immunity arguments, despite not having raising them in the arbitration. However, it found that Ukraine had agreed to submit the disputes in question to arbitration under the Russia-Ukraine Bilateral Investment Treaty (the “BIT“) and was therefore not immune from proceedings in connection with the arbitration by virtue of s9(1) of the State Immunity Act 1978 (“SIA“).
In Reliance Industries Limited & Ors v The Union of India  EWHC 822 (Comm) the English commercial court (the Court) considered a number of challenges to parts of an arbitration award brought under sections 67, 68 and 69 of the Arbitration Act 1996 (the Act).
The decision provides useful guidance regarding the requirements to be satisfied should a party wish to challenge an award due to a “serious irregularity” under the Act. In particular, the Court confirmed that the general duty under s33 of the Act to give each party a reasonable opportunity to present its case was satisfied if the “essential building blocks” of the tribunal’s analysis and reasoning were in play in relation to an issue, even where the argument (in this case on a point of construction) was not articulated in the way adopted by the tribunal.
In addition to the issues discussed in this blog post, the Court considered the foreign act of state doctrine. This challenge is discussed in a post on our Public International Law Notes blog here.
In the recent case of X v Y  EWHC 741 (Comm), the English High Court dismissed an application to set aside an arbitral award under s68 of the English Arbitration Act 1996 (the Act) on the basis that the claimant should have first exhausted all remedies available to it by applying to the tribunal for correction or clarification of the award under s57(3) of the Act. The Court found that a tribunal had power under Article 27.1 of the LCIA Rules 1998 to clarify ambiguity in the award, and that Article 27.1 did not, in any case, oust the tribunal’s equivalent power under s57(3) of the Act. The wording of Article 27.1 in the LCIA Rules 2014 now expressly refers to correcting any ambiguity.
The case is a useful reminder to unsuccessful parties to analyse quickly and thoroughly an award and to ensure that any available process under s57 is exhausted before an application is made under s68. In particular, those who consider that the tribunal’s award is deficient for failing to deal with all issues put to it should assess whether such a complaint may be dealt with under s57(3) as a failure to give (adequate) reasons.
In Grindrod Shipping Pte Ltd v Hyundai Merchant Marine Co. Ltd, the English High Court (“the Court“) rejected an application under s68 of the Arbitration Act 1996 (“the Act“) to challenge an Award (the “Award“). Six years after the proceedings had commenced, the tribunal (“Tribunal“) issued a final award dismissing the claim under s41(3) of the Act on the ground of inordinate and inexcusable delay. Grindod Shipping challenged the award under s68 of the Act, arguing that the Tribunal’s decision was based on grounds not advanced by the respondent. The Court concluded that the issues had been sufficiently “in play” for all sides to have had a fair opportunity to respond. There was no breach of the tribunal’s duty to act fairly and impartially and therefore no procedural irregularity.
In Atlas Power v National Transmission and Despatch Company Ltd  EWHC 1052 the English High Court granted a final anti-suit injunction to permanently restrain a national grid company owned by the Government of Pakistan (“NTDC“) from challenging an LCIA Partial Final Award in Pakistan (or anywhere other than England and Wales).
The injunction was granted on the “entirely straightforward” basis that the seat of the arbitration was London. Phillips J rejected NTDC’s arguments that the courts of Pakistan had concurrent jurisdiction or that the seat of the arbitration was Lahore, Pakistan, and confirmed that an agreement on the seat of the arbitration is also an agreement on the forum for any challenges to an award. Continue reading
The HKIAC has recently published its case statistics for 2017, showing a continued healthy demand for its services. The HKIAC saw a 15.7% increase in its caseload compared to 2016, with the total amount in dispute in HKIAC arbitrations doubling since last year. The statistics demonstrate that HKIAC maintains its position as one of the world’s leading arbitral institutions, serving parties throughout Asia and beyond. Continue reading