In the recent case of Daiichi Chuo Kisen Kaisha v Chubb Seguros Brasil  EWHC 1223 (Comm) (available here) the English High Court granted an anti-suit injunction to compel a claimant to discontinue Brazilian court proceedings which it had pursued in breach of an undertaking not to pursue the relevant contractual claim otherwise than through arbitration in England.
Tag: Aaron McDonald
In the recent case of Albion Energy Ltd v Energy Investments Global BRL  EWHC 301 (Comm) (available here) the English High Court refused to stay court proceedings under section 9 of the Arbitration Act 1996 in a case involving competing jurisdiction and arbitration clauses.
The case concerned a claim for summary judgment in the English High Court brought by the seller of shares against the buyer for an outstanding payment due under a sale and purchase agreement (“SPA”). The SPA contained an exclusive English court jurisdiction clause. However, after the SPA had been executed (and before the court claim commenced), the parties had agreed to hold the disputed payment in escrow, in order to attempt to resolve the dispute. The escrow agreement contained an arbitration clause providing for London-seated ICC arbitration.
The relevant question before the court was whether the arbitration agreement in the escrow agreement operated to supplant the jurisdiction clause in the SPA. If it did, the seller’s summary judgment claim would have been commenced in breach of the arbitration agreement and would be stayed by the court under section 9 of the Arbitration Act 1996 (the “Act”).
The court determined, after analysing the contractual documents, that the arbitration agreement in the escrow agreement did not supplant the jurisdiction clause in the SPA in respect of the summary judgment claim. It therefore refused to stay the court proceedings under the Act. In reaching this decision, the court provided useful guidance in resolving conflicts between competing jurisdiction and arbitration clauses across different agreements.
The dispute arose from an SPA for the sale of shares between Albion Energy Ltd (“Albion”) as seller and Energy Investments Global BRL (“EIGL”) as buyer. The SPA provided that EIGL would pay for the shares in instalments. In addition to Albion and EIGL, there were four other parties to the SPA including the owner of Albion, a Mr Buckingham. The SPA contained an exclusive court jurisdiction clause which provided as follows:
“The Parties submit to the exclusive jurisdiction of the courts of England and Wales as regards any claim, dispute or matter (whether contractual or non-contractual) arising out of or in connection with this agreement (including its formation).”
EIGL paid the first two instalments under the SPA but refused to pay the third instalment of US$33.3 million. It argued that it had legal claims against Mr Buckingham and Albion which entitled it to withhold payment under the SPA.
Following solicitors’ correspondence, Albion and EIGL agreed that US$20 million would be paid unconditionally by EIGL to Albion and that the remaining US$13.3 million would be held in escrow pursuant to an Escrow Agreement. The parties to the Escrow Agreement were Albion, EIGL and Mr Buckingham (but not the other three parties to the SPA). The Escrow Agreement provided that the parties would exchange information, would attempt to resolve the dispute, and would not commence proceedings before a specified date. The Escrow Agreement expressly provided that payment into escrow was without prejudice to the parties’ legal rights under the SPA.
The dispute resolution clause in the Escrow Agreement provided that:
“Any dispute or difference (whether contractual or non-contractual) arising out of or in connection with this letter (including any question regarding its existence, validity, interpretation performance or termination) shall be referred to and finally settled by arbitration [in London under the ICC Rules].”
Commencement of proceedings and applications to the court
Albion commenced proceedings against EIGL and brought an application for summary judgment in respect of the outstanding US$13.3 million held in escrow.
EIGL applied to stay the court proceedings under section 9 of the Act, which provides:
“Stay of legal proceedings.
(1) A party to an arbitration agreement against whom legal proceedings are brought (whether by way of claim or counterclaim) in respect of a matter which under the agreement is to be referred to arbitration may (upon notice to the other parties to the proceedings) apply to the court in which the proceedings have been brought to stay the proceedings so far as they concern that matter.
(4) On an application under this section the court shall grant a stay unless satisfied that the arbitration agreement is null and void, inoperative, or incapable of being performed.”
EIGL’s position was that the arbitration agreement in the Escrow Agreement varied or supplanted the exclusive jurisdiction clause in the SPA in respect of the claim for US$13.3 million. Alternatively, it argued that summary judgment should not be granted because it had a realistic prospect of defending the claim for payment on the merits.
The court observed that:
- Before ordering a stay under section 9 of the Act, the court must be satisfied both that there is an arbitration clause and that the subject matter of the claim falls within that clause.
- There are occasions when the court is willing to stay proceedings under its case management jurisdiction, in order to allow the arbitration tribunal to consider these matters under its kompetenz kompetenz
- However, in this case neither party (in the judge’s view, correctly) suggested that this was the appropriate course or that the court should not finally determine the question.
The court considered the guidance provided by Hamblen LJ in BNP Paribas v Trattamento Rifiuti Metropolitani SpA  EWCA Civ 768 in interpreting competing dispute resolution provisions across different contracts which are part of a single transaction. These guidelines include the following:
- Where the parties’ overall contractual arrangements contain two competing jurisdiction clauses, the starting point is that a jurisdiction clause in one contract was probably not intended to capture disputes more naturally seen as arising under a related contract.
- A broad, purposive and commercially-minded approach is to be followed.
- Where the jurisdiction clauses are part of a series of agreements they should be interpreted in the light of the transaction as a whole, taking into account the overall scheme of the agreements and reading sentences and phrases in the context of that overall scheme.
- It is recognised that sensible business people are unlikely to intend that similar claims should be the subject of inconsistent jurisdiction clauses.
- The starting presumption will therefore be that competing jurisdiction clauses are to be interpreted on the basis that each deals exclusively with its own subject-matter and they are not overlapping, provided the language and surrounding circumstances so allow.
- The language and surrounding circumstances may, however, make it clear that a dispute falls within the ambit of both clauses. In that event the result may be that either clause can apply rather than one clause to the exclusion of the other.
The court noted, however, that this guidance may apply with less force where (as in the present case) the parties had entered a second agreement after the first agreement, rather than multiple agreements at the same time.
The court also observed that in situations where there is a principal agreement and a security agreement, it is not unusual for the parties to agree to submit disputes under the principal agreement to one form of dispute resolution (often arbitration) and disputes concerning security to another (often court).
In the court’s view, the claim brought by Albion concerned its entitlement to be paid the purchase price under the SPA, rather than the operation of the Escrow Agreement so as to realise the benefits of the security. As a consequence, the claim fell outside the scope of the arbitration agreement in the Escrow Account and the application for a stay under section 9 was refused. The reasons for this conclusion included:
- It was inherently more likely that the arbitration agreement was intended to address the security and other ancillary obligations under the Escrow Agreement, rather than to displace the jurisdiction clause under the SPA for determining EIGL’s liability to Albion.
- The reference in the arbitration agreement to disputes arising in relation to “this letter” suggested that the focus of the clause was on obligations under the letter (i.e. the Escrow Agreement) rather than obligations under the SPA.
- The express recognition in the Escrow Agreement that it was without prejudice to the parties’ rights under the SPA suggests that the arbitration agreement was not intended to take away the right conferred under the jurisdiction clause in the SPA to commence court proceedings.
- The Escrow Agreement only involved three of the six parties to the SPA. This suggested that it was intended only to have a localised effect, in order to avoid the commercially unattractive position where claims between some of the parties to the SPA are subject to court jurisdiction, while other related claims under the SPA are subject to arbitration.
After dismissing EIGL’s application for a stay, the court decided to grant Albion’s application for summary judgment.
The case provides a useful illustration of the interpretation exercise that will be carried out by the English court in determining which of two competing dispute resolution clauses ought to apply to a claim. In particular, it reinforces that:
- Some of the guidelines which generally apply where multiple contracts are entered at the same time may apply with less force where the parties have entered successive agreements at different times.
- The court may consider that there is nothing unusual about the parties choosing to resolve disputes relating to security in a different forum from disputes relating to the parties’ principal obligations.
The case also serves as a reminder that care must be taken when drafting dispute resolution clauses across multiple contracts. Had the arbitration clause in the Escrow Agreement expressly addressed its relationship with the jurisdiction clause in the SPA, the case – and the associated expenditure of time and money – might have been avoided.
For more information, please contact Nicholas Peacock, Partner, Aaron McDonald, Senior Associate, or your usual Herbert Smith Freehills Contact.
In the recent case of Peepul Capital Fund II LLC v VSoft Holdings LLC  UKPC 47, handed down on 19 December 2019 and available here, the Privy Council (on appeal from Mauritius) upheld the decision of the Supreme Court of Mauritius which refused to set aside an arbitral award on the basis of alleged breaches of natural justice and public policy.
The essence of the appellant’s case was that the sole arbitrator had improperly concluded, based on a submission by the appellant’s counsel at the hearing, that the appellant had abandoned its defence to the claim. Alternatively, it was alleged that the relevant submission by counsel had been preceded by an inappropriate intervention by the sole arbitrator, and this had prevented the appellant from presenting its case. However, the Privy Council rejected these arguments and held that the appellant’s counsel had indeed made such a concession, and that the sole arbitrator’s intervention preceding the concession had been appropriate.
The decision serves as a useful remainder of the high hurdle that an applicant will generally face when attempting to challenge an award on the basis of natural justice or procedural irregularity. The case also highlights an unusual feature of Mauritian arbitration law: decisions of the Mauritius court in respect of challenges to an award may be appealed as of right to the Privy Council.
The dispute arose from an equity investment by the respondents (“Investors“) into the appellant (“VSoft“), a company incorporated in Mauritius.
The relationship was governed by an investment agreement, which provided one of the Investors with an option to exit its shareholding in VSoft in exchange for a minimum return on its original purchase price (“Investment Agreement“).
The parties subsequently terminated the Investment Agreement and entered a new agreement under which the Investors agreed to surrender their shares in VSoft for an aggregate sum of US$17 million, which was payable in three tranches and with interest (“Shareholders Agreement“).
The Investors surrendered their shares in VSoft but VSoft failed to pay the tranches due under the Shareholders Agreement.
Arbitration and award
The parties referred their dispute, through an ad hoc agreement, to arbitration in Mauritius before a sole arbitrator.
The parties’ positions were developed through two rounds of pleadings. By the time the arbitration came to hearing, the Investors were only pursuing a claim under the Shareholders Agreement and both parties were asserting in their pleadings that the Investment Agreement had been terminated.
However, during closing submissions at the hearing, counsel for VSoft argued that the Investors had not properly followed the steps under the Shareholders Agreement and the sole arbitrator was therefore required to decide which legal document and which legal regime governed the Investors’ claim for payment.
The sole arbitrator intervened to explain his view “for the time being” that counsel’s attempt, for the first time, to argue that VSoft’s liability might arise otherwise than under the Shareholder’s Agreement was contrary to the contemporaneous correspondence. He advised counsel that he should seek instructions from his client on the approach and adjourned the hearing to allow this to occur.
Following the adjournment, counsel for VSoft stated that VSoft did not dispute the Investors’ claim, but did request that the sole arbitrator determine the quantification of the claim. Counsel for the Investors responded by noting VSoft’s abandonment of its defence to the claim and arguing that there could be no dispute as to quantum, save for interest. The main part of the arbitration concluded at this point on the basis that there was no dispute as to VSoft’s liability under the Shareholders Agreement, and the sole arbitrator directed the parties to present written submissions on the narrow point of quantum which remained between them.
In the subsequent written submissions, the Investors submitted their interest calculation but VSoft submitted a quantum calculation based on the repayment of the original investment without reference to the Shareholders Agreement.
The sole arbitrator rendered his award in the Investors’ favour, holding that there was no dispute as to liability (in light of the concession by VSoft’s counsel) and accepting the Investors’ quantification of the claim.
Challenge in Mauritius Supreme Court
VSoft applied to the Supreme Court of Mauritius to set aside the award under section 39(2) of the Mauritius International Arbitration Act 2008 (“MIAA“). The challenge was based on the following grounds:
- VSoft was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present its case (section 39(2)(a)(ii));
- the award was in conflict with the public policy of Mauritius (section 39(2)(b)(ii)); and
- a breach of the rules of natural justice occurred during the arbitral proceedings or in connection with the making of the award by which the rights of VSoft have been or will be substantially prejudiced (section 39(2)(b)(iv)).
The Supreme Court rejected each of these challenges and upheld the award.
Appeal to Privy Council
VSoft appealed against the Supreme Court’s decision to the Privy Council, which is available as of right in Mauritius. Its key arguments were:
- Considered in its context, the submissions made by VSoft’s counsel following the adjournment was a continued assertion of VSoft’s case (albeit in the briefest summary) rather than an abandonment of it. This was reinforced by its written submissions on quantification, which were based on the repayment of the original investment rather than the amount due under the Shareholders Agreement. The sole arbitrator’s failure to rule upon liability was contrary to the rules of natural justice and caused VSoft substantial prejudice.
- Even if counsel’s submissions had the effect of abandoning VSoft’s defence to liability, this was a result of being unable properly to present its case as a result of the sole arbitrator’s intervention.
- The award ordered that the Investors receive the payment in full (plus interest), but did not contain any provision to ensure that the Investors ceased to enjoy the benefits of being equity shareholders. This amounted to double recovery and was contrary to public policy.
The Privy Council dismissed each of these arguments for the following reasons:
- The submissions made by VSoft’s counsel were, objectively construed in context, an abandonment of VSoft’s defence to liability. To the extent that aspects of the submissions may have appeared equivocal, that was part of counsel’s attempt to “dress up a surrender“.
- The meaning of the submissions at the hearing cannot be affected by the subsequent written submissions on quantum. The part of the arbitration dealing with quantum had been concluded at the end of the hearing, and it was not open to VSoft to attempt to re-open the issue at a later stage.
- Even if it was arguable that counsel’s submission was not an abandonment of VSoft’s case on liability, the sole arbitrator committed no breach of the rules of natural justice by interpreting it otherwise. The sole arbitrator’s interpretation of the submission was reasonable, and nothing in section 39 of the MIAA is designed to enable a party to challenge a decision of a tribunal on the merits, or to enable the court to overrule such a decision merely because it disagrees with it.
- Had the sole arbitrator’s understanding of the submission been plainly wrong so as to give rise to a breach of the rules of natural justice, the requirement to demonstrate substantial prejudice had not been met. In particular, none of the evidence or arguments offered the slightest basis for the conclusion that VSoft was not liable under the Shareholders Agreement.
- The sole arbitrator’s intervention did not prevent VSoft from presenting its case. The sole arbitrator did not stop counsel from making submissions; he expressed a clearly provisional view about the course being taken by counsel and invited counsel to take instructions.
- The public policy argument was hopeless in circumstances where the Investors had surrendered their shares for cancellation and it was for VSoft to cancel them.
The appeal against the Supreme Court’s rejection of the application to set aside the award was therefore dismissed.
Although the case concerned the application of section 39 of the MIAA, the guidance provided by the Privy Council is likely to be useful in other common law jurisdictions with an arbitration law based on the UNCITRAL Model Law.
The case serves as a reminder of the high threshold that must generally be met to establish a breach of natural justice or serious procedural irregularity, and confirms that:
- the court will not intervene where the tribunal’s conclusion that a concession was made was reasonable;
- a party will be held to a concession made at the hearing, even if it later attempts to re-open the point in subsequent submissions; and
- a party will not be prevented from presenting its case merely because the tribunal expresses a provisional view on the party’s position.
The case also highlights an unusual feature of the MIAA: decisions of the Mauritius Supreme Court on applications to set aside an award may be appealed, as of right, to the Privy Council. This can be contrasted with most other comparable jurisdictions with an arbitration law based on the UNCITRAL Model Law, where such appeals are not available or are available only with permission. As the Privy Council observed, a consequence of the wide right of appeal in this case was that while the arbitration itself only took approximately six months, the set aside application and subsequent appeal took approximately five years. Parties considering Mauritius as an arbitral seat should therefore take into account the additional time and costs that may arise under the MIAA if the award becomes the subject of a challenge and subsequent appeal.
For more information, please contact Craig Tevendale, Partner, Aaron McDonald, Senior Associate, or your usual Herbert Smith Freehills contact.
In the recent decision of Equitas Insurance Limited v Municipal Mutual Insurance Limited  EWCA Civ 718 (available here), the Court of Appeal allowed an appeal on a point of law under section 69 of the Arbitration Act 1996 (the “Act“) against an award rendered by Flaux LJ as judge-arbitrator.
The award concerned a dispute between an insurer, Municipal Mutual Insurance (“MMI“), and its reinsurer, Equitas Insurance (“Equitas“), about how employer’s liability (“EL“) mesothelioma insurance claims should be handled at a reinsurance level. The Court of Appeal held that although employers may “spike” their EL claims 100% into a single policy year as against their insurer, an insurer may not “spike” its own claims 100% into a single policy year as against its reinsurer. A detailed analysis of the case can be found here.
Given the relatively low number of cases which obtain permission to appeal under section 69 of the Act (let alone succeed), it is instructive to revisit the earlier decision of the Court of Appeal in which permission to appeal was granted.
The English High Court’s decision in State A v Party B  EWHC 799 (Comm), handed down in January 2019 but only recently published, concerned the court’s dismissal of an application to extend the time for bringing a jurisdictional challenge under section 67 of the Arbitration Act 1996 in circumstances where the challenge was 959 days late (available here).
The decision found that where the delay is lengthy and the application for an extension is based on fresh evidence, an extension will only be justified by fresh evidence that is “transformational” or “seismic“. The decision illustrates the importance that the English court places on the timeliness of challenges to awards and the high threshold that must be met in order to obtain an extension.
The English High Court’s decision in Asset Management Corporation Of Nigeria v Qatar National Bank  EWHC 2218 (Comm), handed down in July 2018 but only recently published, concerned the court’s dismissal on the papers of an application under section 68 of the Arbitration Act 1996 on the basis that the application had no reasonable prospect of success (available here: https://www.bailii.org/ew/cases/EWHC/Comm/2018/2218.html).
The decision serves as an example of the court employing the summary procedure to dismiss a section 68 application on the papers, but the drawn out process highlights the practical difficulties in quickly disposing of meritless applications.
In its recent decision in SCM Financial Overseas Ltd v Raga Establishment Ltd  EWHC 1008 (Comm) (available here), the English High Court (“Court“) refused to set aside an award on the ground of serious irregularity in circumstances where the London-seated tribunal applying the LCIA rules (“Tribunal“) proceeded to issue an award rather than await the outcome of domestic court proceedings which could have had a significant impact on the issues before the Tribunal.
The Court’s decision is significant because it highlights the wide discretion afforded to tribunals to manage the proceedings as they see fit, and demonstrates that there is an high bar to a successful challenge under section 68 of the Arbitration Act 1996 (“Act“). The decision also provides interesting observations on the relationship between arbitral and domestic court proceedings, and the inherent risk of inconsistent decisions should a party choose to arbitrate.
In the recent case of Gerald Metals SA v Timis  EWHC 2327 (Ch), the English High Court considered its power to grant urgent relief under s 44(3) of the Arbitration Act 1996 ("Act") in circumstances where timely and effective relief could have instead been granted by an expedited tribunal or emergency arbitrator under the LCIA Arbitration Rules 2014 ("LCIA Rules").
Under s 44(3) of the Act, the English court may, in cases of urgency, make in support of arbitration proceedings such orders as it thinks necessary to preserve evidence or assets (e.g. freezing injunctions). However, s 44(5) provides that the court may only act to the extent that the arbitral tribunal (or other person or body vested with power in that regard) has no power or is unable for the time being to act.
In Gerald Metals, the Court held that where there is sufficient time for an applicant to obtain relief from an expedited tribunal or emergency arbitrator under the Rules, it does not have power to grant urgent relief. As a consequence, the Court did not have power to grant the freezing injunction requested by the applicant because the applicant's request for an emergency arbitrator under the LCIA Rules had already been considered and dismissed by the LCIA.
The decision is significant because it suggests that the availability of timely and effective relief under the LCIA Rules and other institutional rules (such as emergency arbitrators) may in certain circumstances erode the court's power to grant urgent relief in support of the arbitral proceedings.
The case concerned a claim by Gerald Metals SA ("Gerald Metals"), a commodities trader, in respect of a financing arrangement entered with Timis Mining Corp (SL) Limited ("Timis Mining").
Under the arrangement, Gerald Metals would advance $50 million to Timis Mining to finance the development of an iron ore mine in Sierra Leone. Timis Mining would then sell iron ore extracted from the mine to Gerald Metals in monthly shipments pursuant to an offtake agreement. The sum advanced by Gerald Mining would be repaid, with interest, in monthly installments deducted from the price of the iron ore shipments.
Timis Mining was controlled by Mr Timis, whose business interests were held by a trust called the Timis Trust ("Trust"). The Trust's assets were said to have been worth in excess of $2 billion. In order to secure Timis Mining's performance, the trustee of the Timis Trust, Safeguard Management Corp ("Safeguard"), provided a guarantee of all sums due to Gerald Mining under the offtake agreement up to a maximum of $75 million. The guarantee was subject to arbitration in London under the LCIA Rules.
Following defaults under the offtake agreement, Gerald Metals commenced arbitral proceedings under the LCIA Rules against Safeguard under the guarantee.
Before the constitution of the tribunal, Gerald Metals applied to the LCIA for the appointment of an emergency arbitrator, with a view to seeking emergency relief, including an order to prevent Safeguard from disposing of the Trust's assets. Safeguard responded to the application by giving undertakings not to dispose of any assets other than for full market value and at arm's length, and to give 7 days' notice to Gerald Metals before disposing of any asset considered to be worth more than £250,000. In light of those undertakings, the LCIA rejected Gerald Metals' application for the appointment of an emergency arbitrator.
Gerald Metals applied to the English High Court for urgent relief against Safeguard, including a freezing injunction to prevent the disposal of the Trust's assets.
Mr Justice Leggatt began by considering its power to grant urgent relief under the Act. Section 44(3) provides:
If the case is one of urgency, the court may, on the application of a party or proposed party to the arbitral proceedings, make such orders as it thinks necessary for the purpose of preserving evidence or assets.
This power, however, is subject to s 44(5):
In any case the court shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively.
Leggatt J then turned to the LCIA Rules relating to urgent relief:
- Paragraph 9.1 of Article 9A of the LCIA Rules provides that in cases of "exceptional urgency", any party may apply to the LCIA Court for the expedited formation of the arbitral tribunal.
- Paragraph 9.4 of Article 9B provides that "in the case of an emergency", at any time prior to the formation or expedited formation of the arbitral tribunal, any party may apply to the LCIA Court for the appointment of an emergency arbitrator.
- Paragraph 9.12 of Article 9B provides that Article 9B shall not prejudice a party's right to apply to a state court or other legal authority for any interim or conservatory measure before the formation of the arbitral tribunal.
It was common ground that (1) the test of urgency in s 44(3) was to be assessed by reference to whether the arbitral tribunal has the power and practical ability to grant effective relief within the relevant timescale; and (2) there can be situations where the need for relief (e.g. a freezing injunction) is so urgent that the power to appoint an emergency arbitrator is insufficient and the court may properly act under s 44(3) of the Act – for example, if the application needs to be made without notice.
However, Leggatt J held that if an expedited tribunal could be constituted or an emergency arbitrator appointed within the relevant timeframe, and the expedited tribunal or emergency arbitrator could practically exercise the necessary powers, the test of "urgency" under s 44(5) of the Act will not be satisfied and the court will not have power to grant urgent relief. In other words, the court will only have power to grant urgent relief under s 44(3) where either:
- there is insufficient time to form an expedited tribunal or appoint an emergency arbitrator; or
- an expedited tribunal or emergency arbitrator could not exercise the necessary powers.
In the present case, the LCIA had considered Gerald Metals' application for an emergency arbitrator and dismissed the application in light of Safeguard's undertakings. As the case was not sufficiently urgent to satisfy the requirements of Article 9A or 9B under the LCIA Rules, it could not be urgent enough to fall within s 44(3) of the Act.
Accordingly, the application for relief was dismissed.
The case is significant because it provides that s 44(3) of the Act only empowers the court to grant urgent relief where effective relief could not be granted in a timely manner by the arbitral tribunal or other relevant body.
Although the facts of the case were somewhat unusual – the applicant had already applied to the LCIA Court for an emergency arbitrator and the application had been refused – the principle, as expressed by Leggatt J, was not confined to that particular fact pattern and was of general application.
As a result, arbitration rules (including the LCIA Rules) which give the parties more options to obtain urgent relief through an expedited tribunal or emergency arbitrator may at the same time reduce the ability of the English court to step in and provide urgent relief against one of the parties to the arbitration. The fact that the LCIA Rules themselves, in paragraph 9.12 of Article 9B, state that the emergency arbitrator provision "shall not prejudice" the parties' rights to apply for urgent relief from the court could not prevent the urgency limitation built in to s 44(5) from operating. This is not the effect the institutional rules were intended to have – it is generally said that emergency arbitrators are intended to provide an additional, rather than alternative, avenue of relief.
The impact of this decision is of course not limited to arbitrations under the LCIA Rules. The reasoning, if followed in subsequent cases, will apply in a similar way to arbitrations under other institutional rules (or arbitration agreements) which provide avenues for urgent relief. Indeed, the court has previously made some obiter comments in relation to urgent relief under the current ICC Arbitration Rules and the effect on s 44 of the Act: see Seele Middle East FZE v Drake & Scull International SA Co  EWHC 4350 (TCC).
In light of the court's approach, parties arbitrating in London may wish to consider whether they ought to "opt out" of the emergency arbitrator provisions in the LCIA Rules (which is permissible under paragraph 9.14), so preserving as far as possible the jurisdiction of the English courts pursuant to s 44 of the Act (but at the expense of the option of an emergency arbitrator).
Another option for parties to consider is including in their arbitration agreement a statement that they agree that certain matters amount to "a case of urgency" within the meaning of s 44(3) of the Act. Although such a clause could not override the limitation in s 44(5) of the Act or turn a genuinely non-urgent matter into an urgent one, it may go some way to persuading the court of the urgency of the situation.
For further information, please contact Chris Parker, Partner or Aaron McDonald, Associate.