English High Court considers: arbitability of civil claims with a criminal aspect; its discretion to enforce awards under s66 of the Arbitration Act 1996; and the scope of the arbitration exception to immunity under s9 of the State Immunity Act 1978

In The London Steam-Ship Owners’ Mutual Insurance Association Ltd v The Kingdom of Spain and the French State [2013] EWHC 3188 (Comm), the High Court had to consider whether to exercise its discretion under section 66 of the English Arbitration Act 1996 (the Act) to permit enforcement of two arbitral awards giving declaratory relief to the protection and indemnity insurers (the Club) of the owners of a vessel that had sunk off the coast of Spain, causing a major oil spill. The arbitral awards made declarations limiting the liability of the Club in relation to claims brought by the Spanish and French States (the States) as a result of the oil spill. The application was made by the Club on an urgent basis, as it understood that a Spanish court would soon issue a judgment in respect of the same cause of action.

The States challenged the substantive jurisdiction of the tribunal that had rendered the two awards (the Tribunal) on the grounds that their rights of direct action against the Club were in essence independent rights under Spanish law, the claims were not arbitrable and (in relation to France’s claims only) waiver of the right to arbitrate by the Club. However, the Court dismissed all of the challenges, emphasising that the States’ claims were in substance claims under a contract of insurance between the Club and the owners of the vessel (the Contract) and that they fell within the scope of the arbitration clause in the Contract.

The States’ further contention that the English courts lacked jurisdiction over them in view of their state immunity under the English State Immunity Act 1978 (the SIA) was rejected by the Court. In bringing claims in relation to the Contract, the States had, for the purposes of the Act and the SIA, become parties to the Contract and the agreement in writing in the Contract to refer claims to arbitration. The States therefore came within one of the exceptions to state immunity in the SIA.

The Court held that the real prospect of establishing the primacy of the awards of the Tribunal over any inconsistent judgment which might be rendered in Spain meant that there was clear utility in granting the Club leave to enforce the awards as judgments under section 66 of the Act. It rejected the States’ arguments that exercise of its discretion to permit enforcement would be inappropriate as it would lead to a result not countenanced by EC Regulation No 44/2001 (the Brussels Regulation) or that the awards should not be enforced because of the importance of, and public interest in, the Spanish proceedings. The Court granted leave to enforce the awards as judgments of the Court to the same effect.

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High Court applies Sulamérica test in Arsanovia and gives rise to unexpected results

In December last year, the High Court upheld a challenge under section 67 of the Arbitration Act 1996 (the Act) in Arsanovia Ltd and others v Cruz City 1 Mauritius Holdings [2012] EWHC 3702 (Comm) and overturned an arbitration award on the ground that the Tribunal did not have substantive jurisdiction. The court was required to determine, by reference to the English common law conflict of law rules, the law applicable to the arbitration agreement in the absence of an express governing law. This was required in order resolve the issue of which law determined whether one of the claimants was party to the arbitration agreement.

In resolving whether to follow the law of the underlying contract (India) or the law of the seat (England) the court considered the Court of Appeal’s reasoning in the well-known cases of C v D and Sulamérica. Of particular note, the court factored in the exclusion by the parties of Part I of the Indian Arbitration and Conciliation Act 1996 (Indian Arbitration Act), and consequently held somewhat surprisingly that the parties had impliedly chosen the governing law to be Indian.

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U&M Mining Zambia Ltd v Konkola Copper Mines plc: Court of the seat does not have exclusive jurisdiction to grant interim measures in support of arbitration

In the recent case of U&M Mining Zambia Ltd v Konkola Copper Mines plc [2013] EWHC 260 (Comm), the court examined the question of whether English courts have exclusive jurisdiction to grant interim measures in support of an arbitration seated in England pending the appointment of the tribunal. Although it did not have to decide the point, the court found that, whilst English courts would have primary jurisdiction to hear applications in support of arbitral proceedings, parties may nevertheless seek interim relief or conservatory measures from other national courts where, for practical reasons, the application can only sensibly be made there.

Pending the formation of the arbitral tribunal, parties to an English-seated arbitration may wish to consider whether they may be able to get more effective interim relief in courts other than those of the seat.

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