THE COURT OF APPEAL CONFIRMS THE JURISDICTION OF ENGLISH COURTS TO RESTRAIN A FOREIGN ARBITRATION IN AN ‘EXCEPTIONAL’ CASE

In Sabbagh v Khoury and others, [2019] EWCA Civ 1219 (available here), the English Court of Appeal partly upheld the injunction granted by the Commercial Court restraining the pursuit of arbitration proceedings seated in Lebanon.  In doing so, the Court of Appeal confirmed the power of English courts to restrain a foreign arbitration on grounds that the foreign arbitration is oppressive and vexatious and provided helpful guidance on the exceptional circumstances in which English courts may exercise this power.

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INSIDE ARBITRATION: ISSUE #8 OF THE PUBLICATION FROM HERBERT SMITH FREEHILLS’ GLOBAL ARBITRATION PRACTICE

We are delighted to share with you the latest issue of the publication from the Herbert Smith Freehills Global Arbitration Practice. We once again take a regional focus, turning to our practitioners in Europe for their latest insights.

The full digital edition can be downloaded in PDF via the link below.

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In addition to sharing knowledge and insight about the markets and industries in which our clients operate, the publication offers personal perspectives of our international arbitration partners from across the globe.

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CREATION OF NEW DELHI ARBITRATION CENTRE PROPOSED IN INDIA’S LOWER HOUSE OF PARLIAMENT

Based on the recommendations of the Sri Krishna Committee (previously discussed here), on 3 July 2019, the current Law Minister, Ravi Shankar Prasad, introduced Bill No.127 of 2019, the New Delhi International Arbitration Centre Bill 2019 (the Bill) in the Lok Sabha. The Bill replaces an ordinance issued by the previous government in March 2019 (found here) (the Ordinance). The English text of the Bill can be found here.

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ENGLISH COURT ALLOWS SECTION 69 APPEAL ON POINT OF LAW AGAINST AWARD ISSUED BY JUDGE-ARBITRATOR

In the recent decision of Equitas Insurance Limited v Municipal Mutual Insurance Limited [2019] 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.

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ENGLISH HIGH COURT OVERTURNS AN ARBITRAL AWARD AS IT HOLDS THAT AN ARBITRAL TRIBUNAL LACKED JURISDICTION OVER A DISSOLVED COMPANY PURSUANT TO SECTION 67 OF THE ENGLISH ARBITRATION ACT

The English Commercial court has overturned an arbitral award under section 67 of the English Arbitration Act 1996, finding that an arbitral tribunal lacked substantive jurisdiction because the respondent company in the arbitration had been dissolved by the time the notice of arbitration was filed (in GA-Hyun Chung v Silver Dry Bulk Co Ltd [2019] EWHC 1147 (Comm)).

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ENGLISH COURT UPHOLDS S68 CHALLENGE TO ARBITRAL AWARD AND CRITICISES TRIBUNAL FOR TWO-YEAR DELAY

An arbitral award was recently challenged in the English High Court (the Court) in K v P [2019] EWHC 589 (Comm). In a rare example of a successful challenge under s68 of the Arbitration Act 1996, the Court held that (i) the tribunal had failed to deal with an issue put to it, and (ii) the Claimants had been denied the opportunity properly to present their case. The Court remitted the award back to the tribunal, notwithstanding its review of the tribunal’s handling of the case and criticism of the two years taken to hand down its award.

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CONTRACTUAL DISPUTE ARISING OUT OF HACKING: ENGLISH COURT CONSIDERS CHALLENGE TO AWARD UNDER s68 AND s69 OF THE ARBITRATION ACT 1996

In a rare example of a successful challenge under s68 of the Arbitration Act 1996 (the Act), in K v A [2019] EWHC 1118 (Comm), the English Court held that there was a serious irregularity when the GAFTA Board of Appeal (the Tribunal) found K liable based on an interpretation of a clause in the contract which had not been argued by A. The Court concluded that the Board may have reached a different view if K had had an opportunity to address the argument, and remitted the Award back to the Tribunal. The application for leave to appeal under s69 of the Act was rejected as the Court found that there was no error of law in the Tribunal’s finding that the payment obligation on K was to make payment into A’s account, not just to A’s bank.

The case arose following the hacking of the intermediary broker’s (V‘s) email accounts. Whilst A had provided the correct account details to V, the details provided to K (purportedly by V but actually by the fraudster), resulted in the payment of the contract price into the fraudster’s account. After discovery of the fraud, a payment shortfall arose out of complications in the eventual payment of the purchase price to A. A sought to recover the shortfall in the arbitration.

The case shows the importance of understanding where the risk passes under a contract for fraud or hacking of the type which can interfere with performance by the parties of their contractual obligations.

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