In a recent application (Shell Energy Europe Limited v Meta Energia SpA  EWHC 1799 (Comm)), the English court dismissed a challenge to the court’s previous order under s66 of the Arbitration Act 1996 (“the Act”) granting leave to enforce an award. The challenge was made on the ground that the applicant was not able to participate in the merits hearing in the arbitration, due to difficulty in securing an advocate. In circumstances where the evidence “fell well short” of persuading the Court that the applicant had no choice but to cease its hearing participation, the challenge was unsuccessful.
The applicant in this case, Meta Energia SpA (“Meta”) had participated fully in the underlying LCIA arbitration until the last stage. Less than 10 days ahead of the planned two-day final merits hearing, Meta dismissed its entire legal team, saying this was because it was unsatisfied with the way the legal team had pursued or presented the defence.
Meta was granted a hearing adjournment of two weeks and instructed new solicitors, but said that it was unable to instruct new leading counsel as advocate.
Meta’s new solicitors attended the final hearing, but did not participate other than to make a brief submission that Meta was unable to present its case.
The arbitrators considered whether it was just and appropriate to continue and concluded that it was. The claimant’s legal team reminded the arbitrators of points of substance raised against the claimant, based upon Meta’s written submissions on the merits.
The arbitrators afforded Meta a further period of time to engage with the merits, if it chose to do so after receiving the hearing transcript. Meta did not make any submissions on the merits and did not seek additional time to do so, although it did make a number of comments on costs. The award was then issued in December 2019.
The claimant sought to enforce the award in Italy under the New York Convention, but Meta attempted to resist enforcement there on the basis that Meta had been unable to present its case in the arbitration (Article V.1(b)). The claimant also sought to enforce the award in the UK and in May 2020 had obtained the High Court’s leave pursuant to s66 of the Act to enter judgment in the terms of the award (the “May 2020 enforcement order”). Meta subsequently applied to the Court to set aside the May 2020 enforcement.
S66 of the Act
The summary procedure under s66 of the Act can be used to enforce arbitral awards in arbitrations seated in England and elsewhere. An award creditor can apply to the English court under s66 to enforce an award in the same way as an English court judgment and may also seek judgment in terms of the award. Applications under s66 will be refused either where the award debtor can show that the tribunal lacked substantive jurisdiction (s66(3) of the Act), or where the court refuses the application on discretionary grounds.
In this case Meta sought to persuade the court that there was a “’due process’ complaint”…as a discretionary reason why… [the award] should not be enforced under s.66”.
The Court was unsympathetic to Meta’s argument that it was not able to participate in the merits hearing because it was unable to be represented by leading counsel.
The Court noted that there was no clarity as to how the applicant’s defence in the arbitration could have been improved or set out differently by any new legal team. In addition, Meta had said it wanted to instruct leading counsel to provide the advocacy at the hearing and ”took the view that it would not participate on the merits unless it could be represented by leading counsel”. Despite this, the Court took the view that Meta could have been appropriately represented at the merits hearing by suitable junior counsel. The Court went on further to say that Meta did not need to use the Bar and could have instructed suitable solicitors for the advocacy, there being “highly skilled and experienced international arbitration practitioners, not just the Bar”, able to provide advocacy services in arbitration.
No evidence had been put before the court to explain Meta’s decision not to provide written submissions in response to the receipt of the hearing transcript, or to explain how Meta’s position had allegedly been worsened by the hearing having gone ahead.
The Court also noted that no challenge to the award had been made under s68 of the Act, which would be the “normal means to pursue a complaint of lack of due process or other procedural unfairness”. It was in any event clear that there was no arguable basis for any s68 challenge. The arbitrators had been “scrupulously even-handed” and the process “unimpeachably fair”. Meta could have presented and fully developed its case, but simply chose not to do so.
Accordingly, the Court dismissed the challenge, and the May 2020 enforcement order was confirmed.
This judgment confirms the pro-arbitration stance of the English courts in relation to applications for enforcement under s66 of the Act. While the courts will refuse applications where enforcement would not be in the interests of justice, the courts will not exercise their discretion to deny enforcement on questionable grounds.
For more information, please contact Chris Parker, Partner, Rebecca Warder, Professional Support Lawyer, Peter Chen, Associate, or your usual Herbert Smith Freehills contact.