In almost every field of international trade, commerce, and investment, international arbitration has been the primary means of resolving disputes between governments, individuals, and companies.
With its widespread relevance in today’s world, where commercial life necessitates swift and prompt action, international arbitration tends to be the right approach. And many companies already rely on it.
Arbitration is a very straightforward concept wherein the parties in a conflict agree to refer their disagreements, as well as any other conflicts that arise in the course of their business, to the individual whose judgment or expertise is trusted by both parties.
International arbitration is the most widely used means of resolving disputes mainly arising from international trade agreements and international disputes.
Arbitration is the most effective way to reach a definitive, binding verdict without having to go through the formalities of a court. With the popularity of arbitration and the need for such a powerful tool, many lawyers and accountants have formed exclusive groups of arbitration experts. Many countries have begun to change their laws in order to facilitate arbitration. Because of a few disadvantages in the court system that is commonly known, the concept of arbitration was given birth to. Unlike trial court procedures, it is easy for the parties to come to terms with arbitration if they come from civil or common law backgrounds.
An arbitration award obtained in England or overseas but under an arbitration agreement regulated by English law is considered domestic. As a result of this definition, an award made in England between parties who are neither United Kingdom citizens nor England residents is still regarded as domestic. Again, if the arbitration arrangement is regulated by English law, an award made outside England between parties, one of whom is ordinarily residing in England, is often considered domestic. This is indeed a remedy relying on arbitration’s contractual nature.
It is argued that by agreeing to refer their dispute to arbitration, the parties implicitly agree to recognize and voluntarily give force to the arbitration award. Failure to do so from one party would be a violation or a breach of the arbitration agreement.
Any award that isn’t a domestic award is necessarily a foreign award. An award made outside of England is a foreign award where one of the parties is a non-UK citizen, resident, or company, and the award is regulated by a law other than English law.
In England, there are six different ways to enforce foreign awards. Each of these methods is used in various situations, though more than one method might be available in the same situation. These methods can be categorized as one common law remedy and five statutory remedies.
An arbitral tribunal’s award is immediately enforceable if it is made under an arbitration agreement. Enforcement proceedings are required if the losing party refrains from complying with the said award. Giving an award the same effect as a domestic court judgment, which serves as the official basis for further execution, is regarded as enforcement. The terms permission to enforce sections 66(1) and 101(2) and entering a judgment of sections 66(2) and 101(3) of the Arbitration Act 1996 have a slight difference.
An application for permission to impose the award can be made to the High Court without giving notice to the respondent. The appeal must be accompanied by written evidence displaying the arbitration agreement as well as the initial award (or copies of it). The submission must also include the applicant’s and respondent’s names and places of residence or service, as well as a statement that the award has not been complied with or the degree to which it has not been complied with as of the date of the application. When permission to execute the award is given, the order granting the permission must be served on the respondent, who must be told that it will appeal to the Court to have the order set aside.
The period for doing so would be 14 days after service of the order, or within such period as the Court may direct if served outside the jurisdiction of the English Courts. The Court of Appeal has found that the right to enforcement under Section 66 of the Arbitration Act 1996 (1996 Act) that applies to declaratory awards where the claimant is trying to determine the primacy of a declaratory award over an inconsistent decision. There is a fair likelihood of primacy being established once the claimant has produced a fair award and settlement agreement to the judge. The responsibility transfers to the respondent, who must give facts demonstrating that the award could not be applied.
A party can appeal an arbitration award made in England based on significant irregularities in the proceedings that have caused or will cause injustice. Effective and successful challenges, on the other hand, are exceedingly unlikely and rare. There have been 112 challenges for extreme irregularity in the last four years, but only one has succeeded. It is well acknowledged that one advantage in London-seated arbitration is the limited grounds for challenging or appealing an arbitration decision in English courts.
In the local Court, arbitration awards may be challenged or appealed. The grounds for these challenges or appeals, however, are limited (1996 Act).
If an appeal is not raised at an early stage, a party can lose the ability to challenge on the grounds of jurisdiction. A tribunal may decide on its procedural authority unless agreed by the parties otherwise (section 30, 1996 Act):
As a result, the 1996 Act recognizes the Kompetenz-Kompetenz doctrine. A request for such a decision may be made from either party to the tribunal. A party may also apply with the Court, requesting a ruling on the tribunal’s substantive jurisdiction (section 32, 1996 Act). This application, however, can only be made with the written consent of all other parties to the arbitration process or with the approval of the tribunal. Other conditions and requirements must also be met.
The right to object to the tribunal’s jurisdiction could be lost if the objection is raised later than the first step in the process to question the merits of the matter concerning which the tribunal’s jurisdiction is challenged. However, the party objecting may participate in the tribunal’s appointment (section 31(1) of the 1996 Act). If the tribunal is deciding on its jurisdiction, it may do so in one of the following ways (section 31(4) of the 1996 Act):
A party to an arbitration taken no part may also challenge the tribunal’s jurisdiction by applying with the local courts (section 72). The idea of separability is well-known (section 7, 1996 Act). As a result, just because the agreement of which it forms part is itself invalid does not mean that the arbitration agreement is invalid as well. In this relevance, the arbitration agreement is considered to be treated as a distinct agreement.
A significant irregularity must be one (or more) of the ones mentioned in section 68. The Court must find it to be causing the claimant substantial injustice.
Significant irregularities include:
In fact, under English case law, the test of serious irregularity is challenging to satisfy. Several appeals on this basis have been dismissed.
Cameroon Airlines v Transnet Ltd EWHC 1829 Comm was a successful appeal in which the majority of the tribunal changed the method the parties were required to present their case without allowing the parties the chance to deal with the new approach.
An appeal on a point of law arising from an award can be brought only if the parties agreed or the court grants approval. Permission is granted only if:
The parties can only agree to waive the right to appeal under section 69, which is typical. For instance, the LCIA and ICC Rules exclude this right. Though, the exclusion must be expressly stated (Shell Egypt West v Dana Gas Egypt EWHC 2097 Comm). An appeal is filed with the Court and must be filed within 28 days of either:
The latest Arbitration Law, Federal Law Number 6 of 2018, governs arbitration proceedings in the UAE and repeals the provisions of the Civil Procedure Code. The reform law introduces a new principle of commencing a separate action to challenge arbitration awards.
Previously, the UAE courts ruled that an appeal to challenge an award should only be considered after a successful party had applied the award for ratification and enforcement. The losing party was barred from bringing independent proceedings in the case.
With the passage of the current legislation, the losing party can now challenge the award incompetent courts, either from the beginning or in reaction to the winning party’s ratification application.
By Article 53(1) of the Law, the party can depend on one or more of the following reasons for setting aside the award, which is equivalent to UNCITRAL Model Law:
Procedurally, the motion for setting aside the arbitration award must be filed with the Court of Appeal having jurisdiction over the case within 30 days of receiving the arbitration award.
Any subsequent clause waiving the right to set aside the reward is null and void.
As a result, the losing side will benefit from the current concept in the following ways:
RJ and L Ltd to the English Court applied to set aside the award, claiming that the decision declaring RJ to be the beneficial owner of the shares in Bank 2 was tainted by a serious irregularity under section 68 of 1996, Act. The claimants have asked that the issues be resolved again, either by a different arbitrator or, instead, by the same arbitrator. RJ and L Ltd successfully claimed that the relief provided, namely a declaration that RJ was the owner of the shares in Bank 2, had not been requested by either party to dispute. This was achieved without giving the parties notice, depriving them of the opportunity to consider or deal with this point.
According to Mr Justice Andrew Baker, the arbitrators’ general obligation of dignity fairness section 33 of the 1996 Act demands that the parties be granted notice and a reasonable opportunity to consider and respond to the new point. The Court further commented that the procedure adopted by the arbitrator in the preparation of the final award was quite unusual, albeit well within his procedural discretion. Still, the three brief exchanges about the beneficial ownership analysis during the oral closing statements were insufficient to put the parties on notice, fairly or otherwise, that the arbitrator may be contemplating such a declaration.
The Court determined that the sole arbitrator had handled the case on a substantially different basis from the parties’ submissions, had failed to notify the parties of this, and had thereby caused substantial injustice by refusing the parties the ability to discuss the possible outcome. However, parts of the award were set aside and the Court refused to dismiss the sole arbitrator. It was observed that following existing case law on setting aside awards, but where there has been no suggestion that the arbitrators can no longer be trusted, the arbitrator should not be substituted.
The tribunal’s award was set aside by the English Commercial Court (the “Court”), upholding its jurisdiction, on the basis that the LCIA Rules 2014 do not allow a claimant to initiate a single arbitration under several contracts. Consequently, the claimant’s request for arbitration was rendered null and void. The Court also ruled (contrary to the tribunal’s award) that the respondent had not waived its right to object to the tribunal’s jurisdiction in failure to raise it until shortly before filing its statement of defence. This is an unusual case of an English court setting aside a tribunal’s award. It serves as a timely reminder to parties to agreements involving several similar contracts to consider an efficient resolution of disputes at the contract drafting stage.
The Court concluded that A had not waived its right to object to the tribunal’s jurisdiction by raising its objections too close to the deadline for filing its defence:
In K v S EWHC 2386 (Comm), the English Court (the Court) dismissed a challenge to a procedural order of the LCIA arbitral panel. The challenge was filed under s68 of the 1996 Act on the grounds of serious irregularity. Still, it was dismissed for failing to meet any of the s68 requirements and for challenging a procedural order instead of an award. The judgment lays forth the parameters within which a section 68 challenge can be brought.
The Court decided that K’s reliance on authorities, that section 68 had superseded the previous law of misconduct, and also that section 68 is exhaustive as to what establishes “serious irregularity affecting the… proceedings or the award.” Consequently, the Court ruled that there was no evidence of any irregularity, much alone a serious irregularity. It could also not be maintained that this was an exceptional situation in which the tribunal’s decision was so far from what might be reasonably expected that the Court should intervene. The Court had no cause to interfere with the tribunal’s decision or comment on whether it was right or wrong.
As a result, the Court granted the claimants’ application under section 68(2)(f) and had remitted the award to the said tribunal for reconsideration of the parties to the contract. The Court did not see the necessity to deal with the alternative application under section 68(2) due to the successful finding under section 68(2)(f) (c). This is a somewhat uncommon instance of a successful challenge under section 68 of the 1996 Act. The case indicates the English courts’ willingness to deal forcefully with ambiguity or uncertainties in awards that amount to serious irregularities under section 68 of the 1996 Act.