Where parties to a contract agree to arbitrate
their disputes under English procedural laws in England, any
challenge to the eventual award must be made to the English court
under those rules, regardless of the governing law of the
contract. The English court will grant an anti-suit
injunction to prevent an attempt to avoid this result.
In C v. D, “D”, a US
incorporated insurer, issued an insurance policy to “C”
(also US incorporated) governed by New York law. The policy
provided for disputes to be settled “in London, England
under the provisions of the English Arbitration Act” and
that any award would be “final and binding… a
complete defence to any attempted appeal…”.
An arbitration was commenced and the tribunal made a partial award
in favour of C.
D wrote to the tribunal applying for correction of
the award. It said that the award fell outside the New York
Convention 1958 as a matter of US law and was reviewable for error
by the US courts. D threatened an application to the US
Federal court to set aside the award on the basis that it was based
on a “manifest disregard of New York law”. C
obtained an interim anti-suit injunction to restrain D from
commencing proceedings in the US.
At the final hearing, the court held that New York
law was irrelevant. By choosing England as the seat, all
mandatory provisions of the Arbitration Act applied. Only
express contrary agreement or, unusually, a choice of a different
procedural law to that of the seat, would affect the non-mandatory
provisions of the Act. The choice of New York as the
governing law of the contract could not by itself alter the
non-mandatory Arbitration Act framework for challenging an
award. In fact, the parties had expressly excluded
non-mandatory rights of challenge, including a challenge on a point
of law.
The English court, as the court of the chosen seat,
had exclusive supervisory jurisdiction and, absent express
agreement to the contrary, any challenge to an award must be made
to that court. On the facts, the law of the arbitration agreement
was English law and so it was also an implied term that the parties
agreed to perform the award.
The attempt to challenge in another jurisdiction
was both a breach of the arbitration agreement and an abuse of
process. The court granted injunctions to prevent challenge
of the award in any jurisdiction other than England &
Wales.
This case is further evidence of the English
court’s desire to support and enforce parties’ choice
to arbitrate even by granting injunctions to prevent foreign
proceedings, in this case in the US. It remains to be seen
whether this power will be curtailed for proceedings threatened
elsewhere in Europe, following the House of Lords’ referral
of this question to the European Court of Justice in the West
Tankers Inc case.
Case references:
C v. D [2007] EWHC 1541 (Comm)
West Tankers Inc v. RAS Riunione, The Front Comor [2007]
UKHL 4