In Atlas Power Ltd v National Transmission and Despatch Company Limited  EWHC 1052, the English High Court granted an anti-suit injunction to a group of independent power purchasers in Pakistan (“IPPs”) to prevent a collateral attack against an arbitral award in their favour through the Pakistani courts by the national transmission and dispatch company. The IPPs had successfully brought an LCIA arbitration, seated in London, against the national transmission and dispatch company, under their power purchase agreements (“PPAs”). The High Court decided that any challenge to such arbitration award must be made through the courts of England and Wales, not in Pakistan.
The claimants were the nine IPPs registered in Pakistan generating and supplying energy solely to National Transmission and Despatch Company Limited (“NTDC”) pursuant to the PPAs. NTDC is owned by the Government of Pakistan. It is a National Grid Company licensed by the National Electrical Power Regulatory Authority of Pakistan.
Each of the nine PPAs is expressly governed by the law of Pakistan and contains a provision for arbitration. The central issue between the parties was whether the courts of Pakistan have supervisory jurisdiction over the arbitration.
PPA arbitration clause
The arbitration clause provides that any dispute shall be settled by arbitration in accordance with the LCIA and conducted in Lahore, Pakistan. It further provides that if the value of the dispute is above a certain threshold or fell within a certain category, either party could require that the arbitration be conducted in London.
The underlying dispute arose as to sums allegedly owed by NTDC to the IPPs. The IPPs initiated an expert determination process which concluded with a finding that NTDC was liable to pay specified amounts to each of the IPPs on the basis that those amounts had been unlawfully withheld (the “Determination”). NTDC challenged the Determination following which the IPPs commenced LCIA arbitration proceedings. The IPPs exercised its right to designate London as the seat of the arbitration on the ground that the value threshold in the arbitration clause had been exceeded. The LCIA issued the partial final award finding, among other things, that the Determination was final and binding and that the seat of the arbitration was London.
NTDC commenced proceedings challenging the partial final award both in the English High Court (which were subsequently discontinued) and in the Court of the Senior Civil Judge in Lahore. The IPPs issued an arbitration claim seeking a final anti-suit injunction to restrain NTDC from challenging the partial final award by way of proceedings in Lahore, Pakistan or in any jurisdiction other than England and Wales.
Arguments of the Parties
The IPPs argued: (1) the seat of the Arbitration is London (2); it would have been open to NTDC to mount a challenge to the determination of the seat by the arbitrators and LCIA Court under section 67 (and possibly sections 68 or 69) of the 1996 Act, but no such application was made; (3) accordingly there is no basis on which NTDC can dispute that the seat of the arbitration is London; and (4) as the seat of the arbitration is London, supervisory jurisdiction over the arbitration is exclusively a matter for the courts of England and Wales, such that an anti-suit injunction should be permitted to prevent proceedings elsewhere.
NTDC made clear that its primary case was not a challenge to London as the seat of the arbitration but whether the parties had validly and lawfully chosen London as the seat of the arbitration. NTDC argued that:
- the choice of a London seat gives rise to concurrent jurisdiction of the Pakistan courts because the governing law of the PPAs is the law of Pakistan, and therefore the provisions as to the choice of seat of the arbitration must be construed as a matter of the law of Pakistan which does not provide for exclusive supervisory jurisdiction of England and Wales; and
- if the choice of a London seat cannot be construed as giving rise to concurrent jurisdiction of the Pakistan courts, that choice must be invalid as being contrary to the relevant policy of the governing law of the PPAs. The seat must therefore be Lahore, Pakistan.
Decision of the English High Court
NTDC’s argument that the courts of Pakistan had at least concurrent supervisory jurisdiction, even if the seat of the arbitration was London, was rejected, as was its alternative argument that the seat was Lahore.
The High Court referred to the Court of Appeal decision in C v D  1 Lloyd's Rep. 239 where it considered Court of Appeal made it clear that where the seat of the arbitration was England proceedings on the award should be only those permitted by English law. In that case Longmore LJ concluded that the parties “must be taken to have so agreed”, “a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award” and “their agreement on the seat and the "curial law" necessarily meant that any challenges to any award had to be only those permitted by that [Arbitration Act 1996]”.
Applying C v D, in considering the issue of supervisory jurisdiction over the arbitration, the court noted that it is the seat of arbitration that determines the “curial law” (the law governing the arbitration proceedings) of the arbitration, not the governing law of the contract. The court found that:
- NTDC must be treated as bound by the decision of the LCIA Court as to the seat of the arbitration, and by the further rulings of the Arbitrator in that regard; and
- the IPPs were entitled to a final anti-suit injunction to restrain NTDC from challenging an LCIA partial arbitration award in Lahore, Pakistan, or anywhere other than England or Wales on the basis that the seat was London.
The decision highlights the critical importance of carefully drafting arbitration clauses in commercial energy contracts like the PPAs. Although getting the arbitration clause right will not guarantee a successful arbitration, it will increase the chances of successfully securing a neutral venue and process for disputes to be heard, minimise the prospects from interference from local courts and make enforcing an award significantly less risky. IPPs with PPAs outside the United Kingdom will take comfort from the English High Court’s willingness to intervene to protect the integrity of the process agreed in the PPA and the remedies awarded by the arbitral tribunal.
Parties negotiating an arbitration clause should have in mind that the choice of seat for an arbitration carries with it important consequences in terms of the legal regime to which the arbitration process will be subject in relation to the challenges to awards. If NTDC were to challenge an LCIA partial arbitration award, they would have to do it in the English courts where its options for challenge are limited.