Arbitration Matters - March 2010

Review of arbitration in 2009: key decisions

Why is arbitration so appealing?
The narrow scope for appealing arbitral awards is generally considered to be one of the most attractive aspects of arbitration.  This restrictiveness results in a greater sense of finality post-arbitral award, as opposed to post-judgement in normal litigation. 

In Shell Egypt West Manzala GmbH & or v Dana Gas Egypt Ltd [2009] EWHC 2097 (Comm), the English High Court provided useful guidance as to how conclusive an arbitral award is.  The claimant made an application for permission to appeal on a point of law against an UNCITRAL arbitral award, pursuant to section 69 of the Arbitration Act. The arbitration clause stated that the arbitral tribunal's award was “final, conclusive and binding on the parties." The question was whether this excluded any rights of appeal under section 69 of the Act. It was held that the use of the words "final, conclusive and binding" was not enough to exclude an appeal.  If the parties wanted to avoid the possibility of an appeal on a point of law, then clear wording to that effect should have be included within the arbitration clause. It is arguable that such wording is already contained within the LCIA and ICC Rules, but even in such cases, parties should err on the side of caution when dealing with arbitration clauses.

Anti-Suit following West Tankers
In Allianz SpA v West Tankers Inc (Case C-185/07), the House of Lords referred the following question to the European Court of Justice (ECJ): "Is it consistent with EC Regulation 44/2001 for a court of a member state to make an order to restrain a person from commencing or continuing proceedings in another member state on the ground that such proceedings are in breach of an arbitration agreement?" The ECJ held that the grant of anti-suit injunctions restraining proceedings in an EU member state was not consistent with the Brussels Regulation. As a result of West Tankers, anti-suit injunctions are generally no longer available to restrain proceedings based upon an arbitration clause in the court of a member state.

The English courts have generally applied the ECJ's analysis but it has not been extended by analogy.  An example of the English courts’ reluctance can be found in Roger Shashoua & ors v Mukesh Sharma [2009] EWHC 957 (Comm).  In this case, the claimants sought an anti-suit injunction from the English court preventing the defendant from pursuing proceedings in the Indian courts to challenge an interim arbitration award made in London.    

It was argued that West Tankers should apply as between countries that are signatories to the New York Convention.  This argument was largely based upon the Advocate General’s Opinion in West Tankers which stated: "Consistent with the New York Convention for a court which has jurisdiction over the subject matter of proceedings under Regulation No 44/2001 to examine the preliminary issue of the existence and scope of the arbitration clause."  The argument was rejected.  The English High Court held that West Tankers was not applicable to proceedings commenced in a non-Member State court.   

The internal arbitration process is set to be streamlined in the upcoming year. According to the former Lord Chief Justice Lord Woolf, “Mediation and other early settlement techniques are being encouraged by the commercial court, but this is not taking place in international arbitration.”  Together with the Centre for Effective Dispute Resolution, Lord Woolf has recently set out some guidelines to assist the arbitration process.  

Amongst other things, the guidance includes a ‘mediation window’ to be inserted into arbitral proceedings to make it easier for parties to come to a settlement in international arbitrations. This would enable proceedings to be adjourned so that mediation can take place at the request of the parties.  The guidance also allows an arbitrator to give a preliminary view on merits, but only with the permission of the parties.

It is hoped that the guidance will lead to more, early settlements.  We look forward to seeing what the practical impact is in the coming year.

If you require further information, please contact:

Andrew Leach
Tel: +44 (0)845 404 2564

Keith Mills
Tel: +44 (0)845 404 2426