Arbitration Law Monthly

The court has power under s44 of the Arbitration Act 1996 to protect the subject matter of the arbitration, and this includes preventing one party from breaking the substantive agreement to which the arbitration relates in a manner which might render the arbitration meaningless. The power can only be exercised in the case of emergency, and also the circumstances must be such that the arbitrators themselves cannot act. This normally means that the application to the court will be at a time before the arbitrators have been appointed. Sabmiller Africa v East African Breweries Ltd [2009] EWHC 2140 (Comm) illustrates the principles to be applied to the court when faced with a pre-arbitration application.

In Pace Shipping Co Ltd of Malta v Churchgate Nigeria Ltd of Nigeria [2009] EWHC 1975 (Comm) an award was challenged primarily on the ground that the arbitrators had not given proper reasons for their conclusion, contrary to ss68(2)(d) and 68(2)(g) of the Arbitration Act 1996. In essence, however, it would seem that the reality of the complaint was that the arbitrators had rejected the applicant’s case and had refused to reconsider it following an application under the slip rule in s57 of the 1996 Act. Once again the English courts have shown their determination not to allow the arbitrators’ factual findings to be challenged indirectly.

The right to appeal against an award for error of law, set out in s69 of the Arbitration Act 1996, can be ousted by agreement. The question before Gloster J in Shell Egypt West Manzala GmbH & Anorv Dana Gas Egypt Ltd [2009] EWHC 2097 (Comm) is, what wording suffices for this purpose? In Shell Egypt, Gloster J held that the words ‘final, conclusive and binding’ did not have that effect.

EC law does not permit unfair terms in consumer contracts. Arbitration clauses are regarded as potentially unfair. In Asturcom Telecomunicaciones SL v Nogueira Case C-408, 6 October 2009, the Spanish courts referred to the European Court of Justice the question of whether EC law required a court to refuse to enforce an arbitration award where the consumer had failed to participate in the arbitration and had not sought to challenge the award within the time limits laid down by local law. As is often the case with the European Court of Justice, the answer was, possibly, depending upon whether the conditions for challenging the award were equivalent to conditions laid down by domestic law for enforcing other rights based on EC law or public policy.

UR Power GmbH v Kuok Oils and Grains Pte Ltd [2009] EWHC 1940 (Comm), a decision of Gross J, raised a whole series of complex issues concerning appeals to the court against awards on jurisdiction and procedural irregularity. Of the main issues raised, perhaps the most important related to the application of the appeal provisions to two-tier arbitration procedures and to the distinction between separability and determination of jurisdiction.