Arbitration Law Monthly

The decision of the Court of Appeal in Gater Assets Ltd v Nak Naftogaz Ukrainiy [2007] 2 Lloyd’s Rep 588 has led to a great deal of uncertainty on the question of whether a court can order the applicant for an order enforcing an award to give security for the defendant’s costs and, if so, how the court’s discretion should be applied. The valuable analysis of Burton J in Diag Human SE v Czech Republic [2013] EWHC 3190 (Comm) has confirmed that jurisdiction exists, but that it should be exercised with caution.

The English courts will freely grant an anti-suit injunction to restrain foreign proceedings in breach of an arbitration clause. Bannai v Erez [2013] EWHC 3689 (Comm), a decision of Burton J, is a further example of English practice. The court was unmoved by the facts that the foreign proceedings were brought by a trustee in bankruptcy who was alleging fraud, and that the foreign court had refused to stay its own proceedings.

The New York Convention, which provides for the enforcement of arbitration awards, adopts a two-stage process to such enforcement. First, the applicant must produce the arbitration clause and the award, or copies thereof. Such production entitles the applicant to enforcement unless, at the second stage, the respondent can make good one or more of the defences to challenge set out in the New York Convention.

Section 41(4) of the Arbitration Act 1996 permits the arbitral tribunal to make a peremptory order where a party has failed to comply with any order or direction made by the tribunal. Such an order is generally in “unless” form, so that if it is not complied with then the tribunal can adopt various sanctions.

Section 44 of the Arbitration Act 1996 allows a party to apply to the court for interim relief in order to preserve property rights which are the subject of a dispute in arbitration. However, the court may grant an order only if the arbitrators are not themselves empowered to act.