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British Isles Arbitration Law

Lloyd's Maritime and Commercial Law Quarterly

British Isles Arbitration Law

Karen Maxwell*

CASES

21. A v. B 1

Award—challenge—security pending challenge

Disputes arose under two grain supply contracts between A and B. B contended that the contracts incorporated FOSFA Form 28, including the FOSFA arbitration clause, and commenced arbitration. A challenged the tribunal’s jurisdiction. The tribunal ruled that it lacked jurisdiction, but the FOSFA Board of Appeal allowed an appeal from this ruling, held that the tribunal had jurisdiction and awarded damages to B. A challenged the Board’s substantive jurisdiction under the Arbitration Act 1996, s 67 and also sought permission to appeal under s 69. B applied for security in respect of the sums awarded to B by the Board of Appeal. The application was made pursuant to s 70(7) of the Act, which allows the court to order “that any money payable under the award shall be brought into court or otherwise secured” pending a challenge.
Decision: Application dismissed.
Held: In most cases, it would be a threshold requirement that the party applying for security show that the relevant jurisdictional challenge is flimsy or otherwise lacks substance. There had been a difference in approach in previous authorities: in Peterson Farms Inc v. C&M Farming Ltd,2 Tomlinson J had considered the case of jurisdictional challenges under the Arbitration Act 1996, s 67 (which might have been advanced under ss 32 or 72, in which case the power to grant security under s 70 would not be available). Tomlinson J had observed that (unlike challenges under ss 68 or 69) the award has no presumptive validity in a s 67 challenge, and concluded that in the case of s 67 challenges it would be a threshold requirement for the order of security that the challenge is “flimsy or otherwise lacks substance”. By contrast, in Tajik Aluminium Plant v. Hydro Aluminium AS,3 Morison J had held that there was no such threshold requirement. Morison J’s approach appeared to have been influenced by his dislike of the suggestion that a s 67 challenge took the form of a complete rehearing (rather than a review of the tribunal’s ruling). However, this was now very well established, and had been confirmed by the Supreme Court in Dallah Real Estate and Tourism Holding Co v. Ministry of Religious
BRITISH ISLES ARBITRATION LAW

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