Global Arbitration Review (GAR) has unveiled its annual ranking of the world’s leading international arbitration practices, with Herbert Smith Freehills ranked fifth in the world.

The firm’s GAR 30 ranking appears in the 17th Edition of the GAR 100, which was revealed last night at the annual GAR Awards ceremony at the Hôtel Du Collectionneur in Paris.

The ranking reveals that the firm’s portfolio as counsel amassed US$101.3 billion, nearly double its portfolio value in 2018, and includes 5 cases with a claim value of over $5 billion and 11 cases with a claim value of between $1-5 billion.

In the firm’s GAR100 profile, GAR describes the firm’s commercial arbitration group as “formidable”, and it is also “well regarded for public international law and investment treaty arbitration, advising governments in state-to-state negotiations and boundary disputes”.

In feedback from clients included in the GAR survey, the firm is described as having “clear strategies, cost transparency and quick reaction times”, and able to take “into account clients’ commercial imperatives”.

The prestigious GAR 30 is based on a thorough quantitative analysis, ranking firms according to factors including the number of arbitral hearings conducted by a firm over a two-year period. The research considers merits and jurisdictional hearings, the amount in dispute in those cases and the number of hours billed to arbitration over that period. The number of high value matters settled during the window and the portfolio value of a firm’s active arbitration caseload is also taken into account. Of all the criteria, bet-the-company and large hearings have the greatest effect on final ranking.

Rankings are also based on the number of arbitrator appointments a firm’s members have received and the number of individuals who appear in GAR’s sister publication, Who’s Who Legal: Arbitration – a guide to the leading practitioners in the field as selected by their peers.

Also at this year’s GAR Awards, Herbert Smith Freehills CEO Justin D’Agostino was nominated for Best Lecture or Speech for his keynote at the Edinburgh International Arbitration Festival 2023. In the speech last September, Justin called for arbitral institutions to be proactive in tackling ESG, outlining three ways institutions can play a crucial role in addressing these issues.

The full GAR 30 can be found here.

Paula Hodges KC, Head of Herbert Smith Freehills’ Global Arbitration Practice, commented: “I am immensely proud to see our practice ranked once again in the top 10 busiest arbitration practices in the world, for the eleventh year in a row. That consistency is testament to the talent and hard work of our lawyers across the globe as well as the trust clients place in us to support them in their disputes.”

For more information, please contact Paula Hodges KC, Partner and Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.

Paula Hodges KC

Head of Global Arbitration Practice

+44 20 7466 2027

Vanessa Naish

Professional Support Consultant

+44 20 7466 2112

The Hong Kong Court of First Instance has refused to enforce an AAA-ICDR award because the arbitrator failed to give reasons for her decisions on key issues (A v. B and Others [2024] HKCFI 751).

Mimmie Chan J found that the award simply recited the relevant contractual provisions (the interpretation and effect of which was disputed) and stated the orders made, without addressing the parties’ arguments or explaining the arbitrator’s reasoning.  These failings were sufficiently serious to have affected the structural integrity of the arbitral process and undermined due process, such that it would be contrary to public policy to enforce the award.

It is unusual for an award to be successfully challenged before the Hong Kong courts on the basis of a lack of reasons.  As the court noted in its decision, the starting point is that awards should be “read generously, in a reasonable and commercial way expecting, as is usually the case, that there will be no substantial fault that can be found with [them], and always bearing in mind the policy of minimal curial intervention…  Any inference that a tribunal has failed to consider an important issue is to be made only if it is clear and virtually inescapable.”

At the same time, the court noted that “it is fundamental to concepts of fairness, due process and justice, as recognized in Hong Kong, that key and material issues raised for determination, either by a court or the arbitral tribunal, should be considered and dealt with fairly.  An award should be reasoned, to the extent of being reasonably sufficient and understandable by the parties…  Readers of the award, namely the parties themselves, should understand how and why the tribunal reached its conclusion on a particular issue, in the context of how the relevant issues had been argued before the tribunal.”

Here, there had been no waiver of the requirement for reasons, and the award debtors were entitled to expect key issues to be dealt with and explained with adequate reasons.  Because there was no analysis or explanation at all of the arbitrator’s reasons, the award debtors were therefore entitled to query whether the relevant issues had been considered by the arbitrator, and if so, why they were determined against them.

It is important to note the unusual circumstances of this case.  In most award challenges based on a lack of reasons, the complaint relates to one or a small number of discrete points, often with extensive debate between the parties as to whether they were “issues” or merely “arguments”, their significance (including whether they were or would have been determinative of the result), the extent to which they were expressly or implicitly addressed in the award, and sometimes the degree to which they were even in issue.  An example of the latter point is the recent decision in X and YCo v. ZCo [2024] HKCFI 695 (on which we reported here), in which an application to set aside an award was rejected because the relevant points had not been maintained as key issues for determination by the tribunal.

In this case, by contrast, there was no reasoning at all in relation to substantially all of the central issues for determination.  While arbitrators generally have a significant degree of latitude in terms of the nature and extent of the reasoning which they include in their awards, the decision demonstrates the readiness of the Hong Kong courts to act in those rare cases where minimum standards of arbitral reasoning have not been met.

Simon Chapman KC

Partner, Head of Asia Disputes

+852 2101 4217

Martin Wallace

Professional Support Consultant

+852 2101 4126

The European Court of Human Rights (the ECtHR) has found that in delaying recognition of an arbitral award against it, the Republic of Albania breached its obligations under Article 6 (Right to a Fair Trial) of the European Convention on Human Rights (ECHR). Article 6(1) states that proceedings must be determined “within a reasonable time”. Iliria SRL (Iliria) spent 17 years and 9 months attempting to obtain legal recognition of an arbitral award in the Albanian domestic courts. After various proceedings in the Tirana Court of Appeal, the Albanian Supreme Court and the Albanian Constitutional Court, recognition of the arbitration award was denied on public policy grounds. Iliria successfully argued that Albania had breached its obligations under Article 6(1) by failing to resolve Iliria’s application within a reasonable time and was awarded compensation of €10,800.

While the ECtHR did find in favour of Iliria, it is questionable whether this route provides an effective remedy for delays and non-enforcement of awards by domestic courts. Iliria’s application to the ECtHR took 8 years to be determined and Iliria was awarded less than the sum claimed. Award creditors have also looked to claims under investment treaties to address difficulties in recognition and enforcement of awards. This route, where available, appears to provide a more effective remedy.

Background

On 3 September 1993, an arbitral tribunal issued an award ordering the Albanian Government to pay Iliria 48,239,000,000 Italian Lira (about 500,000,000 euros at the time) and 13% annual interest. On 11 March 1998, Iliria applied to the Tirana Court of Appeal for recognition of the arbitral award. The Tirana Court of Appeal approved the recognition request in relation to the principal amount on 2 April 1998 and in relation to the interest on 5 May 2000.

The Albanian Council of Ministers applied to appeal the recognition decision out of time on the grounds that the decision was not served on the Council of Ministers. The application was granted on 26 December 2003 and the Council of Ministers lodged an appeal on certain points of law.

The case was twice referred to the Supreme Court which quashed the decision of the lower courts on both occasions and remitted the case for re-examination, on 10 February 2005 and 9 May 2007. The Supreme Court found against Iliria on 12 April 2012. The Albanian Constitutional Court quashed the decision and remitted the case to the Supreme Court. The Supreme Court ruled against Iliria again on 4 October 2013.

Iliria again appealed to the Albanian Constitutional Court, arguing (amongst other things) that the proceedings had been unduly delayed. The Constitutional Court rejected Iliria’s argument and dismissed its case on 22 December 2015, over 17 years after the original application. Iliria applied to the ECtHR under Article 6(1) of the Convention alleging that the length of the proceedings concerning the recognition of the Arbitral Award was unreasonable. Iliria did not challenge the outcome of the enforcement proceedings.

The European Court of Human Rights decision

As a threshold point, the ECtHR determined that Iliria’s claim was admissible despite the fact the Constitutional Court had rejected its application for recognition of the award. The ECtHR held that irrespective of the outcome, Iliria could claim to be a victim of unreasonably long proceedings.

The ECtHR determined that the following factors must be considered when assessing the reasonableness of the length of proceedings under Article 6(1) of the ECHR:

1. the circumstances of the case;
2. the complexity of the case;
3. the conduct of the applicants; and
4. the relevant authorities and what was at stake for the applicants in the dispute.

Relevant period of delay

The ECtHR rejected Albania’s assertion that there had not been an unreasonable delay.

The Constitutional Court had determined that the proceedings could be split into two relevant periods: 1) spanning from 31 March 2009 to 12 April 2012, which Iliria did not complain about, and 2) spanning from 10 July 2013 to 4 October 2013, which was held not to have been subject to undue delays.

The ECtHR disagreed with the Constitutional Court’s distinction and found that the relevant period started when Iliria lodged an application for recognition of the arbitral award in the Albanian domestic courts (11 March 1998) and ended when the Constitutional Court finally dismissed Iliria’s claim (22 December 2015) ending the proceedings. The relevant period was therefore 17 years and 9 months.

Conduct of the applicant

The ECtHR rejected the Albanian Government’s argument that lliria was to blame for certain delays. The ECtHR noted the following delays:

• the delay between the 1998 initial recognition decision and the 2003 Tirana Court of Appeal decision allowing the Council of Ministers to appeal out of time, which it found was not attributable to Iliria;
• the delays due to the case being remitted for re-examination twice by the Supreme Court and once by the Constitutional Court; and
• lengthy delays in the proceedings in which the Albanian courts did not hold any hearings nor make any procedural orders.

The ECtHR also noted that while it was not appropriate to analyse the decision-making of domestic courts, serial remittals within the same set of proceedings (as in this case) may indicate a serious deficiency in the judicial system.

Complexity of the case

The ECtHR also rejected the argument that the delays were due to the complexity of the case. Even if the process of enforcing this arbitral award entailed some complexity, the ECtHR decided that this cannot justify legal proceedings lasting nearly 18 years.

Outcome

Iliria did not seek pecuniary damages but sought 100,000 euros in respect of non-pecuniary damages in respect of the delays and 21,000 euros (supported by invoices) in respect of the costs and expenses incurred in the domestic proceedings. The ECtHR ordered 10,800 euros to be paid to Iliria, to compensate for both non-pecuniary damage (4,800 euros) and costs and expenses (6,000 euros).

Comment

Award creditors are increasingly employing different strategies to monetise awards in a timely and effective way. Enforcement should, of course, be a consideration from the outset of a transaction but, particularly where the award debtor is a state or state-related entity, challenges may nonetheless ensue.

The Iliria decision of the ECtHR comes after the 2022 decision in BTS Holding, as v. Slovakia, in which the ECtHR found that Slovakia violated BTS Holding’s rights when the Slovak courts arbitrarily refused to enforce an arbitral award against the Slovak National Property Fund. The ECtHR found that an arbitral award constitutes a “possession” under Article 1 of Protocol 1 of the ECHR, and failure to enforce an arbitral award could be an unjustified and unlawful interference with possessions.

Both the BTS and Iliria decisions show that the ECHR may offer award creditors a remedy in relation to difficulties enforcing awards in the domestic courts of ECHR State parties. However, there are still open questions about the viability of this avenue. Notably, the level of compensation may not compensate for the award or reimburse claimants for the costs of bringing such claims. The ECtHR process is not a short one.

The decisions in Saipem S.p.A v The People’s Republic of Bangladesh and White Industries v India  demonstrate the willingness of award creditors to look to international law remedies to compensate for extensive judicial delays and failures to enforce awards in domestic courts. In these cases, the award debtor brought a claim under an international investment treaty – in Saipem the claim arose out of the actions of the Bangladeshi court in connection with a commercial arbitration and its non-enforcement of the award and in White (covered in our blog post here) the claim arose out of judicial delays by India that left the claimant unable to enforce an award for over nine years. In each of these cases, the claimant was awarded, among other things, damages in respect of the amount due under the award. Where available, international investment treaties may offer a better prospect of recovery.

For more information, please contact Hannah Ambrose, partner, Rosalind Axbey, Senior Associate, or your usual Herbert Smith Freehills contact.

Hannah Ambrose

Partner

+44 20 7466 7585

Rosalind Axbey

Senior Associate

+44 2074 662 874

The authors would like to thank Wajih Jaroudi for his contribution to this blog post. 

In Carmichael Rail Network Pty Ltd v BBC Chartering Carriers GMBH & Co KG & Anor [2024] HCA 4, the High Court of Australia affirmed a decision of the Full Court of the Federal Court of Australia to dismiss an application to restrain arbitration proceedings conducted in London relating to a dispute arising from a carrier contract.

Background

Carmichael contracted with OneSteel for the manufacture and supply of steel rails. It was agreed that the rails would be transported from OneSteel’s facility to the Port of Whyalla and loaded onto a vessel nominated by Carmichael. The rails were then transported by BBC, a carrier booked by Carmichael, from Port Whyalla, South Australia to Port Mackay, Queensland. However, upon arrival, the rails were found to be damaged due to a collapse of the stowed goods, rendering them unusable and subsequently sold as scrap.

On the day the rails were loaded on the carrier ship, BBC issued Carmichael a bill of lading for the goods which relevantly included: (i) an exclusion clause providing that the carrier would have no liability for damage to cargo (ii) an English choice of law clause; and (iii) an arbitration agreement requiring that any dispute related to the bill of lading be referred to arbitration in London.

The Full Federal Court of Australia’s Decision

BBC initiated an arbitration against Carmichael in London regarding the rail damage, while Carmichael filed an application in the Federal Court of Australia (FCA) seeking damages and attempting to restrain any arbitration in connection with the consignment of the rails. BBC then applied for a stay of the proceedings in the FCA.

The competing interlocutory applications were referred for hearing before the Full Court of the FCA.

Carmichael (amongst other things) argued that both the choice of law clause and arbitration agreement were void as they contravened mandatory laws of Australia. In particular:

• The choice of law clause contravened section 10(1)(b)(ii) of the Carriage of Goods by Sea Amendment Act 1997 (Cth) (COGSA), which provides that the International Convention for the Unification of Certain Rules of Law relating to Bills of Lading (known as the Hague Rules), as amended by the COGSA (Australian Hague Rules), applied to contracts for the carriage of goods by sea from a port in Australia to another port in Australia.
• Both the choice of law clause and arbitration agreement contravened Article 3(8) of the Australian Hague Rules which provides that any “clause, covenant or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to … goods … or lessening such liability otherwise than as provided in these Rules, shall be null and void and of no effect.” In particular, Carmichael argued that BBC’s liability might be lessened in three ways:
  • An English tribunal might give primacy to the exclusion clause and find that only certain provisions of the Hague Rules, which provide lower limitation amounts, apply.
  • An English tribunal might apply an English interpretation of the Australian Hague Rules which was of concern as there were divergences in approach as between Australian and English courts.
  • An English arbitration would require Australian law to be proved through expert evidence, rather than as a matter of argument before an Australian court.

Significantly, in response and to ameliorate the risks identified by Carmichael, BBC made an undertaking to the FCA that in the arbitration it would admit the Australian Hague Rules as applied under Australian law applied to the bill of lading.

The Full Court dismissed Carmichael’s interlocutory application and ordered that the FCA proceeding be stayed in favour of arbitration in London. In so doing, the Full Court determined that neither the choice of law clause nor arbitration agreement contravened the COGSA as:

• Any risk of divergence between Australian and English law, was mitigated by an undertaking given by BBC and a subsequent declaration made by the Full Court that the Australian Hague Rules, as applied under Australian law, would apply to the interpretation of the bill of lading in the London arbitration.
• Additional costs that might be occurred in arbitration compared to Australian court litigation, did not have the effect of relieving or lessening a carrier’s liability.

The High Court of Australia’s Decision

Subsequently, Carmichael sought special leave to appeal the Full Court’s decision on the interpretation of Article 3(8) of the Australian Hague Rules. The High Court granted Carmichael special leave to appeal.

Before the High Court, Carmichael argued that the arbitration agreement contravened Article 3(8) of the Australian Hague Rules. In particular, Carmichael argued that BBC’s liability might be impermissibly lessened as:

• The English tribunal might consider they were bound to apply the Hague Rules in effect in England which allow for carrier’s responsibility to be delegated, whereas in Australia such responsibility was non-delegable.
• The English tribunal might give primacy to the exclusion clause and find that only certain provisions of the Hague Rules, which provide lower limitation amounts apply.
• Carmichael would face increased expense and practical difficulty in pursuing its claims in arbitration in London.

The High Court agreed with the Full Court’s decision that in the circumstances, including BBC’s undertaking and the declaration made by the Full Court, Carmichael had not established that the conduct of the arbitration would be such as to lessen the liability of BBC. In particular, the High Court held that:

• Carmichael’s concerns regarding the potential approach by an English tribunal were “mere speculation” and did not rise to the standard of proof that – on the balance of probabilities – the carrier’s liability would be impermissibly lessened.
• Carmichael’s concerns regarding the cost and inconvenience of arbitration were not directed to BBC’s liability, but rather the enforcement of that liability.

The High Court agreed with the FCA’s decision to dismiss Carmichael’s application to restrain the conduct of the London arbitration and grant BBC’s application to stay Carmichael’s proceedings.

Comment

This case again reflects Australian courts’ pro-arbitration approach in seeking to give effect to the parties’ agreement to arbitrate, including through flexibly and pragmatically dealing with a local law issue.

For further information, please contact Chad Catterwell, Partner, James Allsop, Partner, Imogen Kenny, Senior Associate, Caitlin Setter, Solicitor or your usual Herbert Smith Freehills contact.

Chad Catterwell

Partner

+61 3 9288 1498

James Allsop

Partner

+61 3 9288 1820

Imogen Kenny

Senior Associate

+61 3 9288 1657

Caitlin Setter

Solicitor

+61 3 9288 1180

In the recent decision in H1 and another v W,D and F [2024] EWHC 382 (Comm), the English High Court granted an application under section 24(1)(a) of the Arbitration Act 1996 (the 1996 Act) to remove a sole arbitrator (the Arbitrator) on the grounds of apparent bias. The application primarily concerned comments made by the Arbitrator, who was an industry professional without previous experience sitting as an arbitrator, in relation to the parties’ witnesses and his approach to the expert evidence in the case. In upholding the challenge to the Arbitrator, the Court found that some of the Arbitrator’s remarks gave rise to an appearance of having pre-determined a key issue in dispute; others were “unfortunate and misguided” but did not give rise to an appearance of bias.

Background

The underlying arbitration concerned a claim under an insurance policy (the Policy) brought by a film company and a film production guarantor (the Film Producers) and their insurer (the Insurer). Following a stunt-related incident on set, the Film Producers submitted a claim under the Policy, concerning the additional expense arising from consequential delays in production. Following the Insurer’s rejection of the Policy claim, the Film Producers commenced arbitration proceedings. The British Film Institute nominated the Arbitrator, a non-lawyer and without previous arbitrator experience, based on his expertise in film and television programme production.

Following an initial procedural hearing, the parties exchanged factual and expert witness statements, addressing, amongst other things, who bore responsibility for safety on set during filming (the Responsibility Issue).

At a subsequent procedural hearing, the Arbitrator made a number of comments on the parties’ witnesses and his views about the evidence relating to the Responsibility Issue, including that:

• He did not “need to hear any of the expert witnesses” as he “[knew] what they [were] saying” and “[knew] what is normal on film“. Accordingly, he felt that he did not “need to listen to them” in cross examination;
• The Film Producer’s experts were “exceptional people in their fields” and that he “[knew] them all personally extremely well” while one of the Insurer’s experts did not “add… much“;
• He would “absolutely believe” the evidence of the Film Producers’ expert in relation to the Responsibility Issue on account of him being “one of the top Norwegian producers” even though his evidence contradicted the Arbitrator’s own experience in other locations;
• While he would allow cross-examination and would “reserve…judgement“, he had read the evidence and could “say now” what he thought; and
• The evidence of one of the Insurer’s experts on the Responsibility Issue should be “disallowed” because he had “change[d] sides half-way through” and was a “gun for hire” (the Switching Side Comments).

In light of these and other comments, the Insurer brought an application before the English Court under s24 of the 1996 Act (the s24 Application) to remove the Arbitrator on the grounds of apparent bias. As emphasised by the Court, the Insurer’s case was not that the Arbitrator was actually biased, but that his remarks gave rise to the appearance of bias.

Decision

Applying the test for apparent bias confirmed by the Supreme Court in Halliburton v Chubb Bermuda Insurance (see our blog post here and for further commentary relating to a subsequent decision applying Halliburton see here), the Court concluded that “the fair minded and informed observer would… conclude that there was at least a real possibility that the arbitrator was biased”.

The Court accordingly ordered the Arbitrator’s removal, while allowing the Arbitrator’s fees and expenses up to the end of the procedural hearing where the comments were made. The Court additionally took the “exceptional” step of preserving the Arbitrator’s anonymity, principally because revealing the name of the Arbitrator might “defeat the purpose of maintaining the confidentiality of the arbitration and the parties to it“. Moreover, the Court determined there was “no public interest in revealing his identity“.

Pre-determination gave rise to an appearance of bias

The Court found that the Arbitrator’s remarks relating to “how he would approach the evidence of the expert witnesses” gave rise to “the appearance of bias in the sense of appearing to pre-judge [the Responsibility Issue] by reference to [the expert’s] status”. The Court considered that “the suggestion that it was unnecessary to call any expert witnesses was plainly not an expression of a balanced and impartial view, or merely a concern about the hearing over-running, or an attempt by the arbitrator to impose an orderly and economical procedure on the parties“. Instead of “pre-judging the merits“, the Arbitrator ought to have “[kept] an open mind as to whether or not the producer is responsible for the safety on set and whether the position in Sweden is different to the rest of the world“. The Arbitrator’s comments showed that he would believe the expert “come what may” on account on the expert being, in his view, “one of the top Norwegian producers“.

The Court determined that a “fair minded and informed observer would not be reassured” by the Arbitrator’s purported qualification that he would “reserve [his] judgement“. This was because the comment preceded him stating that he had “read the statements and [knew] the professionals” such that he could “say now” what he thought. Given that the Arbitrator had read the evidence prior to the procedural hearing, it was clear that he knew the importance of the Responsibility Issue. Consequently, he would have been aware that the evidence on this point remained contested.

In the eyes of the Court, the Arbitrator had not merely indicated a legitimate “predisposition towards a particular outcome, giving the parties an opportunity to persuade him that his initial assessment of an issue may be wrong“. Instead, the Arbitrator had given a “firm impression of having already allowed extraneous, illegitimate factors to influence his assessment of evidence which has not yet heard and, moreover, of not even realising that this this is an unfair approach to adopt“. This was of particular concern because the Arbitrator was “a sole inexperienced arbitrator ([acting] without the tempering influence of two other co-arbitrators)“. This was the case notwithstanding the Court’s acknowledgement that “the parties might expect the arbitrator to use his special knowledge of the film industry to understand the evidence that is given at the arbitration and any usages of the trade“.

No appearance of bias

While the Insurer had initially also relied on comments made by the Arbitrator regarding the nature and extent of his relationships with the Film Producers’ experts, in light of the evidence given by those experts in response to the s24 Application, counsel for the Insurer accepted that the relationships did not give rise to an appearance of bias. On the facts, the relationships were “entirely to be expected of ‘an experienced practitioner in… television programme production’ who has been in the market for some time“.

Similarly, the Court found that that while the Switching Side Comments were “unfortunate and misguided“, they did not give rise to an appearance of bias. This was primarily because (i) the comments had been wrongly encouraged by counsel for the Film Producers; (ii) the Arbitrator in fact made no formal decision to disallow the evidence; and (iii) the remarks were attributable more to a lack of experience than closed mindedness or “animus” against the Insurer.

Comment

The decision is a useful illustration of an approach to evidence which “[fell] well short” of the standard expected of an arbitral tribunal. Whilst this case is unusual on its facts, it demonstrates the importance of appointing arbitrators who are not only experts in the relevant field, but who are also comfortable with arbitral procedure and best practice.

This judgment also serves as a reminder of the importance of taking accurate and sufficiently detailed attendance notes for non-transcribed hearings. In this case, the Court was greatly assisted by the notes prepared by the parties’ legal representatives, without which the challenge may not have been sufficiently evidenced.

For more information, please contact Mike McClure KC, Partner, Liz Kantor, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Mike McClure KC

Partner

+44 20 7466 6325

Elizabeth Kantor

Professional Support Lawyer

+44 20 7466 2406

The authors would like to thank Luke Hard and George Maxwell for their contributions to this blog post.

In the recent case of Ganz v Petronz FZE and another [2024] EWHC 635 (Comm), the High Court upheld a tribunal’s decision to decline jurisdiction over a dispute, as the party challenging the award failed to prove the existence of an authentic and binding agreement to arbitrate.

The claimant argued that the respondent had agreed to buy shares in a company under a Share Purchase Agreement (SPA). The SPA provided for arbitration under the LCIA Rules. However, the arbitrator determined – in the context where a party to the SPA alleged its signature had been forged – that it had no jurisdiction on the available evidence to hear the substantive dispute. The claimant’s challenges under Section 67 (challenge to substantive jurisdiction) and Section 68 (serious irregularity causing substantial injustice) of the English Arbitration Act 1996 (the Act) both failed.

Section 67 Challenge

The High Court upheld the tribunal’s decision and found that the applicant failed to show that there was an authentic and binding SPA. The claimant relied on the Fiona Trust case (see our blog post here) arguing that even if the main contract was invalid, the arbitration agreement was valid as per the separability principle. While the Court acknowledged that principle, the claimant had failed to prove the existence of an authentic and binding agreement, including as to a valid arbitration agreement, in the face of allegations of forgery.

Section 68 Challenge

The claimant also challenged the award under section 68(2)(a) of the Act, i.e., on the basis the tribunal failed to comply with its general duty to act fairly and impartially between the parties or to adopt procedures suitable to the circumstances of the case under Section 33 of the Act. In support, the claimant argued that the arbitrator refused to permit the claimant to adduce evidence from a handwriting expert to determine the validity of the signatures in the SPA. However, the Court noted that the arbitrator had left open that question until receipt of the parties’ submissions, and the claimant had not made a further request at that stage although “there was clearly an opportunity for [the claimant] to make such proposals“. Based on this, the Court dismissed the challenge, noting that the claimant had the opportunity to pursue his application for expert evidence but failed to do so. Therefore, there was no breach of Section 33.

Comment

This decision confirms the common-sense position that an arbitration agreement contained in a document that has not been agreed between the relevant parties will not be enforced by tribunals or courts notwithstanding the “separability” principle (contrary to the position where the broader contract, or elements of it, may be invalid for reasons which do not affect the parties’ agreement to arbitrate disputes).

This decision also serves as a reminder that parties seeking to challenge an award for lack of procedural fairness need to show that they in fact took available steps in the arbitration to request the opportunity they allege to have been denied.

For more information, please contact Charlie Morgan, Partner, Maria Popova, Associate, or your usual Herbert Smith Freehills contact.

Charlie Morgan

Partner

+44 20 7466 2733

Maria Popova

Associate

+44 2074663109

Herbert Smith Freehills has promoted ten Disputes lawyers to its partnership out of a total of 27 worldwide. The promotions in the Disputes practice, which take effect on 1 May 2024, span across the firm’s international network.

Of these new partners, three are arbitration specialists, reflecting the strength and importance of the practice area to the firm.

The new arbitration partners are:

Murphy Mok, Hong Kong

An international arbitration lawyer, Murphy advises Chinese and international clients on cross-border disputes, particularly those related to construction, infrastructure, energy and share purchase and shareholder disputes. He also advises on project execution, dispute avoidance, contract drafting and the negotiation of major global infrastructure projects. Murphy graduated with a bachelor’s degree in law and commerce from the University of New South Wales and a master’s degree in business law from the University of Sydney. He is qualified in England & Wales and Australia (New South Wales), and is fluent in English, Mandarin and Cantonese.

Emily Fox, Paris

Emily is an international arbitration lawyer with over 15 years’ experience advising clients on complex international disputes. She is based in Paris and is qualified as both a French Avocat and a Solicitor of England & Wales.

Emily has significant experience of international commercial arbitration and has advised and represented clients in ad hoc commercial arbitrations and proceedings under the auspices of major arbitral institutions, as well as in arbitration-related court proceedings. She also delivers strategic dispute resolution and crisis management advice.

She has broad sector experience, with a specific focus on energy, construction and aviation disputes, and has advised clients in a broad range of jurisdictions, and has particular expertise in Francophone and Anglophone Africa.

Emily also sits as an arbitrator and is a regular speaker at arbitration conferences.

Marco de Sousa, New York

Marco is a specialist in international arbitration and public international law. He acts as counsel and advocate in commercial and investment treaty arbitrations, with a particular focus on disputes in the Energy and TMT sectors. He has acted in disputes in Europe, the Middle East, Asia and Africa. He worked in the firm’s offices in Hong Kong, Dubai and London before joining the New York office.

Marco has acted in commercial arbitrations under most major institutional rules and ad hoc arbitrations under the UNCITRAL rules. He advises both investors and states in investment treaty claims, and on issues of Public International Law and Business and Human Rights. He also has considerable experience in arbitration-related court proceedings in England & Wales, Singapore and Hong Kong.

Paula Hodges KC comments: “I would like to congratulate each of our new arbitration partners on their fantastic achievements to date and wish them all the very best for the future. These promotions in Paris, New York and Hong Kong underline the global strength of our arbitration practice, enabling us to service our clients wherever they need us.”

For more information, please contact Murphy Mok, Emily Fox, Marco de Sousa, or your usual Herbert Smith Freehills contact.

Murphy Mok

Partner (from 1 May 2024)

+852 21014224

Emily Fox

Partner (from 1 May 2024)

+33 1 53 57 72 48

Marco de Sousa

Partner (from 1 May 2024)

+1 917 542 7893

On 22 March 2024, the highest court of the Dubai International Financial Centre (‘DIFC’) rejected an appeal, ruling that a provisional award issued by a foreign seated tribunal providing for interim measures could be enforced as an ‘award’ in the DIFC. Former English High Court Judge, Justice Sir Jeremy Cooke, handed down the anonymized judgment on behalf of the DIFC Court of Appeal.

The decision turned on the proper interpretation of the DIFC Arbitration Law which is based upon the UNCITRAL Model Law, but which does not include all of its provisions.

Background

In November 2022, a London-seated Tribunal issued a ‘Provisional Award on Interim Relief’ which took the form of an order granting a proprietary injunction, a freezing order and an order for ancillary disclosure. The claimant subsequently applied to the DIFC Court for an order recognising and enforcing the Provisional Award.

On 19 September 2023, in the DIFC Court of First Instance, His Excellence Justice Shamlan Al Sawalehi held that Article 24 of the Arbitration Law – which deals with the enforcement of interim measures exclusively for DIFC-seated arbitrations – did not, by its terms, exclude any other route for the enforcement of interim measures. It was simply a matter for the Court to consider whether the Provisional Award was indeed an ‘arbitral award’ for the purposes of Part 4 of the Arbitration Law which deals with the recognition and enforcement of awards (i.e., Articles 42-44). He held that there was nothing in the Arbitration Law which suggested that this was not the case.

The defendant appealed this ruling to the Court of Appeal. The defendant’s central arguments were:

1. Pursuant to Article 24 of the DIFC Arbitration Law, interim measures ordered by an arbitral tribunal, whether by way of an award or order, could only be enforced by the DIFC Court if the seat of the arbitration was the DIFC (here it was London); and
2. Articles 42 and 43 of DIFC Arbitration Law provide for the enforcement of awards which are final on their merits (i.e., partial and final awards), regardless of the seat of the arbitration, but not for the enforcement of interim measures, even if made in the form of an interim/provisional award.

Court of Appeal’s Decision

The Court of Appeal upheld the lower court’s decision that the Provisional Award was indeed an award capable of enforcement under the Arbitration Law on the basis that:

1. There remains ongoing debate as to whether an award granting interim measures constitutes an award under the New York Convention. However, as the Tribunal considered this point when granting the Provisional Award, it must have had in mind the issue of enforcement (paragraph 21).
2. While the Arbitration Law omitted certain provisions from the 2006 amended UNCITRAL model law which explicitly deal with the recognition and enforcement of interim measures, the Arbitration Law has to be construed on its own terms (paragraphs 22-24).
3. In ordinary parlance and international commercial practice, an ‘award’ is so described whether it is interim, provisional, partial or final. With reference to the Tribunal, it was stated that the term ‘award’ was in this case used by ‘well known arbitrators/ judicial figures’ (paragraph 25).
4. There was no basis for importing the criteria for finality when interpreting the term ‘arbitral award’, not defined in the Arbitration Law. What mattered was the binding nature of the award (paragraph 26).
5. The Court of Appeal accepted that interim measures can only be ordered by the DIFC Court in support of DIFC-seated arbitrations pursuant to its supervisory jurisdiction under Article 24. However, the DIFC Court’s supervisory jurisdiction over arbitration should be distinguished from its enforcement jurisdiction which allows it to enforce awards (including awards for interim measures) made in other states (paragraphs 8, 26, 28).
6. Once it is accepted that a provisional or interim measure is indeed an award, there is no reason for the DIFC Court not to enforce it as an award, unless one of the grounds for challenging an award in Part 4 is established (paragraph 29).

Comment

There is still no consensus amongst national courts as to the enforcement of awards providing for interim relief – even in some of the most developed jurisdictions, the position as to whether interim relief can be made by way of an award is often uncertain, with contrasting conclusions being reached.

The DIFC Court’s decision is an important one for users of international arbitration in the region. It is encouraging to see the DIFC Court take this view on the interpretation on the term ‘award’, avoiding an unduly technical distinction and thereby respecting the order of a foreign-seated arbitral tribunal.

For more information, please contact Nick Oury, Partner, Tania Forichon, Associate, or your usual Herbert Smith Freehills contact.

Nick Oury

Partner

Tania Forichon

Associate

Our Johannesburg team co-hosted the inaugural Johannesburg Arbitration Week, a landmark event that brought together leading arbitration practitioners from across the African continent and beyond.

The event, co-hosted with the Arbitration Foundation of Southern Africa (AFSA) and other leading local and international law firms and South African Bars, sought to dissect issues and challenges in the fast-paced world of international commercial arbitration.

The week was packed with insightful sessions, including two panel events hosted by our firm.

This included the plenary session, “ESG: fertile ground for disputes?”, which featured Michael Schottler (Anglo American), Andrew Cannon (Partner, London), Dr Patricia Nacimiento (Partner, Frankfurt) and moderator Fiorella Noriega Del Valle (Director, Johannesburg).

South African jurist and former Deputy Chief Justice of South Africa Justice Dikgang Moseneke delivered the keynote speech at the plenary session.

The HSF team also hosted “How Helpful are Experts in Arbitration?”, with Adv Azhar Bham SC (Senior Counsel and Arbitrator), Professor David Butler (Professor Emeritus and Research Fellow, Department of Mercantile Law, Stellenbosch University), Hannah Ambrose (Partner, London), Laurence Franc-Menget (Partner, Paris) and Mike McClure KC (Partner, London).

Johannesburg associate Kyle Melville also took part in a Young AFSA moot competition earlier in the week.

Jonathan Ripley-Evans, who also sits as a Vice President on the AFSA International Court, commented: “The inaugural Johannesburg Arbitration Week was a resounding success, and we are proud to have played a significant role in it. In the spirit of Ubuntu[1], we look forward to continuing our active involvement in promoting arbitration and strengthening collaboration in Africa and beyond.”

For more information, please contact Jonathan Ripley-Evans, Partner, Laurence Franc-Menget, Partner, Andrew Cannon, Partner, Mike McClure KC Partner, Hannah Ambrose, Partner, Dr. Patricia Nacimiento, Partner, Fiorella Noriega Del Valle, Director, or your usual Herbert Smith Freehills contact.

Jonathan Ripley-Evans

Partner

+27 10 500 2690

Laurence Franc-Menget

Partner

+33 1 53 57 73 70

Andrew Cannon

Partner

+44 20 7466 2852

Mike McClure KC

Partner

+44 20 7466 6325

Hannah Ambrose

Partner

+44 20 7466 7585

Patricia Nacimiento

Partner

+49 69 2222 82530

Fiorella Noriega Del Valle

Director

+27 10 500 2691

[1] The spirit of Ubuntu is a philosophy that originates from African Bantu societies. It embodies the concepts of connection, community and mutual caring for all, and emphasises that our success is deeply intertwined with that of others.

Following a hearing that took place last week (17 and 18 April 2024), on 23 April 2024 the UK Supreme Court announced its decision in Unicredit Bank GmbH v RusChemAlliance LLC, dismissing RCA’s appeal and maintaining the final anti-suit injunction in respect of proceedings brought by RCA in Russia (see our previous post here for the background to the appeal). After the Court of Appeal granted a final mandatory anti-suit injunction, RCA was granted permission to appeal to the Supreme Court on essentially the following questions: (i) whether the Paris seat of arbitration meant that the arbitration agreement was governed by French law; and (ii) whether England was the proper forum.

At the time of writing, the judgment is not available. However, this decision confirms that the English court may grant an anti-suit injunction where the arbitration agreement is governed by English law, despite the parties choosing a foreign seat. While not in a position to hand down its judgment in full, the Supreme Court gave its decision dismissing RCA’s appeal in order to provide clarity prior to the upcoming Russian court hearing on 6 May 2024, the Russian court having adjourned to allow the Supreme Court to render its decision on RCA’s appeal.

Comment

This decision confirms that parties may be able to obtain ASI relief from the English court to uphold an agreement to arbitrate, even where the parties have selected a seat outside of England and Wales. The English court will act if it is satisfied that the matter fits within a jurisdictional gateway – in this instance, by an arbitration agreement that it found was governed by English law – and that England is the proper place for the claim. The Supreme Court’s rationale for this latter point will be clarified in its judgment, as the ramifications of the parties’ choice of a Paris seat was a point of considerable contention between the parties. We anticipate that the Supreme Court’s judgment will also deal with the role of allegations of abuse of process that were raised by Unicredit.

For the time being at least, this decision may be helpful for parties with Russia-related contracts who are facing Russian proceedings that breach an agreed arbitration clause. The decision confirms that the English court will have the discretion to grant an ASI, provided that the parties have either chosen an English seat or the arbitration agreement is governed by English law.

Although the Supreme Court’s decision will likely have been based on the seminal decision of Enka v Chubb, the English law position looks set to change in light of the draft Arbitration Bill, which provides for the default law of the arbitration agreement to be the law of the seat where there is no express agreement between the parties. This may limit opportunities for parties to argue for an English governing law and to meet the jurisdictional gateway requirements for the English court to act. To avoid uncertainty, parties should ensure that the law of the arbitration agreement is expressly addressed in their contracts.

During the hearing, the Supreme Court explored the practical effect were it to maintain the final ASI, seeking submissions from the parties on this point. It remains to be seen how the parties and the Russian court respond to the decision.

For more information, please contact Hannah Ambrose, Partner, Vanessa Naish, Professional Support Consultant, Liz Kantor, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

Hannah Ambrose

Partner

+44 20 7466 7585

Vanessa Naish

Professional Support Consultant

+44 20 7466 2112

Elizabeth Kantor

Professional Support Lawyer

+44 20 7466 2406

The authors would like to thank Luke Hard for his contribution to this blog post.