In the case of Sucafina SA v Rotenberg [2012], the court examined the status of various arbitration awards and whether a provision in the arbitral institution's rules regarding payment of its costs invalidated the final and binding award.
Section 39 of the Arbitration Act 1996 allows the parties to agree that the tribunal may make a provisional award (which is subject to the tribunal's final award on the merits). Section 47 allows the tribunal to make awards on different issues ("partial awards") – such awards being final and binding on the parties.
In issue in the case of Sucafina SA v Rotenberg was the status of certain "appeal interim awards" made by a Board of Appeal. The appellant sought to argue that these awards, although they represented the Board of Appeal's final decision on the matters with which they dealt (and it did not intend to revisit those matters), they remained conditional until a further award was made which operated to ratify them (pursuant to the arbitral institution's rules). The Court of Appeal rejected that argument for the following reasons:
(1) There was no express or implied agreement by the parties to exclude section 47 of the Act; and
(2) An award is either final and binding, or it is not. It is unfortunate that the drafters of the Act used the term "interim" as it is capable of giving rise to confusion. Here, the appeal interim awards amounted to partial awards under section 47.
A further rule of the arbitral institution provided that if an appeal award was not taken up (eg because fees and costs were not paid in time) "the original award of the arbitrator(s) or umpire shall become final and binding immediately". Despite that wording, the Court of Appeal held that "no arbitral body of standing in London would have drafted ...a provision that was intended to have the effect that a final and binding award on an issue would be rendered nugatory because a fee for a subsequent award was not paid, given powers to take security for its fees (see [relevant arbitral institution rule]) and the powers in s.56 of the 1996 Act. The construction contended for by [the appellant] would, far from making any commercial sense, be damaging to the standing of the arbitral body and inimical to the proper conduct of arbitration, in the light of the common practice to make partial awards existing at the time the rules were drafted and as is reflected in the 1996 DAC report. No one with any understanding of arbitration law and practice or commercial dealing could have intended such a result".
The rule in question could only be given effect by reading it as referring to that part of the umpire's award that remained extant after the appeal interim awards. The Court of Appeal went on to find that the umpire's award on costs did remain extant and so the appellant was entitled to enforce that part of the umpire's award.
COMMENT: Section 56 of the Act (which cannot be excluded by the parties) provides that the tribunal may refuse to deliver an award until its fees and expenses have been paid in full. Where an award has, however, been released prior to payment, this case confirms that the award itself will remain binding even if the fees are not subsequently paid (notwithstanding any contrary provision in the arbitral tribunal's rules). The only sanction that the arbitrators will have in such a situation will be to sue for their fees.
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