UK: Are English Arbitration Awards ‘Final, Conclusive And Binding'? – Revisiting The Right To Challenge Arbitration Awards In English Courts

Recent debate on the right to appeal Under limited circumstances, a party to an English arbitration award who is dissatisfied with the result can challenge that award in the courts. There are concerns that the current legal framework for such a challenge (or at least, the operation in practice of the framework) does not strike the right balance between upholding awards and allowing defective awards to be challenged.

Reed Smith attended the Commodity Arbitration Club lunch in May 2015, which hosted a number of representatives of main arbitration bodies, arbitrators and legal practitioners. One of the hotly debated topics of the day was appealing arbitration awards in the courts. Concerns were expressed that appeals on points of law may be happening too often. Whether this frequency is a perception or a reality, the possibility that your English law arbitration award may be appealed on a point of law is a reality. So, can you make your arbitration awards truly "final, conclusive and binding"?

This alert sets out the current position regarding the right to appeal on points of law under English law and some of the more commonly used arbitration rules. We will also discuss the pros and cons of excluding your right to appeal and how this may impact your choice of arbitration rules and arbitration clauses.

The position under English law: the Arbitration Act 1996

When can you appeal or challenge an award?

The English legal framework for arbitration is governed by the Arbitration Act 1996 (the 'Act'). The Act provides that arbitration awards can be challenged or appealed to the court by:

a. challenging the tribunal's substantive jurisdiction to decide the case under Section 67

b. challenging the award on the basis of a serious (procedural) irregularity under Section 68

c. appealing the award on a point of law under Section 69

Sections 67 and 68 challenges are said to preserve proper administration of justice and therefore apply to all English seat arbitration awards and cannot be excluded. In contrast, Section 69 applies only "[u]nless otherwise agreed by the parties"1. Therefore the Section 69 right of appeal can be excluded in the arbitration agreement, and requires further consideration by the parties.

Scope of Section 69 of the Act The scope of Section 69 is already significantly restricted by law (in keeping with the principle that arbitration awards should, in general, be final):

  • Section 69 can be used only to appeal questions of law, not to challenge findings of fact.
  • Appeals under Section 69 are not automatic – they are possible only by agreement of the parties or with the permission of the court. Permission will only be given if the court is satisfied by a number of things, including where it considers:

"(i) the decision of the tribunal on the question is obviously wrong, or
(ii) the question is one of general public importance and the decision
of the tribunal is at least open to serious doubt..."

  • The appeal must be filed with the court within 28 days of the date of the award.

This may seem like a high threshold for any appeal. However, there is a growing concern that the courts are becoming more liberal in granting permission to appeal, so in a number of cases where a party might have assumed that arbitration would be the only forum for the dispute, it has ended up before the English Commercial Court on appeal.

When does the Arbitration Act 1996 apply to challenges/appeals? Sections 67-69 of the Act apply where the 'seat' of the arbitration is in England, Wales or Northern Ireland. The seat means the place designated by the parties, or the relevant arbitral institution/ the tribunal as 'seat' for that arbitration.

How to avoid an appeal under Section 69 of the Act? Parties may exclude Section 69 of the Act by:

  • Using express wording: clear words are necessary for the parties to exclude the right to appeal under Section 69. It is not enough that the parties agree the award shall be "final, conclusive and binding"2; parties must use explicit exclusions, e.g. "the parties waive any right of appeal or legal recourse insofar as such waiver may be validly made".
  • Making reference to certain arbitration rules: many of the arbitration rules limit the right to appeal (see further below). The courts have accepted that agreeing to arbitrate (for example) under ICC arbitration rules amounts to an effective exclusion of Section 693, and an equivalent approach has been adopted in Singapore4.
  • Dispensing with reasons for the decision: in Section 69(1), it is set out that agreeing that the tribunal's award does not need to include reasons will be treated as an exclusion of Section 69, whether that is the parties' intention or not. (It should be said that rarely is such a provision included within a parties' arbitration agreement.)

Approach under popular arbitration rules Some arbitration rules expressly exclude the right to appeal the tribunal's award (for example, the ICC and the LCIA rules). However, some arbitration rules leave it open, notably those rules associated with soft commodity trade associations. A tabular summary setting out the approach to appealing the tribunal's award under commonly-used arbitration rules can be found here. To exclude appeals under those rules, the parties would need to insert an appropriate provision in their agreement as suggested above.

To appeal or not to appeal?

Why would a party want to retain the right to appeal?

  • By keeping the right to appeal an arbitration award to the courts, a party avoids the risk of being left with an award which is clearly wrong on a point of law. While many arbitrators are well versed in the law relevant to their field, errors may still happen, even where arbitration rules allow for internal appeals.
  • Every appeal to the courts contributes to the body of precedent cases, which allows the law to develop. Without new decisions, the law in a particular area may become stagnant and fall behind industry trends. Some arbitration associations, including FOSFA and LMAA, seek to mitigate this risk by publishing anonymised awards, but progress is bound to be slower without legally binding precedents. While a party may not care about developing the law in the area, it may be a reason for an arbitration association to decide to permit appeal to the court from awards they issue.
  • A binding legal precedent may be of value to you, in particular if you face the same or similar questions on a regular basis, or if you have connected proceedings. Even if you lose, you may prefer to have certainty on an issue for the future.

Why would I want to exclude the right to appeal?

  • A commonly cited benefit of arbitration is that it allows the parties to limit costs and expedite matters. Adding a layer (or further layers) of appeal, particularly in the courts, adds both time and very significant additional cost to the legal process.
  • To ensure confidentiality. By bringing the case before the courts, a party will lose privacy as to the existence of the dispute, details of the award and related documents (often the contract).
  • A party may prefer to have the issues decided by industry experts or your chosen arbitrators rather than an appointed judge, who may possibly know less about the relevant industry and/or commercial practice in that industry.
  • Courts are required to decide appeal cases on the basis of only the key documents referred to in the award, and so decisions on appeal are often made without the benefit of all of the information provided to the tribunal.

Exhaust all arbitration remedies first It is important to remember that Sections 67-69 of the Act are not available (in any event) until a party has first exhausted any available arbitral process of appeal/review and (if applicable) recourse under Section 57 of the Act (power for the arbitrators to correct an award).

Conclusions Whether parties retain or exclude the right to appeal an arbitration award under Section 69, thought must be given to whether the risks of doing so outweigh the advantages. This balance will necessarily depend on the circumstances of specific contracts, the industry trends and the parties' own priorities.


  1. Section 69(1), Arbitration Act 1996.
  2. See Shell v Dana Gas Egypt [2009] EWHC 2097 (Comm).
  3. See Lesotho v Impregilo [2005] UKHL 43.
  4. See Daimler v Front Row Investment [2012] 4 SLR 837.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.