A. LEGISLATION AND RULES
A.1 Legislation
The Arbitration Bill (“Bill“), which was introduced into Parliament in late 2023, proposes to amend the Arbitration Act 1996 (“1996 Act“), the principal legislation governing arbitration in England and Wales and in Northern Ireland, to ensure that the 1996 Act remains fit for purpose. Following a general election being called in the UK, the legislative process had to be renewed, and the new government re-commenced the process by introducing the Bill in July 2024. The Bill had its third reading in November 2024 in the House of Lords and will now pass to the House of Commons for consideration before gaining Royal Assent to become law.
A.2 Institutions, rules and infrastructure
The leading arbitral institution in the jurisdiction remains the LCIA. The LCIA’s 2023 annual casework report[1] stated that the LCIA received 377 referrals in 2023, which included 327 referrals specifically for LCIA arbitration, which the LCIA reports “demonstrate a return to the long-term upward trajectory”. Transport and commodities cases continue to dominate the LCIA’s caseload, making up 36% of cases, which the LCIA report attributes to the ongoing impact of global developments on energy prices and supply chains. There has also been a notable increase in disputes involving “younger” agreements. Almost half of the agreements which gave rise to disputes in LCIA arbitrations that commenced in 2023) were concluded within the two years previous to the year of referral. The number of states and state-owned entities as parties in LCIA arbitrations remains high, with 11% of the LCIA’s caseload involving states and/or state-owned entities. 85% of parties in LCIA arbitrations originated from 91 countries other than the United Kingdom. Of the 135 cases that were transferred to the LCIA from the Dubai International Arbitration Centre (DIAC) following the enactment of Decree No. (34) of 2021 of the Government of Dubai and an agreement between the LCIA and DIAC, 100 cases have now been closed, with an additional 13 in their final stages and only 18 remaining active or stayed. As to diversity, even though 82% of LCIA arbitrations in 2023 were governed by English law, 42% of appointments (or 187) were of non-British arbitrators. As to gender diversity, in LCIA Court appointments, 48% were of women (45% in 2022), 39% of all co-arbitrator appointments were of women (23% in 2022), and 21% of all party appointments were of women (19% in 2022). There were five challenges to arbitrators in LCIA arbitrations in 2023, two of which were rejected, in one case the arbitrator resigned and in two cases the applications are pending.
At the end of 2024 the LCIA announced the release of new Equality, Diversity, and Inclusion (EDI) Guidelines, which Kate Corby was closely involved with as an LCIA EDI Steering Group Champion.[2] The LCIA also released additional challenge decisions online[3] and updated costs and duration analysis, reporting that the median LCIA arbitration costs USD 117,653 and lasts a total of 20 months.[4] Finally, it is worth noting that Director General, Jacomijn van Haersolte-van Hof stepped down[5] and Kevin Nash was appointed the new Director General, effective from 1 January 2025.[6]
B. CASES
B.1 Challenges to arbitrators
In H1 and another v. W and others[7] a sole arbitrator was removed under section 24 of the 1996 Act by the English Commercial Court on the basis that a fair-minded and informed observer would conclude that there was a real possibility that the arbitrator was biased. The arbitration related to a stunt related claim under a policy of film production insurance. The complaint against the arbitrator related to statements made by the arbitrator which were alleged to objectively give the impression that the arbitrator held predetermined views as to the credibility of particular witnesses on issues central and/or important to the dispute. The allegation made was not of actual bias but apparent bias. Amongst other comments made, the arbitrator, whose expertise was described to be in film or television program production rather than in law, indicated that he did not need to hear the expert witnesses as the arbitrator knew what was normal on film, adding that he knew the experts all “personally extremely well on the insured side” but did not know the expert witnesses for the insurer and that he was “extremely good friends” with the experts for the insured. These statements gave rise to justifiable doubts as to his impartiality as it suggested a pre-judgment of the merits of the dispute.
Arbitrator bias was also considered in Aiteo Eastern E & P Company Ltd v. Shell Western Supply and Trading Ltd & Ors[8]. Four partial awards made by a tribunal prior to a successful ICC challenge to one of the arbitrators resulting in their removal were challenged under section 68 of the 1996 Act on the grounds of serious irregularity because of an alleged lack of impartiality or independence on that arbitrator’s part. The allegation of bias was based on professional connections between the arbitrator and the solicitors firm representing the party that nominated the arbitrator (including 7 arbitral nominations/appointments and expert instructions excluding this dispute), coupled with the fact that timely disclosure of some of these connections was not made. The court found that the fair-minded and informed observer, having considered the facts, would have considered there was a real possibility of unconscious bias. However, the court ultimately concluded that the test of substantial injustice was only made out in respect of one of the four awards.
B.2 Challenges to and appeals against arbitral awards
The English courts have continued to apply uphold exceptionally high standards for applications set aside arbitral awards.
In Republic of Kosovo v. ContourGlobal Kosovo LLC,[9] the English High Court refused to set aside a USD 20 million arbitral award rendered by an ICC tribunal against the Republic of Kosovo in favour of ContourGlobal Kosovo (CKL) on grounds of a serious irregularity causing substantial injustice under section 68 of the 1996 Act. Prior to issuing its award, the tribunal noted in two procedural orders certain discrepancies in the expert evidence and documentation underpinning CKL’s claim for development costs. In those orders, the tribunal noted it may be necessary for it to seek the assistance of a tribunal-appointed expert or to require production of additional evidence. However, the tribunal subsequently issued an award in CKL’s favor on the relevant point without additional documentary or expert evidence. Kosovo argued this amounted to a serious irregularity. In deciding the challenge, the court closely examined the wording of the relevant procedural orders in a “reasonable and commercial way”. It dismissed the challenge, reiterating this ground of challenge is reserved to “extreme cases” and noting that the tribunal had never committed to ordering further evidence or submissions on quantum. It was therefore still open to it to issue a decision on the basis of the materials before it.
In Ganz v. Petronz FZE,[10] the court dismissed a challenge to an award under section 67 (challenge to substantive jurisdiction) and section 68 of the 1996 Act. The arbitrator declined jurisdiction having decided that a signature in the underlying contract had been forged. The court dismissed the challenge under section 67 noting the party seeking to set aside the arbitral award had failed to prove that there was an authentic and binding SPA. It further dismissed a related section 68 challenge on the basis of an arbitrator’s initial refusal to admit certain handwriting expert evidence. In an interesting, related decision,[11] the court decided to publish the Ganz v. Petronz FZE decision, noting that the broader public interest in the operation and practice of arbitration supported publication and outweighed the claimant’s concerns around the expectation of confidentiality and reputational harm.
The courts have also heard several cases based on unorthodox grounds of challenge. In Contax Partners Inc BVI v. Kuwait Finance House (KFH-Kuwait)[12], the court set aside an arbitral award having held that it was a fabrication with no underlying arbitration ever having taken place. The court held it had conclusive evidence of the fraud, including that substantial passages of the award were taken from a prior English High Court judgment. In Eternity Sky Investments Ltd v. Xiaomin Zhang,[13] the Court of Appeal upheld an award arising from a personal guarantee which Ms Zhang entered into to secure a substantial convertible bond issue as part of a corporate deal. Ms Zhang sought to challenge the award on the basis that she had entered into the guarantee as a consumer, and that the enforcement of the award in the UK would run contrary to public policy enshrined in the Consumer Rights Act 2015 (CRA). At first instance, the High Court rejected the challenge, holding that although Ms Zhang acted as a consumer when entering into the guarantee, the document fell outside the territorial scope of the CRA as it was more closely connected with Hong Kong than the UK and in any event did not breach any protections in the CRA. The Court of Appeal agreed but overturned the finding that Ms Zhang acted as consumer when signing the guarantee. Noting the context of the personal guarantee “was a corporate convertible bond issue for the raising of a very substantial amount of money”, the court held this was a “transaction of a business and not a private nature”.[14]
Unusually, the courts gave much consideration to section 69 of the Act this year, under which parties may direct appeals on points of law to the English courts. This mechanism is not relevant to most commercial disputes, as the parties are entitled to opt out of the mechanism and usually do so by agreeing to the most popular arbitration rules (such as the LCIA, ICC or UNCITRAL). However, one case under section 69 made its way all the way to the UK Supreme Court. In Sharp Corp v. Viterra BV,[15] the Supreme Court clarified that an appeal on a point of law must be on a point which the “tribunal was asked to determine” and therefore must have been fairly and squarely before the tribunal for determination.[16] As a result, the Supreme Court overturned one of the appeals decided by the Court of Appeal because it was based on a point neither argued nor addressed by the relevant tribunal. Another interesting decision on section 69 was issued by the High Court in Friedhelm Eronat v. CPNC International (Chad) Ltd and Cliveden Petroleum Co. Ltd[17]. In this case, the court held the appeal was submitted out of time because the arbitration clause required that a section 69 appeal needed to be submitted within a time limit running from the date of the award (as opposed to date of notification, on which the appellant sought to rely).
B.3 Supervisory jurisdiction of the English Courts
In Abrey v. Abrey,[18] the High Court granted the claimant’s application for an interim injunction, despite a pending application on the part of the defendants to stay court proceedings in favor of arbitration. The defendants had previously brought arbitral proceedings against the claimant and his father, seeking to dissolve their third-generation family farming partnership, under an arbitration clause in their partnership agreement, and to remove the claimant as a company director. In response, the claimant applied for an interim injunction to prevent the defendants from interfering with his management rights before the English courts. The defendants applied to stay this claim in favor of arbitration under section 9 of the 1996 Act and claimed that the court lacked jurisdiction to grant the injunction. The claimant argued that, even if his claim were subject to arbitration rather than court proceedings, the court had jurisdiction to grant such injunctions in cases of urgency under section 44(3) of the 1996 Act. The Judge held that the court had jurisdiction to grant the injunction, whether pursuant to court proceedings or section 44 of the 1996 Act. The judge also noted that the claimant needed to go to court if he required an enforceable and effective interim injunction on an urgent basis, due to the limited powers of the arbitral tribunal to make similar orders.
B.4 State immunity
In General Dynamics UK Ltd v. Libya,[19] the High Court granted a final charging order over London property owned by the Libyan state. General Dynamics, a US-based defense contractor, was awarded approximately GBP 16 million plus interest and costs following an ICC arbitration against Libya. General Dynamics UK Ltd (“General Dynamics“) was granted permission to enforce this award in the UK under the Arbitration (Investment Disputes) Act 1966 (“1966 Act“), as well as an interim charging order (ICO) against a property in London owned by Libya. General Dynamics applied to the High Court to make the ICO final, while Libya cross-applied to discharge the ICO on the grounds that the property was immune from execution under section 13(2)(b) of the State Immunity Act 1978 (“SIA 1978“). General Dynamics argued that section 13(3) of the SIA 1978 allows for execution against state property if the state has provided its written consent. The court had to determine whether a clause of the contract between General Dynamics and Libya, which stated that any decision of the arbitration panel would be “final, binding and wholly enforceable,” amounted to written consent. Libya argued that it had only agreed to waive adjudicative immunity, and not immunity from execution.
The court rejected Libya’s argument and granted the final charging order, holding that Libya had waived immunity from execution based on this clause. The judge held that no special or particular words were required to be in a clause in order to establish that a state had consented to execution against their assets. Instead, the court evaluated the clause based on applicable Swiss law principles (governing law of the contract), and found that a reasonable person, with the relevant knowledge of the parties and applying the good faith principle, would conclude that the parties intended to be able to enforce the obligations of the agreement, including any obligations resulting from arbitral awards. This case highlights the importance of precision in drafting dispute resolution clauses, especially for states who wish to avoid inadvertent waiver of execution immunity.
The Court of Appeal has reconciled inconsistency between two recent cases in the combined appeals of Infrastructure Services Luxembourg SARL and another v. Kingdom of Spain and Border Timbers Ltd & another v. Republic of Zimbabwe.[20] The court established that parties to the ICSID Convention may not rely on state immunity to resist enforcement of ICSID awards in the UK. In the Infrastructure Services Luxembourg (ISL) case, the ISL claimants obtained a EUR 101 million ICSID award against Spain after the Spanish government removed tariff advantages that had been available for solar energy at the time of the claimants’ initial investment. This award was registered in the UK in 2021 under the 1966 Act, and Spain sought to have this registration set aside by asserting state immunity under section 1 of the SIA 1978. The lower court held that article 54 of the ICSID Convention amounted to a prior written agreement to submit to the jurisdiction of the UK courts, an exception to state immunity under section 2(2) of the SIA 1978.
In the Border Timbers case, the claimants obtained an ICSID award against Zimbabwe under a bilateral investment treaty between Zimbabwe and Switzerland for expropriation of land. In 2021, the claimants successfully registered this award in the UK under the 1966 Act, but Zimbabwe challenged this on the basis of state immunity under section 1 of the SIA 1978. While the lower court once again rejected the reliance on sovereign immunity, it did so whilst explicitly disagreeing with the decision in the ISL case. The judge held that article 54 of the ICSID Convention did not amount to a “sufficiently clear and unequivocal submission to the jurisdiction” of the UK courts, meaning that the exception in section 2(2) of the SIA 1978 was not applicable. Nonetheless, the court determined Zimbabwe could not rely on state immunity under section 1 of the SIA 1978 because it considered registration of the award to be an “essentially automatic ministerial act.”
The Court of Appeal reconciled the ISL and Border Timbers cases. It held that the registration of ICSID awards is “not merely a ministerial or administrative act.” In addition, the court found that article 54 of the ICSID Convention was a sufficiently clear agreement to submit to the jurisdiction of the UK courts, and establish the exception to state immunity under section 2(2) of the SIA 1978. This has resolved the prior conflicting principles and established that states cannot rely on immunity under section 1 of the SIA 1978 to resist registration of ICSID awards. Following this judgment, the UK joins a growing list of jurisdictions that have considered article 54 of the ICSID Convention to amount to a waiver of state immunity, including Australia, New Zealand, the US, France and Malaysia.
B.5 Use of anti-suit injunctions to enforce arbitration agreements
In UniCredit Bank GmbH v. RusChemAlliance LLC[21] the Supreme Court maintained a final anti-suit injunction in relation to proceedings commenced by RusChem in Russia in breach of Paris seated arbitration agreements. The court had to determine (i) whether the governing law of the arbitration agreements was English law; and (ii) whether England was the proper place to bring the claim for an injunction. The substantive law of the contracts was English law, and the court determined that there was an implied agreement that the law of the arbitration agreements was also English law, notwithstanding that it would have been French law if the law of the seat had been applied. Further, it was proper to bring the claim for an injunction in England because it was not solely a question for the court of the seat, but desirable that the parties should be held to their contractual bargain by any court before which they could properly be brought. In addition, since the French courts would not grant an anti-suit injunction, no effective remedy could be obtained from the French courts.
In Euronav Shipping NV (“Euronav“) v. Black Swan Petroleum DMCC (“BSP“)[22], the English Commercial Court exercised its discretion to decline to grant an anti-anti-arbitration injunction on the grounds of comity. BSP brought a claim against Euronav in the Malaysian High Court, which was opposed by Euronav on the basis of an arbitration agreement in a disputed and unsigned addendum. Euronav commenced LMAA proceedings seated in England against BSP and also applied to the Malaysian High Court to stay or strike out its proceedings. The Malaysian High Court determined that by making a strike out application, Euronav had consented to its jurisdiction and issued an anti-arbitration injunction preventing Euronav from continuing the arbitration proceedings. Euronav applied to the English court for an anti-anti-arbitration injunction. The court determined that Euronav had a high degree of probability of establishing that there was an arbitration agreement and BSP had breached the agreement but nonetheless exercised its discretion to decline to grant the order at that stage on grounds of comity. The Malaysian High Court had determined that Euronav had voluntarily submitted to its jurisdiction and it was entitled to protect that order by prohibiting Euronav from continuing duplicative proceedings. The court noted that the position may change if the Court of Appeal in Malaysia overturned the finding that Euronav had submitted to the Malaysian Court’s jurisdiction, and adjourned the application pending a final determination of the Malaysian appeal.
In Barclays Bank PLC v. VEB.RF (“VEB“)[23] the English Commercial Court granted permanent interim anti-suit and anti-enforcement injunctions in respect of Russian court proceedings brought by a sanctioned Russian entity in breach of a London arbitration clause. The court rejected an argument that the sanctioned entity’s alleged inability to access justice in a London-seated LCIA arbitration meant that the arbitration agreement was frustrated. The court found that VEB’s evidence amounted to no more than that there was a reduced pool of lawyers for VEB to choose from, potential delays and bureaucracy in paying lawyers and fees and a need to conduct the arbitration remotely. This came “nowhere near” showing that the performance of the arbitration agreement was so radically different from what the parties intended that it was frustrated.
In Investcom Global Limited v. Plc Investments Limited[24] the English Commercial Court discharged in part an interim anti-suit injunction. At the time that the injunction was granted, the court accepted that the seat of arbitration would be London and therefore that the English Court had jurisdiction to grant the injunction against parties outside the jurisdiction. However, the ICC Court subsequently determined under article 18(1) of the ICC Rules that in the absence of an agreement by the parties, the seat of arbitration was Toronto. The court found that there was no good arguable case nor a high degree of probability that this determination would be overturned and that the arbitration was or would be seated in London. The English court therefore discharged the injunction on the basis that it had no jurisdiction.
In Renaissance Securities (Cyprus) Limited (“Renaissance“) v. ILLC Chlodwig Enterprises and Others[25] the English Commercial Court rejected an application to extend an anti-suit injunction restraining Russian court proceedings brought by two Defendants against Renaissance’s (affiliate) Russian entities (RREs). Renaissance contended that the Russian proceedings against the RREs were either in breach of an arbitration agreement between Renaissance and the Defendants or in any event were claims which were brought vexatiously for the purposes of circumventing the arbitration agreement. The court held that the arbitration agreement did not extend to claims against the RREs as non-contracting parties; consequently, there was no contractual basis for the anti-suit injunction. In addition, there was no basis for the court to conclude that the claims were vexatious in circumstances where it had concluded that the claims fell outside the scope of the arbitration agreement, and the claims were advanced by Russian entities against Russian entities, based on alleged breaches of Russian law.
[1] https://www.lcia.org/lcia/reports.aspx
[2] https://www.lcia.org/News/lcia-launches-new-edi-guidelines-for-international-arbitration.aspx
[3] https://www.lcia.org/News/lcia-releases-additional-challenge-decisions-online.aspx
[4] https://www.lcia.org/News/lcia-releases-updated-costs-and-duration-analysis-2024.aspx#:~:text=The%20median%20LCIA%20arbitration%20lasts,expeditiously%2C%20namely%20in%2012%20months.
[5] https://www.lcia.org/News/professor-dr-jacomijn-van-haersolte-van-hof-to-step-down-as-lcia.aspx
[6] https://www.lcia.org/News/lcia-appoints-new-director-general.aspx#:~:text=The%20London%20Court%20of%20International,over%20the%20past%20ten%20year.
[7] [2024] EWHC 382 (Comm).
[8] [2024] EWHC 1993 (Comm).
[9] [2024] EWHC 877 (Comm).
[10] [2024] EWHC 635 (Comm).
[11] [2024] EWHC 1011 (Comm).
[12] [2024] EWHC 436 (Comm).
[13] [2024] EWCA Civ 630.
[14] Ibid., at [79].
[15] [2024] UKSC 14.
[16] At. [51].
[17] [2024] EWHC 2880 (Comm).
[18] Abrey v. Abrey [2024] EWHC 2689 (Ch).
[19] General Dynamics UK Ltd v. Libya [2024] EWHC 472 (Comm).
[20] Infrastructure Services Luxembourg SARL and another v. Kingdom of Spain; Border Timbers Ltd & another v. Republic of Zimbabwe [2024] EWCA Civ 1257. Baker McKenzie is acting for Border parties in this case.
[21] [2024] UKSC 30.
[22] [2024] EWHC 986 (Comm).
[23] [2024] EWHC 1074 (Comm).
[24] [2024] EWHC 2505 (Comm).
[25] [2024] EWHC 2843 (Comm).
