Arbitration procedures and practice in UK (England and Wales): overview

A Q&A guide to arbitration law and practice in the UK (England and Wales).

The country-specific Q&A guide provides a structured overview of the key practical issues concerning arbitration in this jurisdiction, including any mandatory provisions and default rules applicable under local law, confidentiality, local courts' willingness to assist arbitration, enforcement of awards and the available remedies, both final and interim.

To compare answers across multiple jurisdictions visit the Arbitration procedures and practice Country Q&A Tool.

This Q&A is part of the multi-jurisdictional guide to arbitration. For a full list of jurisdictional Q&As visit www.practicallaw.com/arbitration-mjg.

Stephen Jagusch and Epaminontas E Triantafilou, Quinn Emanuel Urquhart & Sullivan LLP
Contents

Use of arbitration and recent trends

1. How is commercial arbitration used in your jurisdiction and what are the recent trends?

Use of commercial arbitration

Parties from all over the world, often with no connection to England and Wales, select London as the seat of their arbitrations. Parties domiciled in the jurisdiction frequently select international arbitration for the resolution of cross-border disputes and choose London as the seat.

A wide range of contractual and non-contractual claims can be referred to arbitration in this jurisdiction, including disputes involving IP rights, competition disputes and statutory claims. However, criminal and family law matters cannot be referred to arbitration.

Recent trends

Over the last decade, the number of international arbitration proceedings has grown dramatically. The London Maritime Arbitrators' Association (LMAA) website reports that: "more maritime disputes are referred to arbitration in London than to any other place where arbitration services are offered" (www.lmaa.org.uk).

The 2010 International Arbitration Survey conducted by Queen Mary College, University of London found that the most popular seat of arbitration in the world was London. This is largely due to:

  • London's continuing status as a major financial centre and world market.

  • Its reputation as a neutral and impartial jurisdiction.

  • The record of the courts in enforcing agreements to arbitrate and arbitral awards.

Advantages/disadvantages

Parties choose arbitration instead of litigation because it keeps their disputes out of national courts and refers them instead to a neutral forum in which they have confidence, and because arbitral awards are recognised and enforceable in many more countries than English court judgments under the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention), which well over 140 countries have ratified.

Some parties prefer arbitration because it is a private procedure, whereas court trials are held in public. Arbitration has the potential for confidentiality, but there are many exceptions to this principle in English law and if this is important to a party it should provide for confidentiality in the arbitration agreement. Arbitration also has the potential to be more flexible than litigation. Parties can, for example, appoint arbitrators who are experts in a specialist field and tailor the procedure to suit the needs of their particular case.

Some parties value the finality of an arbitral award. Awards are less likely to be appealed than judgments and certain rights of appeal can be excluded by agreement.

However, arbitration is not ideal in all circumstances. The tribunal cannot generally compel a third party to join an arbitration, nor can it consolidate a number of related arbitrations in order to bring them before one tribunal. This can lead to parallel proceedings, which can have inconsistent outcomes, despite the fact that the arbitrations arose from a similar, or the same, dispute.

Delays can occur at the beginning of proceedings as a result of the procedures for appointing the tribunal. Where arbitrators are very busy, sometimes substantial delays can occur before any hearing can be accommodated. As arbitrators' powers of coercion are much more limited than the courts', there is greater opportunity for strategic (deliberate) delays and breaches of procedural deadlines.

Although arbitration is sometimes said to be faster and cheaper than litigation, this is not always the case. Much depends on the behaviour of the parties and the tribunal. An experienced tribunal and co-operative parties can work together to agree procedures to minimise costs. However, parties in dispute are frequently uncooperative, and as arbitrators do not have the coercive powers of judges this can result in delay and unnecessary costs.

There is no precedent in international arbitration so an award obtained in one arbitration cannot be relied on by the successful party in a subsequent arbitration. The award binds only the parties to that award, and the award typically remains confidential.

 

Legislative framework

Applicable legislation

2. What legislation applies to arbitration? To what extent has your jurisdiction adopted the UNCITRAL Model Law on International Commercial Arbitration 1985 (UNCITRAL Model Law)?

The Arbitration Act 1996 (Arbitration Act) contains a coherent and modern framework for domestic and international arbitration seated in this jurisdiction. The Arbitration Act is influenced by the UNCITRAL Model Law but it differs from it in some important ways. For example, the Arbitration Act is a single legislative framework governing all arbitrations seated in England, Wales and Northern Ireland, not just international commercial arbitrations. The Arbitration Act also sets out the principles which underlie arbitration and arbitration law in the jurisdiction.

 

Mandatory legislative provisions

3. Are there any mandatory legislative provisions? What is their effect?

In the interests of public policy the Arbitration Act contains a number of mandatory provisions, which are listed in Schedule 1. They include:

  • The court's power to stay court proceedings brought in breach of an arbitration agreement and related provisions (sections 9 to 11).

  • The court's power to extend agreed time limits and to apply Limitation Acts (sections 12 and 13).

  • Provisions dealing with the arbitrator's position, for example:

    • the power of the court to remove the arbitrator;

    • the effect of the arbitrator's death;

    • the parties' liability for the fees and expenses of the arbitrator;

    • the arbitrator's immunity (sections 24, 26(1), 28 and 29).

  • The general duty of the tribunal to act fairly and impartially (section 33).

  • The tribunal's power to withhold an award for the non-payment of the arbitrator's fees and expenses (section 56).

  • The enforcement of an award (section 66).

  • Grounds for challenging an award (sections 67 and 68).

 

Limitation

4. Does the law of limitation apply to arbitration proceedings?

The Arbitration Act provides that the Limitation Act 1980 and the Foreign Limitation Periods Act 1984, as well as "any other enactment (whenever passed) relating to the limitation of actions", apply to arbitral proceedings as they apply to legal proceedings (section 13(1)). Therefore, a claimant in arbitration proceedings must commence arbitration within the same time periods as a claimant in litigation.

In English law a contract claim has a limitation period of six years from the date of the breach of contract. A tortious claim has a limitation period of six years from the date the damage was suffered, or for latent damage, from the date on which the claimant first had both the knowledge required to bring the action and the right to bring the action.

The Arbitration Act allows the parties to agree when arbitration proceedings have commenced, and makes provision for what is to happen when there is no agreement. Failing to commence the arbitration within this time limit will bar the right to commence arbitration. However, section 12 of the Arbitration Act confers on the court a discretion to extend the time available in exceptional circumstances. An example would be where the conduct of one party makes it unjust to hold the other party to the strict terms of the limitation provision.

If a foreign law governs the contract, the limitation period(s) of that law will apply.

 

Arbitration organisations

5. Which arbitration organisations are commonly used to resolve large commercial disputes in your jurisdiction?

The most commonly used arbitration organisations include the following:

  • International Chamber of Commerce (ICC) (www.iccwbo.org).

  • London Court of International Arbitration (LCIA) (www.lcia.org).

  • International Centre for Dispute Resolution (ICDR) (the international section of the American Arbitration Association (AAA)) (www.adr.org/icdr).

  • The Chartered Institute of Arbitrators (CIArb) (www.ciarb.org).

  • London Maritime Arbitrators' Association (LMAA) (www.lmaa.org.uk).

 

Arbitration agreements

Validity requirements

6. What are the requirements for an arbitration agreement to be enforceable?

Substantive/formal requirements

For an arbitration agreement to be enforceable under the Arbitration Act, it must be in writing (section 5(1)). However, the agreement need not be signed by the parties and it could be found in an exchange of communications that has not been signed by the parties (section 5(2)).

These provisions adopt a very expansive view of written form requirements, and even include an oral agreement to arbitrate recorded by one of the parties, or by a third party with the authority of the parties to the agreement (section 5(4)).

An oral agreement to arbitrate which is not then recorded in writing will fall outside the ambit of the Arbitration Act, but can remain enforceable uner common law principles.

Separate arbitration agreement

There is no need for a separate arbitration agreement because the doctrine of separability is recognised. This establishes that an arbitration agreement is separate from the contract for which it provides the means of resolving disputes. The arbitration agreement can then survive breach or termination of the contract of which it forms part in order to deal with any disputes in respect of liabilities under the contract arising before or after termination.

Genuine arbitration agreement

The English courts distinguish between arbitration and "arbitration-like" proceedings that do not qualify as arbitration under the Arbitration Act. In Turville Heath Inc v. Chartis Insurance UK Ltd [2012] EWHC 3019, the High Court was presented with a clause under an insurance policy that provided that each party should select an independent appraiser who would then submit its findings on behalf of each party to the putative arbitrator. The arbitrator would then issue a decision in writing that had to be agreed to, either by both appraisers or by either appraiser and the "arbitrator". The court held that this provision was not a genuine arbitration clause since the arbitrator would have to agree with one of the appraisers rather than make its own independent decision.

 

Unilateral or optional clauses

7. Are unilateral or optional clauses, where one party has the right to choose arbitration, enforceable?

The English courts will uphold unilateral option clauses, irrespective of whether they confer an option to litigate or arbitrate a dispute. The courts do not consider that a unilateral dispute resolution clause, including an arbitration clause, violates the rights of the party that is subject to it without benefiting from it, on the rationale that it is common for contractual provisions to bestow an advantage only to one party to the contract.

 

Separability

8. Does the applicable legislation recognise the separability of arbitration agreements?

Section 7 of the Arbitration Act confirms that the separability doctrine applies to arbitration agreements. It makes clear that even if the main contract never came into existence, the arbitration agreement can still be binding. Likewise, if the main contract subsequently fails or is found to be invalid, it does not follow that the arbitration agreement will also automatically fail or become invalid.

 

Breach of an arbitration agreement

9. What remedies are available where a party starts court proceedings in breach of an arbitration agreement or initiates arbitration in breach of a valid jurisdiction clause?

Court proceedings in breach of an arbitration agreement

Where litigation is commenced in breach of an arbitration agreement, the other party can apply to stay the action under section 9 of the Arbitration Act.

Arbitration in breach of a valid jurisdiction clause

Where a party initiates arbitration in breach of a valid jurisdiction clause, various courses of action are available to the party contesting jurisdiction. It can:

  • Seek a ruling from the tribunal on the question of jurisdiction under section 30 of the Arbitration Act.

  • Object to the tribunal's jurisdiction under section 31 of the Arbitration Act.

  • Apply to the court to determine any questions as to the substantive jurisdiction of the tribunal under section 32 of the Arbitration Act.

 
10. Will the local courts grant an injunction to restrain proceedings started overseas in breach of an arbitration agreement?

An option available for a party facing court proceedings brought in breach of an agreement to arbitrate is to apply for an anti-suit injunction under section 44 of the Arbitration Act and/or under section 37 of the Supreme Court Act 1981. Such an injunction can be used where proceedings to challenge an award are commenced outside the EU. The injunction is directed at the respondent, not to a foreign court, and directs the party to take no further steps in the proceedings brought in breach of the agreement to arbitrate. The English courts have jurisdiction to issue injunctions against the commencement or continuation of foreign proceedings brought in breach of an arbitration agreement, even in the absence of ongoing or intended arbitration proceedings (Ust-Kamenogorsk Hydropower Plant JSC v. AES Ust-Kamenogorsk Hydropower Plant LLP [2013] UKSC 35).

However, as a result of the Court of Justice of the European Union's (ECJ) ruling in Allianz SpA v West Tankers Inc (Case C-185/07), if a party brings legal proceedings in the courts of another member state of the EU in breach of an arbitration agreement, the English courts cannot grant anti-suit injunctions to interrupt those proceedings. It is for the relevant member state to recognise and enforce arbitration agreements. Outside the EU, the English courts can issue an anti-suit injunction. In Midgulf International Ltd v Groupe Chimique Tunisien [2010] EWCA Civ 66, the Court of Appeal granted an anti-suit injunction to restrain the pursuit of Tunisian proceedings in breach of an arbitration agreement.

Notably, in U&M Mining Zambia Ltd v Konkola Copper Mines plc [2013] EWHC 260 ( Comm), the English High Court ruled that while the English courts have primary jurisdiction to hear applications in support of arbitral proceedings seated in England and Wales, parties can seek interim relief or conservatory measures from other national courts if practical reasons require the application to be made there.

Another interesting development in case law is the issuance of an anti-suit injunction against a non-party to the arbitration agreement because that party commenced vexatious and oppressive parallel proceedings. In Joint Stock Asset Management Company Ingosstrakh Investments v. BNP Paribas SA [2012] EWCA Civ 644, the Court of Appeal ruled that a third party (Party 1) had colluded with a party to the arbitration agreement (Party 2) in commencing parallel proceedings, with the intention of harassing the counter-party to the arbitration agreement. The factors considered by the court were the:

  • Common control of Party 1 and Party 2.

  • Importance of the underlying transaction.

  • Timing of the parallel proceedings.

  • Improbability of Party 1 acting alone.

 

Joinder of third parties

11. Under the applicable legislation, in what circumstances can a third party be joined to an arbitration or otherwise be bound by an arbitration award?

A key principle of arbitration as a form of dispute resolution is that it is chosen by contracting parties. As a result, only a party to an arbitration agreement can be compelled to arbitrate with the other party or parties to that agreement, and any arbitration necessarily involves only the parties to the agreement. The parties' consent to the applicability of the arbitration agreement to a third party must be explicit, and the third party must agree to be bound by the arbitration agreement, or otherwise agree to become a party to the arbitration proceedings.

A non-signatory to an arbitration agreement can become a party to an arbitration under it by way of the Contracts (Rights of Third Parties) Act 1999 (1999 Act). The 1999 Act enables a third party to enforce a term of a contract if the contract expressly provides that it can do so or if the term provides a benefit to it (section 1, 1999 Act). Section 8 of the 1999 Act expressly applies section 1 to arbitration agreements.

If a third party is seeking to enforce a contract term which is subject to an arbitration agreement (for example, because the contract contains an arbitration clause), then the third party is treated as a party to the arbitration agreement and must enforce the term through arbitration proceedings. However, it is now common for commercial contracts to exclude the applicability of the 1999 Act.

Regarding arbitral awards, with the exception of third parties who agree to be bound by it, it is generally only effective against the parties to it and persons claiming through or under them.

 

Arbitrators

Number and qualifications/characteristics

12. Are there any requirements in the legislation relating to the number and qualifications/characteristics of arbitrators?

The Arbitration Act sets out a number of helpful default provisions providing for the number of arbitrators and their roles where the parties have not agreed them, and where the arbitral rules are silent.

If the parties and the arbitral rules have not given any indication of the number of arbitrators, the Arbitration Act provides that the parties must jointly appoint a sole arbitrator (section 15).

If the parties have agreed that the number of arbitrators shall be two, or any other even number, the Arbitration Act requires the appointment of an additional arbitrator as chairman of the tribunal (section 15).

Where parties agree that there will be a tribunal of three arbitrators, the third acts as the chairman unless the parties agree he should act as umpire (section 15).

Where the tribunal consists of an odd number of arbitrators, in the absence of agreement, the decisions, orders and awards shall be made by all or a majority of the arbitrators (including the chairman) and the view of the chairman will prevail in relation to a decision, order or award in respect of which there is neither unanimity nor a majority (section 20).

Parties can specify the characteristics they require their arbitrators to possess. The arbitration agreement can, for example, provide that an arbitrator must have some special qualification (for example, being a qualified surveyor or having considerable experience in a particular industry sector). If the court appoints an arbitrator under the Arbitration Act it must have due regard to such an agreement (section 19).

 

Independence/impartiality

13. Are there any requirements in the legislation relating to arbitrators' independence and/or impartiality?

Section 33(1) of the Arbitration Act imposes on the tribunal a duty to act fairly and impartially as between the parties, giving each party a reasonable opportunity of putting his case and dealing with that of his opponent. They must:

  • Adopt procedures suitable to the circumstances of the particular case.

  • Avoid unnecessary delay or expense.

  • Provide a fair means of resolving the dispute referred to them.

 

Appointment/removal

14. Does the legislation contain default provisions relating to the appointment and/or removal of arbitrators?

Appointment of arbitrators

The Arbitration Act provides efficient and comprehensive provisions for the appointment of arbitrators if the parties have not agreed them. These default provisions cover the appointment of sole arbitrators, tribunals of two or three arbitrators, and the appointment of chairmen and umpires, and specify short time limits in order to avoid delay. If all these provisions fail, the parties can apply to the court for assistance (sections 16(7) and 18(2)).

Removal of arbitrators

The Arbitration Act empowers parties to revoke the tribunal's authority (section 23(3)) in specified circumstances. Parties can apply to the court on one or more of four grounds:

  • There are justifiable doubts concerning the arbitrator's impartiality.

  • The arbitrator does not possess the qualifications required by the arbitration agreement.

  • The arbitrator is physically or mentally incapable of conducting the proceedings or there are justifiable doubts as to their capacity to do so.

  • The arbitrator has refused or failed to properly conduct the proceedings, or to use all reasonable despatch in conducting the proceedings or making an award, and that substantial injustice has been, or will be, caused to the applicant (section 24).

 

Procedure

Commencement of arbitral proceedings

15. Does the applicable legislation provide default rules governing the commencement of arbitral proceedings?

The parties are free to agree when an arbitration is to be regarded as commencing both under the Arbitration Act and for limitation purposes. In the absence of agreement the provisions of section 14 of the Arbitration Act apply:

  • If the arbitrator(s) must be appointed by the parties, arbitration is treated as having commenced when a notice in writing is served on the other party requiring him to agree to the appointment of an arbitrator or, if the parties are each to make an appointment, requiring him to appoint an arbitrator. The party giving the notice does not have to have already appointed his own arbitrator.

  • If the arbitration agreement specifies the person to be appointed as arbitrator, the arbitration is treated as having commenced when a notice in writing is served on the other party requiring him to submit the dispute to that person.

  • If the arbitrator is to be appointed by someone other than a party to the arbitral proceedings, such as an arbitral institution, the arbitration is treated as having commenced when notice in writing is given to that other person requesting him to appoint the arbitrator.

 

Applicable rules

16. What procedural rules are arbitrators likely to follow? Can the parties determine the procedural rules that apply? Does the legislation provide any default rules governing procedure?

Applicable procedural rules

The parties can specify their own procedure, or they can adopt a set of procedures by specifying arbitration under particular institutional or other rules, subject to the mandatory provisions in the Arbitration Act.

Default rules

If the parties cannot agree the procedure, the tribunal will decide the procedure, subject to the general duty set out in section 33(1) of the Arbitration Act.

 

Arbitrator's powers

17. What procedural powers does the arbitrator have under the applicable legislation? If there is no express agreement, can the arbitrator order disclosure of documents and attendance of witnesses (factual or expert)?

The first source of a tribunal's powers is the arbitration agreement between the parties under which the tribunal has been appointed. These can be incorporated from the rules of an arbitration institution or contained in an express agreement. If there is no express agreement, the Arbitration Act states that the tribunal can, among other things:

  • Order disclosure of documents (section 34(2)( d)).

  • Appoint experts, legal advisers and assessors (section 37).

  • Direct that a witness be examined on oath or affirmation (section 38(5)).

 

Evidence

18. What documents must the parties disclose to the other parties and/or the arbitrator? How, in practice, does the scope of disclosure compare with disclosure in litigation? Can the parties determine the rules on disclosure?

Scope of disclosure

Whether there should be disclosure, and the scope of it, is something that the parties can agree. In the absence of any agreement, the tribunal is to consider "whether any, and if so which, documents or classes of documents should be disclosed between and produced by the parties and at what stage" (section 34(2)( d)). This makes it clear that there does not have to be any disclosure at all, provided in doing so the tribunal does not breach its duties imposed under section 33 of the Arbitration Act. On the other hand, if a tribunal ordered disclosure of irrelevant documents, this would breach its duty to adopt appropriate procedures and avoid delay and unnecessary expense.

Disclosure in arbitrations varies according to the requirements of each case. There is no requirement to undertake an extensive disclosure exercise as there is in litigation.

Parties' choice

Parties often agree to use or have the tribunal be guided by the IBA Rules on Taking Evidence in International Commercial Arbitration. This restricts the tribunal's power to order wide-ranging disclosure to those documents which are "relevant and material" to the issues.

 

Confidentiality

19. Is arbitration confidential?

The Arbitration Act does not specifically deal with confidentiality. The courts will imply a duty of confidentiality and require the parties to an arbitration and the tribunal to maintain the confidentiality of:

  • The hearing.

  • The documents generated and disclosed during the proceedings.

  • The award itself.

These documents cannot be disclosed without the consent of the other parties to the proceedings (Ali Shipping Corp v Shipyard Trogir [1998] 2 All ER 136).

This implied duty is subject to broad exceptions. Confidentiality can be waived with the leave of the court if certain criteria are met. Such a waiver must be:

  • In the interests of justice or in the public interest.

  • Necessary for the protection of the legitimate interests of an arbitrating party.

  • With the express or implied consent of the party that produced the document.

 

Courts and arbitration

20. Will the local courts intervene to assist arbitration proceedings?

The court can intervene in only two situations:

  • When there is a provision in Part I of the Arbitration Act that permits court intervention.

  • In very exceptional circumstances, to prevent a substantial injustice, even if there is no relevant provision in Part I of the Arbitration Act.

Examples of the court's powers to support arbitration include:

  • Ordering a party to comply with a peremptory order made by the tribunal (section 42).

  • Requiring the attendance of a witness in order to give oral testimony or to produce documents or other material evidence (section 43).

  • Granting an interim injunction or the appointment of a receiver (section 44).

  • Determining a question of law arising in the course of proceedings which the court is satisfied substantially affects the rights of one or more of the parties (section 45).

The parties can agree to exclude the court's powers under sections 42, 44 and 45, but not under section 43. Further, where the court is able to intervene, there are restrictions on its powers contained in the sections, which should be considered before seeking the court's assistance to determine if they have been met.

 
21. What is the risk of a local court intervening to frustrate the arbitration? Can a party delay proceedings by frequent court applications?

Risk of court intervention

The English courts are supportive of international arbitration and will not intervene to frustrate it. Cases which involve significant court intervention are largely in relation to ad hoc arbitrations where the parties have not agreed a basic procedure in the arbitration agreement, and are unwilling or unable to agree the procedure once an arbitration has commenced. This intervention is intended to support the proceedings.

Delaying proceedings

The courts are supportive of arbitration and a party is unlikely to be able to delay arbitration proceedings through frequent unfounded court applications. Where the courts consider that they are being used to frustrate and delay proceedings, they are expected to respond with adverse costs orders.

 
22. What remedies are available where one party denies that the tribunal has jurisdiction to determine the dispute(s)? Does your jurisdiction recognise the concept of kompetenz-kompetenz? Does the tribunal or the local court determine issues of jurisdiction?

Where one party denies that the tribunal has jurisdiction to determine the dispute, it can raise the objection at the outset of the proceedings (section 31(1), Arbitration Act) or, with the agreement of the parties or the tribunal, it can apply to the court seeking determination on the tribunal's substantive jurisdiction (section 32, Arbitration Act).

Another remedy is contained in section 72 of the Arbitration Act, which states that an application to the court can be made to challenge the jurisdiction of the tribunal where a person is a party to arbitral proceedings but has taken no part in the proceedings in any way.

The principle of kompetenz-kompetenz is recognised and empowers the tribunal to rule on the question of whether it has jurisdiction: section 30 of the Arbitration Act. The tribunal can rule on whether there is a valid arbitration agreement, on whether the tribunal is properly constituted, and on what matters have been submitted to arbitration in accordance with the arbitration agreement.

If the tribunal is determining its jurisdiction, it can rule on the matter in an award on jurisdiction, or in its award on the merits.

 

Remedies

23. What interim remedies are available from the tribunal under the applicable legislation?

Security

Unless otherwise agreed by the parties, the tribunal can:

  • Order a claimant (or counterclaiming respondent) to provide security for costs (section 38(3), Arbitration Act).

  • Issue orders relating to the property which comprises the subject matter of the proceedings.

  • Issue orders for the preservation of evidence.

Other interim measures

The tribunal can order, on a provisional basis, any relief which it would have the power to grant in a final award (section 3, Arbitration Act). Tribunals can also issue partial awards, which are binding on the parties until a final determination of the issue.

The Arbitration Act allows tribunals to issue more than one award at different times. This power can be effective in reducing time and cost by determining a key issue early on without having to determine all the issues in the case.

 
24. What final remedies are available from the tribunal under the applicable legislation?

The Arbitration Act allows the parties to agree the remedies available from the tribunal. The tribunal can:

  • Make a declaration as to any matter to be determined in the proceedings.

  • Order a payment of money.

  • Order a party to do, or refrain from doing, something.

  • Order specific performance under a contract (except one that relates to land).

  • Order rectification and set aside or cancel a deed or other document.

  • Award simple or compound interest.

  • Award punitive or exemplary damages.

  • Allocate the arbitration costs between the parties.

 

Appeals

25. Can arbitration proceedings and awards be appealed or challenged in the local courts? What are the grounds and procedure? Can the parties effectively exclude any rights of appeal?

Rights of appeal/challenge

While there is a procedure for challenging or appealing arbitration awards in the local courts, it is generally difficult to do so. Before applying to a court, the applicant must first exhaust all available recourses from the tribunal to correct the award or make an additional award, and any available arbitral process of appeal or review.

Grounds and procedure

Challenges must be brought either:

  • Within 28 days of the date of the award.

  • Within 28 days of being notified of the outcome of any arbitral appeal, review, correction to the award or an additional award.

There are only three grounds of challenge or appeal:

  • Challenge to the tribunal's substantive jurisdiction (section 67, Arbitration Act).

  • Challenge on one or more of the grounds of serious irregularity specified in the Arbitration Act, although in practice this ground is particularly difficult to satisfy (section 68, Arbitration Act). Unsuccessful petitioners under section 68 of the Arbitration Act may be liable for the responding party's costs under certain circumstances (Commercial Court Guide).

  • An appeal on a point of law (section 69, Arbitration Act), which can only be brought with the agreement of all the parties to the arbitration or with the leave of the court.

Excluding rights of appeal

Parties can only waive the right to challenge an award on a point of law under section 69 of the Arbitration Act. This must be agreed either expressly or by the incorporation of rules containing a waiver. For example, both the LCIA and ICC rules exclude such a challenge.

The other grounds are mandatory and cannot be waived. However, a party may be deemed to have waived its right to challenge by not raising an objection promptly upon discovery.

 

Costs

26. What legal fee structures can be used? Are fees fixed by law?

Fees are not fixed by law. Fee structures which can be used are:

  • Hourly rates.

  • Conditional fees.

  • Fixed fees.

  • Caps.

  • Third party funding.

From April 2013, solicitors have been able to enter into contingency fee arrangements with clients.

 
27. Does the unsuccessful party have to pay the successful party's costs? How does the tribunal usually calculate any costs award and what factors does it consider?

Cost allocation

The parties can agree how the costs will be borne. However, any agreement that one party is to pay the whole or part of the costs of the arbitration in any event is only valid if made after the dispute has arisen (section 60, Arbitration Act). In the absence of any agreement, section 61 of the Arbitration Act indicates that the tribunal can make an award allocating the costs between the parties. This is done on the general principle that costs should follow the event (meaning that the unsuccessful party pays the successful party's costs), except in cases where it would be inappropriate to do so.

Cost calculation

Awarded costs usually include:

  • The arbitrator's fees and expenses.

  • The costs of supervision by any arbitral institution.

  • The costs of the parties' counsel and their expenses such as venue, travel, translations, and so on.

In the absence of the parties' agreement as to costs, the tribunal can determine its own costs and expenses. Under section 63 of the Arbitration Act, it must specify: the basis on which it has acted and the items of recoverable costs and the amount referable to each. If the tribunal fails to determine the recoverable costs of the arbitration, either party can apply to the court. The tribunal also has the power to limit recoverable costs (section 65, Arbitration Act).

Factors considered

If it is not appropriate that costs should follow the event, the tribunal is able to apportion costs between the parties. It will take into account how the parties have conducted the arbitration. For example, if one party won on the merits but caused unnecessary delay and increased costs, the tribunal may not order the losing party to pay all of the winning party's costs.

 

Enforcement of an award

Domestic awards

28. To what extent is an arbitration award made in your jurisdiction enforceable in the local courts?

The local courts can enforce an arbitral award in the same way as a judgment or order of the court. This means that all the methods for enforcing a judgment of the court are also available to enforce the award, including amongst others, an injunction, award of damages, and specific performance.

The English courts have a good record of enforcing arbitral awards. There are two principal methods of enforcement available under section 66 of the Arbitration Act. A party can obtain the permission of the court to enforce the award under a summary procedure set out in the Arbitration Act (which is often made without notice to the other party). The second method of enforcement is to bring an action on the award and then to seek a judgment from the court for the same relief as is granted by the award.

 

Foreign awards

29. Is your jurisdiction party to international treaties relating to recognition and enforcement of foreign arbitration awards, such as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (New York Convention)?

The UK is party to the New York Convention and so awards made by tribunals seated in England, Wales and Northern Ireland should be enforceable in the jurisdictions of all other countries which have ratified the treaty.

The UK is also party to the European Convention on International Commercial Arbitration 1961 (Geneva Convention), which continues to apply to some awards. The UK has also ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States 1965 (the ICSID or Washington Convention), which applies to ICSID awards.

Where a jurisdiction is not party to any of these Conventions, it can still permit the enforcement of awards rendered in the UK depending on the particular requirements for the recognition and enforcement of foreign arbitral awards in those jurisdictions.

 
30. To what extent is a foreign arbitration award enforceable in your jurisdiction?

The courts will recognise and enforce a foreign arbitral award of states which are parties to the Conventions that the UK has ratified. These awards will be enforced in the same way as a judgment or order of the national courts.

The courts will refuse to enforce the award in limited circumstances, such as those set out in Article 5 of the New York Convention. These include instances in which:

  • A party to the arbitration agreement was under some incapacity.

  • The arbitration agreement was not valid under its substantive law.

  • A party against whom it is to be enforced was not given proper notice or was unable to present its case.

  • The tribunal lacked jurisdiction.

  • There was a procedural irregularity.

  • It would be contrary to public policy to recognise or enforce the award.

If enforcement of the foreign award is sought against sovereign assets in the UK (and in the absence of an effective immunity waiver), it is subject to the State Immunity Act 1978. In the recent case SerVaas Incorporated v. Rafidain Bank and others, the UK Supreme Court interpreted the "commercial purposes" exception from immunity from execution, and, in particular when property is "in use or intended for use for commercial purposes" under section 13(4) of the State Immunity Act 1978. The UK Supreme Court confirmed that the origin of the property against which execution is sought is irrelevant. What matters is the present and future use of the property.

 

Length of enforcement proceedings

31. How long do enforcement proceedings in the local court take, from the date of filing the application to the date when the court makes its final order? Is there an expedited procedure?

Most awards are complied with voluntarily. If the party against whom the award was made fails to comply, the party seeking enforcement can apply to the court. The length of time it takes to enforce an award which complies with the requirements of the New York Convention will depend on whether there are complex objections to enforcement which require the court to investigate the facts of the case. If a case raises issues of public importance, it could be appealed to the Court of Appeal and then to the Supreme Court. This process could take around two years. If no objections are raised, the party seeking enforcement can apply to the court using a summary procedure that is fast and efficient.

 

Reform

32. Are any changes to the applicable legislation or the legal framework currently under consideration or being proposed?

The legal framework for international arbitration in England, Wales and Northern Ireland is not likely to change in the next decade, although the developing case law continues to shed light into different aspects of the framework and varying factual scenarios under it.

 

Main arbitration organisations

Chartered Institute of Arbitrators (CIArb)

Main activities. The CIArb provides education leading to professional qualifications for arbitrators and promotes arbitration internationally through its network of practices.

W www.ciarb.or

London Court of International Arbitration (LCIA)

Main activities. One of the oldest international arbitral institutions, it is recognised as one of the world's leading arbitral institutions. Uniquely among arbitral institutions, the LCIA publishes decisions on challenges to arbitrators. The LCIA hold two symposia on international arbitration in England each year, which are very well attended. The LCIA has established an independent subsidiary in India. LCIA India has its own arbitral rules and can also administer arbitrations under other rules, such as the UNCITRAL Rules. In partnership with the Dubai International Financial Centre (DIFC) the LCIA has established the DIFC-LCIA Arbitration Centre, which has its own arbitration rules that are closely modelled on the LCIA rules. In Mauritius, the LCIA has entered into an agreement to establish and operate the LCIA-MIAC Arbitration Centre.

W www.lcia.org

W www.lcia-india.org/

W www.difcarbitration.com

W www.lcia-miac.org

International Chamber of Commerce (ICC)

Main activities. Based in Paris, the ICC Court of Arbitration administers arbitration under the ICC rules. These rules have several unique features, such as the Terms of Reference and the fact that the ICC Court scrutinises awards before they are delivered to the parties. The ICC published new arbitration rules, which are effective from 1 January 2012. The ICC contributes to the development of international arbitration through its publications and conferences, which are held in many countries around the world.

W www.iccwbo.org/arbitration

London Maritime Arbitrators Association (LMAA)

Main activities. The LMAA is considered to be the world-wide leader in commercial maritime dispute resolution. It is an association of maritime arbitrators practising in London, and exists to promote and support London maritime arbitration in various ways. It can appoint arbitrators and has its own rules.

W www.lmaa.org.uk


Online resources

Legislation.gov.uk

W www.legislation.gov.uk/ukpga/1996/23/contents

Description. Text and annexes of the 1996 Arbitration Act, including amendments. Maintained by the National Archives of the Government.

Judiciary of England and Wales

W www.judiciary.gov.uk/media/judgments

Description. Judgments of the English higher courts. Maintained by the Judiciary of England and Wales.

British and Irish Legal Information Institute (Bailii)

W www.bailii.org

Description. Compilation of judgments of the courts of the UK. Maintained by the British and Irish Information Institute.



Contributor profiles

Stephen Jagusch, Partner

Quinn Emanuel Urquhart & Sullivan LLP

T +44 20 7653 2000
F +44 20 7653 2100
E stephenjagusch@quinnemanuel.com
W www.quinnemanuel.com

Professional qualifications. New Zealand, 1990; England and Wales, 1995

Areas of practice. International commercial and investment treaty arbitration

Recent cases

  • Lead counsel to Dubai Ports Authority in defeating claims brought by a property developer seeking US$2 billion plus in damages for alleged breach of a concession agreement. (Claim dismissed on every ground advanced, and a full costs award in favour of Mr Jagusch's client). DIAC, Dubai.
  • Lead Counsel to Duferco, Marcegaglia S.A. Dongkuk, Ternium and others in proceedings against Tata Steel concerning the termination of steel off take agreement. LCIA, London.
  • Lead Counsel to a leading European Bank successfully defending substantial claims from a joint venture partner in relation to the establishment of a new bank in Asia. UNCITRAL, London.

Professional associations/memberships.

  • Member, ICC Commission on Arbitration.

  • Member, IBA Rules of Evidence Review Subcommittee.

  • Chairman, ICC UK Working Group on E-Disclosure in International Arbitration.

  • Member, ICC Working Group on ICC and Investor-State Arbitration.

  • Member, International Arbitration Club.

  • Member (or higher position) of most leading international arbitration institutions.

Publications.

  • Moral Damages in Investment Arbitration: Punitive Damages in Compensatory Clothing?, Arbitration International, 2013, Volume 29 Number 1 (co-author).

  • Organisation and Presentation of Documents to the Tribunal, The Art of Advocacy in International Arbitration, 2nd edition, Juris, 2010.

  • A Comparison of ICSID and UNICITRAL Arbitration: Areas of Divergence and Concern, The Backlash Against Investment Arbitration, Perceptions and Reality, Wolters Kluwer, 2010.

Epaminontas E Triantafilou, Of Counsel

Quinn Emanuel Urquhart & Sullivan LLP

T +44 20 7653 2000
F +44 20 7653 2100
E etriantafilou@quinnemanuel.com
W www.quinnemanuel.com

Professional qualifications. The University of Chicago Law School (J.D., 2005).

Areas of practice. International commercial and investment treaty arbitration

Recent cases

  • Counsel to a group of 60,000 Italian bondholders who brought a claim for over US$1 billion against Argentina for losses sustained during the country's financial collapse in 2001.
  • Counsel to a major US energy company in connection with a power project in Turkey.
  • Counsel to the Republic of the Philippines in parallel ICSID and ICC proceedings concerning claims of over US$1 billion arising from a major airport concession.

Professional associations/memberships.

  • Assistant Managing Editor, World Arbitration & Mediation Review.

  • Member, American Society of International Law.

  • Member, Young International Arbitration Group, London Court of International Arbitration.

  • Member, ICDR Young & International.

  • Member, American Bar Association.

Publications.

  • Chapter, England and Wales as the Venue of Arbitration, in Claudia T. Solomon and Michael Ostrove (eds.), Choice of Venue in International Arbitration (forthcoming 2013) (with Stephen Jagusch).

  • Chapter, Three Cautionary Notes for Investor State Arbitrators on the Vienna Convention on the Law of Treaties, in C. Bao and F. Lautenschlager (eds.) Liber Amicorum Neil Kaplan (2012) (with Charles N. Brower).


{ "siteName" : "PLC", "objType" : "PLC_Doc_C", "objID" : "1247355428311", "objName" : "Arbitration procedures and practice in UK (England and Wales)", "userID" : "2", "objUrl" : "http://uk.practicallaw.com/cs/Satellite/resource/4-502-1378?service=arbitration", "pageType" : "Resource", "academicUserID" : "", "contentAccessed" : "true", "analyticsPermCookie" : "2-433e1016:148a1aecfdc:2905", "analyticsSessionCookie" : "2-433e1016:148a1aecfdc:2906", "statisticSensorPath" : "http://analytics.practicallaw.com/sensor/statistic" }