Challenging arbitration awards: recent amendments seek to limit unmeritorious challenges

The main amendments focus on deterring parties from seeking to challenge or appeal arbitration awards under ss67-69 Arbitration Act 1996 (AA 1996), namely:

• challenges to awards on grounds of jurisdiction under s67
• challenges alleging irregularity under s68
• appeals on a point of law under s69

Very few applications issued before the English courts challenging awards are successful.  Indeed, only around 5% of appeals on points of law issued under s69 AA 1996 in 2018/2019 were successful.  However, recent statistics from the Commercial Court state that arbitration matters makes up 25% of claims issued in the Commercial Court reflecting London’s continued status as an important centre for international arbitration (see paragraph 3.1 of The Commercial Court Report 2019-2020 which can be found here).  The large bulk of arbitration claims filed in the Commercial Court are challenges to arbitration awards under ss67-69 Arbitration Act 1996. 

The Commercial Court has historically tried to dissuade parties from making unmeritorious challenges to arbitration awards before the Courts by adopting procedures to, where appropriate, summarily dismiss claims challenging awards on the papers.  The English Courts have consistently adopted its pro-arbitration approach by seeking to uphold the finality of arbitral awards and prevent tactics designed to delay enforcement.

However, due to the steady rise in challenges to awards being raised, section O of the Commercial Court Guide seeks to go further.  The recent amendments include:

• implementing requirements that any challenge under:
  • s67 AA 1996 as to jurisdiction can only be brought where there are “serious grounds” for a contention that the matters relied on do affect the substantive jurisdiction of the tribunal or
  • s68 AA 1996 for irregularity can only be brought if there are “serious grounds” for thinking that an irregularity has occurred which has caused or will cause substantial injustice
• confirming that the courts have the power to dismiss any claim without a hearing.  It directs that it would be “astute” for a court to dismiss ss67-68 AA 1996 challenges where the nature of the challenge or evidence filed in support leads the Court to consider the claim has no prospect of success
• extending the rights to respondents to seek indemnity costs where an applicant’s challenge under ss67-68 AA 1996 has been dismissed on the papers and the applicant proceeds to request a hearing of its claim which is subsequently dismissed
• confirming that the Court has power under s70 AA1996 to order that an applicant provide security for costs or for the award as a condition of being able to pursue the challenge

The Guide directs that power needs to be dealt with promptly indicating that a hearing should be listed with a time estimate of one hour or less on the first available Friday after the application has been issued.

In addition, the Guide now explicitly provides guidance that where only part of an award is challenged, any application to permit enforcement of the unchallenged part of the award would normally be dealt with without a hearing. 

The amendments to the Guide will be welcomed by arbitration users as demonstrating the English Court’s pro-arbitration approach and its practice of seeking to uphold the finality of arbitral awards and prevent tactics designed to delay enforcement where unmeritorious challenges are brought.

If you would like to discuss the contents of this article further, please do not hesitate to contact the authors of this article. 

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