How Can a Party Enforce a Foreign Arbitration Award in the Courts of England and Wales?
Notwithstanding a party’s right to challenge an award by way of an arbitral process of appeal or review, arbitration awards are final and binding on the parties to an arbitration agreement.
While parties often comply with the terms of an award, there are instances where they do not. Although arbitration awards are binding, they are not capable of direct enforcement in England and Wales, except by leave of the court. Where there is non-compliance with the terms of an award, the successful party must seek enforcement of that award by applying to the domestic courts in the jurisdiction where enforcement against the losing party is sought, typically the jurisdiction where that party has assets.
This note sets out the framework under which a party can seek enforcement of a foreign arbitration award in the courts of England and Wales and how such enforcement may be resisted.
Caveat
Please be advised that this note refers to the Arbitration Act 1996 (“the AA 1996”) which governs arbitration in England and Wales. There is currently an Arbitration Bill before the UK Parliament which seeks to update the current arbitral framework. Although the current version of the Bill does not significantly affect enforcement of arbitration awards, any amendments should be closely monitored.
What is Meant by Enforcement of an Arbitration Award
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (commonly known as the New York Convention (“NYC”) is a key instrument in international arbitration which over 170 countries including the United Kingdom have signed. Signatories to the NYC have agreed to recognise and enforce awards made in other states. They may, however, limit this obligation by specifying that the other state must also be a signatory to the NYC and/or that the agreement applies only to arbitration awards arising out of commercial legal relationships.
The NYC (and the AA 1996) distinguishes between recognition and enforcement of arbitration awards. Recognition means treating an award from another jurisdiction as if it were a domestic award, allowing parties to rely on it in any domestic legal proceedings, such as by way of defence or set-off. Enforcement, on the other hand, means treating an award from another jurisdiction as if it were a domestic judgement. This allows a domestic court to give permission for judgement to be entered in terms of the award, meaning that parties can enforce the award in the same manner as any domestic judgement obtained by way of litigation.
A party wishing to enforce an arbitration award in England and Wales must have regard to the AA 1996. The AA 1996 gives effect to and implements the NYC, providing that any arbitration award made in the territory of a signatory to the NYC (other than the United Kingdom) is an “NYC award” (s. 100(1)).
In light of the AA 1996 and the sheer number of signatories to the NYC, the remainder of this note considers enforcement of NYC awards. Other methods of enforcement, such as enforcement under the Geneva Convention or under the common law (based on the implied promise by both parties to abide by the terms of the award), are significantly less common and thus fall outside the scope of this note.
The Framework for Enforcing an Arbitration Award
To enforce an arbitration award, a party must apply to the domestic courts of the country where enforcement is sought, typically in the jurisdiction where the losing party has assets.
In England and Wales, such applications are made by issuing an Arbitration Claim Form (Form N8). For foreign awards falling under the NYC, the application must be made pursuant to s. 101 of the AA 1996. For domestic awards, i.e., where the seat of arbitration is England and Wales, s. 66 of the AA 1996 provides a summary procedure for enforcement. The case of A v B [2020] EWHC 952; [2020] 1 Lloyd’s Rep. 553 underscores the necessity of applying under the appropriate statutory section.
Article IV of the NYC (and s.102 of the AA 1996) provides that a party must produce the original arbitration agreement and award (or duly certified copies), along with any certified translations if necessary. The party must also provide written evidence stating non-compliance with the award and detailing the party against whom enforcement is sought. In England and Wales, this evidence must comply with CPR 32.18.
The court, depending on procedure within the jurisdiction, may make an order for enforcement of the award on a without notice basis or order a hearing at which both parties can make submissions before it reaches a decision.
In jurisdictions which are signatories to the NYC, the court must order enforcement of the award (whether on a without notice basis or following a hearing) unless the party resisting enforcement can establish a valid defence, namely one of the exceptions to the enforcement obligation as provided at Article V of the NYC and s. 103 of the AA 1996 (see below). Where that exception is that a decision to annul or set aside the award is pending in the court of the seat of the arbitration, the court may adjourn the hearing and may order the party the subject of the enforcement proceedings to give suitable security (Article VI of the NYC and s. 103(5) of the AA 1996 respectively).
If the court grants the order, it can be enforced as if it were a judgement of the domestic court (s. 101(2) of the AA 1996). A party may, for example, obtain charging orders over property, third party debt orders, or freezing injunctions to prevent the dissipation of assets.
If the court does not grant the order, the party seeking enforcement may seek to enforce the award in another jurisdiction.
Resisting Enforcement
If a party wishes to resist enforcement of an award, the natural starting point is to challenge the award itself. A party may seek to have the award annulled or set aside by the court of the seat of the arbitration. The grounds under which a party can challenge an award differ depending on the laws of the seat of arbitration. If the seat of the arbitration is England and Wales, a challenge to the award may be brought under s. 67 or s. 68 of the AA 1996, or (in some circumstances) there may be an appeal to the court on a question of law under s. 69. The application of these provisions is outside the scope of this note.
A tension can arise if the party successfully challenges the award in the court of the seat but the party wishing to enforce the award nonetheless seeks enforcement in a secondary jurisdiction. Courts in the secondary jurisdiction can either recognise and enforce the award or uphold the seat-court’s annulment or setting aside of the award. The approach taken will likely depend on whether the court favours finality of arbitration or international comity, with the reasons for annulling or setting aside the award also considered. English courts retain discretion unless the seat-court’s decision to annul or set aside is entitled to recognition as a matter of English conflict of law rules.[1]
An alternative is for the party against whom the award is to be enforced to wait until the successful party seeks to enforce the award in a secondary jurisdiction and then resist that enforcement by raising an applicable defence. The grounds on which a court may refuse enforcement of an award are set out at Article V of the NYC and s. 103 of the AA 1996 and are as follows:
- The arbitration agreement was not valid under the law which governed the arbitration or, if there is uncertainty as to which law governed the arbitration, under the law of the country where the award was made;
- One of the parties was under some incapacity (incapacity likely being defined under the law where the party concerned is domiciled);
- One of the parties was not given proper notice of the appointment of the arbitrator, or of the arbitration proceedings or was otherwise unable to present its case;
- The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the arbitration agreement;
- The award deals with a dispute which falls outside the terms of the notice of intention to refer to arbitration or contains decisions on matters beyond the scope of that notice;
- The award has not yet become binding or has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made (see the point above on adjournment of an enforcement application hearing and order for suitable security);
- The award is in respect of a matter which is not capable of settlement by arbitration under the laws of the jurisdiction in which enforcement is sought; or
- Enforcement of the award would be contrary to the public policy of the jurisdiction in which enforcement is sought.
The power of the court in a secondary jurisdiction is limited to determining whether to enforce the award rather than considering challenges to the award itself. Whilst this distinction may seem academic, it can in fact have serious practical implications. Even if a party successfully resists enforcement of the award in a particular jurisdiction, the party seeking to enforce the award may seek enforcement in another jurisdiction. This creates difficulties for a party who has assets in multiple jurisdictions, as they may face multiple costly and time-consuming enforcement actions with no guarantee of consistent outcomes.
Where a party wishing to resist enforcement of an award has assets in multiple jurisdictions, it is often more practical, therefore, to challenge the arbitration award at the seat of arbitration. If a challenge to an arbitration award is successful at the seat of arbitration, most foreign courts are likely to uphold the seat-court’s annulment or setting aside of the award in the interests of international comity.
Once a court makes an order for enforcement of an award, that order is binding unless it was made without notice, as can occur in England and Wales. In such cases, the party who is the subject of the enforcement has a limited time (14 days in England and Wales as per CPR 62.18(9)) to apply to the domestic court to set aside the enforcement order.
[1] See, for example, Yukos Capital Sarl v OJSC Rosneft Oil Co [2012] EWCA Civ 855; [2014] QB 458 which concerned the enforcement by Yukos Capital of Russian arbitral awards which have previously been set aside by the courts of Russia (the seat of the arbitration).
Colleen Cumbers is currently a pupil barrister at Crown Office Chambers and will commence tenancy in October 2024. She looks forward to developing a broad practice across the span of Chambers’ core areas. For instructions, please contact clerks@crownofficechambers.com.
