Posts tagged: refusal

Enforcement of Awards against non-parties to the Arbitration Agreement

The New York Convention is one of the stated advantages of international arbitration over court proceedings. One of the cardinal principles of the Convention is the recognition, and as necessary enforcement, of ‘foreign’ awards in most countries in the world. That is enshrined in s.103 Arbitration Act 1996 which provides that Recognition or enforcement of a New York Convention award shall not be refused except in certain specified cases. One such exception to the recognition and enforcement regime is where there was no valid arbitration agreement: s103(2) (b). This provision was considered by the Supreme Court in Dallah Real Estate and Tourism Holding Company v Government of Pakistan [2010] UKSC 46 The case raised the issue of whether the government of Pakistan (P) could resist enforcement in England of a French ICC award, on the basis that it was not party to the arbitration agreement, even though the tribunal had previously ruled that P was bound by the agreement. The Court of Appeal had held that enforcement should be refused under section 103(2)(b) because, on the evidence, P was not bound by the arbitration agreement. Upholding the conclusions and reasoning of the Court of Appeal, the Supreme Court held that: 

  • The question of whether P was bound by the arbitration agreement fell to be determined by reference to all the evidence. The English court was not limited to reviewing the tribunal’s own ruling on this issue, and was not required to defer to the tribunal’s views. 
  • Dallah’s argument, that P was bound by the arbitration agreement as a matter of French law on the basis of the parties’ “common intention”, was rejected. On the evidence (including expert evidence of French law), P was not so bound. 
  • Although section 103 confers on the court a limited discretion to allow enforcement even if one of the statutory defences to enforcement is established, that discretion will not be exercised in favour of the award creditor where there was no valid binding arbitration agreement and the tribunal lacked jurisdiction to make the award.

The decision is to be welcomed for it must be correct that if a party had never conferred jurisdiction on a tribunal it ought not to face execution over its assets to enforce the award that ought never to have been made.

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