Arbitration and the Courts
In certain instances, a party may wish to seek relief from a court, rather than the tribunal. For example, this may be:
- where a party wishes to apply to remove an arbitrator or to appoint one where the parties do not agree;
- where one party has commenced related court proceedings and the other party wishes to stay those proceedings;
- where a party wishes to obtain an ‘anti-suit’ injunction to prevent a party from commencing or continuing legal proceedings brought in breach of an arbitration agreement; or
- where a party seeks an order for the preservation of evidence or assets that the particular tribunal does not have the power to grant. An example may be where a third party owns or controls the evidence/asset, as typically a tribunal cannot make an order against a third party.
The court’s power to grant interim relief is generally limited and depends on the local law of the seat of the arbitration. Often, the tribunal will have the power to grant the relief desired, for example, pursuant to the applicable institutional rules or powers contained in the arbitration agreement itself. Again, the LCIA and ICC rules grant the tribunal with wide-ranging powers to order interim measures (excepting, typically, orders against third parties).
It should be noted that, where a tribunal has not yet been formed (for example, because the parties cannot agree on an arbitrator appointment), emergency arbitration may be available rather than going to court. Emergency arbitration is a mechanism by which parties may obtain urgent relief before the tribunal is constituted. Most arbitral institutions, such as the LCIA and the ICC, provide for the appointment of an emergency arbitrator. Emergency arbitrators are often appointed within 24 to 60 hours and generally have wide powers to order relief.
Importantly, where court assistance is sought, the court will generally not take over conduct of the arbitration; this will remain with the tribunal. A key benefit of arbitration is that parties are able to simultaneously pursue a case whilst, if necessary, applying for relief from a court (see What are the key benefits of using arbitration? under Overview and Benefits of International Arbitration).
The majority of arbitrations progress without any need to involve a court. This is because, as indicated in the box above, it is likely that the arbitration tribunal will have the power to grant the relief required.
A key stage at which a party may wish to ask the court for assistance is before the tribunal has been constituted and if emergency arbitration is not available. For example, where one party has started litigation proceedings in breach of the arbitration agreement, the other party may seek a stay of those proceedings from the court.
Another key stage at which court assistance may be desirable is if a party wants to enforce an award made under the New York Convention. As explained further below, the New York Convention enables parties to enforce awards across more than 170 jurisdictions. The process is pursued through the local courts of the jurisdiction of the relevant signatory state.
Similarly, if a party wishes to contest an award made against it, it may seek to do so in the courts in the jurisdiction in which the award was made. Again, more detail can be found below.
Whether or not court intervention is required depends on the individual circumstances of the dispute. As mentioned above, most arbitrations proceed independently with no need to involve the courts. In each case, the parties and their lawyers will consider if it is necessary to apply to the court and, if so, the best time and procedure
A key benefit of arbitration is the ease with which arbitration awards can be recognised and enforced across jurisdictions. At present, more than 170 states have entered into the New York Convention, meaning that an award made in one of those signatory states can be enforced in any of the other signatory states as if it were a local court judgment. This is helpful given that many arbitrations operate across jurisdictions and often a respondent’s assets may be located in a jurisdiction other than that in which the award was made.
Enforcing New York Convention awards
An award from an arbitration seated in a New York Convention signatory state which is valid on its face will be enforceable in England unless the respondent raises a valid defence. The defences are listed in the Arbitration Act 1996. Even if one of the defences is made out, the court retains the discretion to enforce an arbitral award in appropriate circumstances. The process is typically straightforward: the enforcing party makes an application to the court, paying a small fee, within the relevant time limit. This is usually 6 years from the date when the other party fails to honour the award and 12 years if the arbitration agreement is under seal.
Enforcing Non-Convention awards
For an award from an arbitration seated not in a New York Convention signatory, other statutory regimes or common law procedures may apply but the approach will vary from jurisdiction to jurisdiction and local legal advice should be sought.
Where a party disagrees with an arbitration award made against it, it may seek to challenge (or appeal) the award before the national courts of the jurisdiction of the seat. The right to bring a challenge is generally limited. Subject to the applicable local law, a challenge may only be brought if one (or more) specified grounds is made out.
These materials are written and provided for general information purposes only. They are not intended and should not be used as a substitute for taking legal advice. Specific legal advice should be taken before acting on any of the topics covered.
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