Dispute Resolution Group Newsletter - June 2011

We are pleased to present our second case review of 2011 which contains summaries of selected cases which will impact on the way in which parties conduct litigation and their business dealings.

In this review we consider recently decided cases on arbitration; whether a declaratory arbitral award can be enforced as a judgment and the status of interim appeal awards. We also comment on recent cases on disclosure, considering disclosure of transcripts from private hearings as well as Norwich Pharmacal orders.

We also review cases on expert independence, injunctions concerning arbitration proceedings and important cases on both what constitutes a Part 36 Offer as well as key decision on expert immunity.

Arbitration

West Tankers v Allianz [2011] EWHC 829 (Comm)

Whether a declaratory arbitral award can be enforced as a judgment (in order to gain primacy over an irreconcilable foreign judgment)

Section 66 of the Arbitration Act 1966 provides that "(1) An Award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect". In this case, the parties had entered into a charterparty which provided for arbitration in London in the event of a dispute. Notwithstanding the arbitration clause, the defendants commenced proceedings in Italy. The ECJ ruled that the English courts had no power to grant an anti-suit injunction. The claimant began arbitration. The defendants took no part in the arbitration and the tribunal eventually made an award in the claimant's favour. Since the proceedings in Italy were still on-going, the claimant applied under section 66 and obtained leave from the English court to enforce the award as a judgment. In this way, the claimant hoped to obtain primacy over any eventual judgment in the defendant's favour in Italy, due to the application of Article 34(3) of Regulation 44/2001. This provides that a judgment will not be recognised if it is irreconcilable with an earlier judgment given in a dispute between the same parties in the Member State in which recognition is sought (here, England).

The award in favour of the claimant declared that it was under no liability to the defendant. The defendant sought to argue, on appeal, that section 66 does not apply to declaratory judgments. That argument was rejected by Field J. The purpose of section 66 "is to provide a means by which the victorious party in an arbitration can obtain the material benefit of the award in his favour other than by suing on it". Where there is no appreciable risk of the losing party obtaining an inconsistent judgment in a member state which he might try to enforce here, leave will not be granted. However, where, as here, the applicant is trying to establish the primacy of a declaratory award over an inconsistent judgment, the court will have jurisdiction to make a section 66 order because to do would be to make a positive contribution to the securing of the material benefit of the award.

The defendants had also sought to argue that any attempt to rely on Article 34 of the Regulation was doomed to fail because of the Court of Appeal decision in National Navigation v Endesa [2010] (where it was held that it would not be contrary to public policy to recognise a judgment even where an English court would have decided that the parties had agreed to refer the dispute to arbitration - see Weekly Update 48/09). Field J held that the claimant had satisfied the threshold requirement that it had a "real prospect" of establishing the primacy of the award over an inconsistent judgment. However, at this stage, the issue did not need to be finally determined because it was hypothetical: "hypothetical because the unsuccessful party to the arbitration will not have obtained an inconsistent judgment in a member state at the time the court is dealing with the s. 66 application".

COMMENT: This case suggests a possible practical solution may exist where a party, in breach of an arbitration agreement, commences proceedings in another Member State. If the other party commences arbitration and pushes for a declaratory award in its favour as quickly as possible, this case raises the possibility that the English courts might refuse to recognise any later irreconcilable judgment from the courts of the other Member State. It was unclear whether such a step was possible in light of the Court of Appeal's judgment in National Navigation v Endesa, so this case will give renewed encouragement to parties who feel they have been wronged because the other side has sought to "grab" jurisdiction in breach of an arbitration agreement. However, the issue was not finally decided in this case and it remains to be seen whether the English courts will refuse to recognise any eventual judgment in the defendant's favour from the Italian courts.

Rotenberg v Sucafina [2011] EWHC 901 (Comm)

Status of interim appeal awards and application under section 79 of the Arbitration Act 1996

Two issues arose in this case:

(1) The status of "interim" appeal awards. Under the arbitration rules of the Coffee Trade Federation Ltd ("CTF"), a board of appeal had the power to make an interim award following an appeal (Rule 48). Eder J said that it was ambiguous whether "interim award" was meant to cover both partial and provisional awards. Section 47 of the Arbitration Act 1996 allows the tribunal to make...