Enforcement Of Arbitration Awards And Stays Of Enforcement Due To Challenges To The Award In The Seat Of The Arbitration: Approaches Taken By The Courts Of Bermuda And The UK

1. Introduction

   The necessary reliance on local courts for enforcement of foreign arbitral awards can lead to significant delays in finalising a dispute. Obtaining a favorable arbitration award is often only half the battle, as subsequent annulment and enforcement proceedings can last years. A particularly common problem is the staying of an enforcement award pending determination of annulment proceedings in the seat of the arbitration. The years it takes for a final determination of these post-award proceedings renders nugatory any favorable award, and places in jeopardy the value and competence of international arbitration in resolving commercial disputes.

   Until recently, courts have shown considerable reluctance to enforce arbitral awards that are subject to annulment proceedings. Such reluctance is understandable, especially in light of the principles underpinning the New York Convention on the Reciprocal Enforcement of Arbitration Awards 1958 (Convention) and the comity between courts of signatory parties. The Bermuda Court of Appeal considered these principles recently in the decision of LAEP Investments Ltd v Emerging Markets Special Situations 3 Ltd, [2015] CA (BDA) 10 Civ, 9 (LAEP case). Whilst sympathetic to the enforcing party's situation, the court ultimately found that even a potential delay of 10 or more years occasioned by the annulment proceedings in Brazilian courts to be insufficient to allow prior enforcement.

   A recent UK Court of Appeal signals a move towards the English court balancing the right of a losing party to pursue an annulment or other challenge against the right of a victorious party to obtain the fruits of a successful award. In IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2015] EWCA Civ 1144 (IPCO case) , the English Court of Appeal allowed, at least in principle, partial execution of an arbitral award on the basis of the ''absurd'' delay expected for determination of set-aside proceedings in Nigeria.

   This development in the application of the Convention principles in the UK to facilitate enforcement may result in the strengthening of confidence in international arbitrations as a certain and reliable dispute resolution process.

2. Bermuda Court of Appeal Decision of LAEP Investments Ltd v Emerging Markets Special Situations 3 Ltd

   The dispute giving rise to the appeal goes back to a reference to arbitration submitted by LAEP Investments Ltd (LAEP) in Brazil in October 2010, concerning the existence and/or extent of obligations owed by LAEP to the Emerging Markets Special Situations 3 Limited (EMSS). An...