English Commercial Court Holds That Arbitrators Are Not Empowered To Express Interim Relief In The Form Of An Award In UNCITRAL Arbitration

• Published date: 11 November 2022
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Herbert Smith Freehills
• Author: Mr Chris Parker and Elizabeth Kantor

On 16 September 2022, the English Commercial Court delivered its judgment in EGF v HVF, HWG, TOM, DCK, HRY [2022] EWHC 2470 (Comm) in respect of a London-seated arbitration under UNCITRAL Rules, dismissing a challenge to a partial award. The challenge was made partly under section 68 of the English Arbitration Act 1996 (the "Act"). Mr Justice Baker dismissed the challenge on the basis that substantive injustice had not been proven - but held, obiter, that the arbitrators had exceeded their powers in making an interim payment order in the form of an award.

Background

In October 2021, the Defendants (the claimants in the arbitration) made an application for urgent post-hearing relief, requesting a partial award for a sum of money owed by the Claimant. In December 2021, a hearing took place addressing the application, and the Tribunal made a "December Ruling", ordering the Claimant to pay US$250 million by 31 January 2022 by way of "Interim Payment Order". On 17 January 2022, the Tribunal followed up with a document entitled "Partial Award", which was expressed to be made pursuant to Article 34 of the UNCITRAL Rules and stated "By way of Interim Payment Order, [the claimant] shall pay [the first defendant] the sum of US$250 million... by 31 January 2022."

The Claimant subsequently commenced proceedings in the Commercial Court seeking to set aside the interim payment order or obtain a declaration of no-effect. The Claimant argued that the arbitrators lacked power to make the order under section 68(2)(b) of the Act because (i) Article 26 of the UNCITRAL Rules does not empower arbitrators to make interim payment orders and/or (ii) Article 34 of the UNCITRAL Rules does not empower arbitrators to issue an interim remedy in the form of an award. The Claimant alleged that the Partial Award caused it to suffer a substantial injustice.

The Claimant also sought the removal of the arbitrators pursuant to section 24 of the Act and, further or alternatively, to set aside the award based on the arbitrators' alleged lack of jurisdiction to make the order.

Decision

The judge dismissed the totality of the Claimant's challenge, holding, in respect of section 68 of the Act, that the Claimant did not and would not suffer substantial injustice, even if the arbitrators had exceeded their powers. The judge found that the Claimant had not complied with the order and there was no threat or real prospect of meaningful enforcement before the arbitrators' final award which was only...