English Court Holds Arbitral Order, Subject To Conditions, An Award

• Published date: 17 January 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Herbert Smith Freehills
• Author: Mr Craig Tevendale and Finnuala Meaden-Torbitt

In YDU v SAB and BYH [2022] EWHC 3304 (Comm), the English High Court has deemed an arbitral tribunal's order for specific performance, which was subject to conditions, an award for the purposes of the English Arbitration Act 1996 (the Act). In so doing, it has respected the Tribunal's own classification of the decision, yet prompted questions as to the applicability of section 39 of the Act, on provisional decisions, to awards.

Background

The underlying London-seated LCIA arbitration concerned an uncompleted sale of shares by the Claimant to the First Defendant. In what the Tribunal had termed a "Partial Final Award", the Tribunal had ordered the Claimant to transfer the shares to the First Defendant within a particular timeframe. This was "on condition" of satisfaction by the First Defendant of certain payment-related requirements. The Tribunal had also expressly ordered the Claimant not to sell the shares to anyone other than the First Defendant.

The Tribunal had also explained that it was reserving jurisdiction to resolve any dispute as to the meaning or effect of the preconditions, or the way forward if the First Defendant was unable to comply with the preconditions. In the event, the First Defendant obtained two extensions to complete the preconditions, granted in the form of two further Partial Final Awards.

The Claimant applied to the English High Court for a declaration that the Tribunal's order for specific performance did not constitute an award. It argued that the order's conditionality and the Tribunal's reservation of jurisdiction prevented the order from being final and therefore an award.

Decision

The Act does not define an award; it simply confirms that the effect of an award is that it is final and binding. By way of preliminary matter, the court briefly considered the "usual position" that once an award has been rendered, a tribunal is functus officio in relation to the matters decided (i.e. it lacks any power to re-examine those matters, or issue any further ruling in relation to them). However, it deemed it "too dogmatic and absolutist a position to say that something which is 'an award' can never be revisited".

Nonetheless, on the basis of three different analyses, the court held that the order constituted an award:

1. Section 48(5) of the Act makes clear that a tribunal has the power, unless otherwise agreed by the parties, to order specific performance of a contract (other than a contract relating to land) It was consistent with this...