English High Court Refuses To Enforce Unchallenged Arbitral Award In Light Of New Evidence

The English High Court (the "Court") has refused to enforce an unchallenged arbitral award because doing so would not be in the interests of justice. In the recent case of David Sterling v Miriam Rand and Morris Rand [2019] EWHC 2560 (Ch), the Court was asked to enforce an arbitral award of the London Beth Din (Court of the Chief Rabbi) (the "Beth Din"), which ordered the Defendants to transfer title of a disputed property to the Claimant. However, in a "serious and unusual case", the Court held that evidence put before it justifying the requested order was inconsistent with evidence put before the Beth Din, and revealed an interested third party in the property, meaning that enforcing the award would be inequitable.

Background

The dispute concerns the sale of a London property (the "Property") between a tenant (the "Claimant") and the freehold owners of the property (the "Defendants"). In March 2008, one of the Defendants entered into an agreement signed in Hebrew, known as a "Heskem", to sell the Property to the Claimant for £745,000. In order to avoid a penalty clause in the Defendant's existing mortgage on the Property, it was agreed in the Heskem that title to the Property would not pass to the Claimant immediately. Instead, the Claimant would take responsibility for paying the existing mortgage for two years, after which he would raise a new mortgage, discharging the Defendants' liability. Although title was not being transferred immediately, it was agreed that the Defendants would sign a declaration of trust stating that they held the Property beneficially for the Claimant.

Three months after the Heskem was signed, the Defendants did indeed enter into a deed of trust relating to the Property, but to hold the Property on trust for Mr Shimon Stern, a relative and the nominee of the Claimant (the "Claimant's Nominee"), not the Claimant himself.

After the two-year deadline passed, the Claimant did not redeem the mortgage, as provided for in the Heskem, and it appeared as though both parties were willing to leave the situation be. However, in 2010, the Claimant's Nominee made an application to register a restriction relating to his interest in the Property, which prompted a dispute between the parties over the ownership of the Property. The Claimant argued that the Heskem transferred ownership of the Property to the Claimant's Nominee if and when the existing mortgage was discharged, whereas the Defendants now disputed the validity of the...

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