Litigation & Arbitration Group Client Alert: London Arbitration – A Brief Summary

As an eventful 2016 draws to a close, we reflect upon some of the more notable developments that have taken place this year in the London arbitration market.

BREXIT

While it has been widely debated whether Brexit will make the English Courts less attractive as a dispute resolution forum for commercial parties, it is generally agreed that those concerns (if valid at all, which is unlikely) do not apply to London based arbitration proceedings.

In particular, the reciprocal enforcement of court judgments in Europe is a matter of European law that will, absent some other steps being taken, be affected by Brexit. In contrast, the worldwide enforcement of arbitral awards is governed by the New York Convention, to which the UK is a Contracting State irrespective of its position in Europe.

Accordingly, there is no reason for Brexit to cause any concern to parties who are considering referring their disputes to arbitration in London.

RECOVERABILITY OF THE COSTS OF THIRD PARTY FUNDING

In September, the English Courts upheld an ICC tribunal's decision to award the successful party its third party funding costs (Essar Oilfields Services Limited v Norscot Rig Management PVT Limited [2016] EWHC 2361 (Comm)). The Tribunal held that Essar had used its superior financial power to try and thwart the claim against it, and that this conduct warranted an award of costs on an indemnity basis, including Norscot's costs that were funded, as is becoming increasingly commonplace, through a third party.

This was significant as it confirmed, for the first time, that the costs of third party funding in arbitration are recoverable (in principle at least), and might, therefore, make arbitration more attractive to parties that anticipate relying on funding their case through third parties.

However, parties seeking to recover their third party funding costs in institutional arbitrations should bear in mind that it remains at the discretion of the tribunal and may therefore be limited to particularly egregious circumstances.

EMERGENCY RELIEF

Also in September, the English Courts clarified the appropriate means by which parties should seek urgent relief in LCIA arbitration. It had generally been accepted that, prior to the formation of the tribunal, parties had a choice between seeking urgent relief from the Court (under Section 44 of the Arbitration Act 1996) or from an emergency arbitrator or a tribunal formed pursuant to the expedited procedure (see Articles 9A and 9B of...