A Round Up Of Commercial Arbitration In 2022: Key Developments You Should Know

• Published date: 17 January 2023
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Herbert Smith Freehills
• Author: Ms Paula Hodges, Craig Tevendale, Andrew Cannon, Chris Parker, James Doe, David Nitek, Vanessa Naish and Elizabeth Kantor

1. Third Party Funding: recoverability and regulation

In Tenke Fungurume Mining S.A. v Katanga Contracting Services S.A.S, [2021] EWHC 3301 (Comm), the Commercial Court considered a challenge to an arbitral award under s68 of the Arbitration Act on the grounds that the tribunal's award of the successful party's costs of third party funding constituted a serious irregularity. The Court refused the challenge, finding that the tribunal had not exceeded their powers or wrongly exercised their discretion in awarding third party funding costs. The case provides some clarity on whether an award of third party funding costs in arbitration constitutes a serious irregularity under the Act. However, it is important to note that the English court was not asked to rule on whether such fees are recoverable in arbitration as a matter of English law: i.e. whether it should be open to an arbitral tribunal to award third party funding costs in the first place. Given that there is no recovery of third party funding costs in English litigation, it leaves a difference in recovery between litigation and arbitration and raises the question as to whether this should be permitted. This is only likely to be addressed by the English courts in the rare (and perhaps unlikely) event that a party raises this point in a challenge or question of English law under s69 or s45 of the Act.

The issues of Tenke are particularly relevant given the recent EU proposal for the regulation of third party funding. In October, the European Parliament proposed a Directive to regulate commercial third party funding in the EU. The Directive intends to establish a legislative framework to safeguard claimants and monitor the activities of litigation funders in the interests of access to justice. This includes ensuring funders have sufficient financial resources to meet possible funding liabilities. Whilst at present the proposal appears to only apply to EU-seated arbitrations, it nonetheless highlights the growing interest in the regulation of third party funding.

For more information, please see these links to our Tenke blog, our blog on the EU draft directive and the EU's draft proposal.

2. Arbitration clauses in the consumer context: breaking new ground with e-commerce and digital assets

The English courts handed down two decisions relating to the arbitrability of consumer disputes in the context of e-commerce and digital assets.

The first was Soleymani v Nifty Gateway LLC (The Competition and Markets Authority intervening) [2022] EWCA Civ 1297, which concerned an application for a declaration that an arbitration clause in the terms and conditions of an online auction platform was unfair and invalid. The Court of Appeal refused to stay English Court proceedings commenced by the consumer, holding that the claimant's domestic consumer rights were a powerful factor in refusing the stay. The Court has directed a trial on the...