Three Part Series: UK Freezing Orders Against A Foreign State

• Jurisdiction: United States,Federal
• Law Firm: Steptoe & Johnson
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Author: Mr Thomas Innes, Steven Davidson, Michael Baratz and Molly Bruder Fox
• Published date: 14 March 2023

First Tuesday Update is our monthly take on current issues in commercial disputes, international arbitration, and judgment enforcement. Today's update is the first in a three-part series that examines whether English courts can issue a worldwide freezing order against a foreign state in support of efforts to enforce an arbitral award or foreign judgment.

We focus today on the procedure in England to enforce arbitral awards and foreign judgments against foreign states. Future updates will consider whether the rules on state immunity from execution bar the grant of a worldwide freezing order against a state, and then the principles that otherwise govern the grant of such orders. Most of the first and last updates will also be relevant to those interested in enforcement against non-state entities.

Recognition and Enforcement of Arbitral Awards

In England, there are various processes to recognize and enforce arbitral awards. It should be noted that Brexit has not affected the applicable processes.

Most awards are governed by the Arbitration Act 1996. In particular, Sections 100–103 give effect to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (NY Convention). By Section 101(1), an award made, in pursuance of an arbitration agreement, in the territory of one of the 171 states other than the UK which are currently party to the NY Convention, "shall be recognised as binding on the persons as between whom it was made." In essence, recognition will allow a party to the award to rely on it in subsequent proceedings in England, including to support a set-off defense.

Sections 101(2)-(3) then set out two mechanisms to enable the award to be enforced in England:

• First, the award creditor can seek the court's permission to enforce the award. Such permission gives the creditor access to the same enforcement mechanisms as are available in respect of English judgments.
• Second, where such permission is given, the creditor may go further and obtain a judgment of the court itself in the same terms as the award. In essence, this will 'convert' the award into an English judgment. An advantage to this mechanism is that non-payment of the award (and thus of the new English judgment) may be a contempt of court, whereas it has been held that the contempt rules do not apply where the creditor has merely obtained permission to enforce.¹

It should be noted that Section 103 sets out various grounds for refusing enforcement, in line with...