By David Hunt, Sagar Gupta, and Veronika Lakhno
On February 7, 2023, Boies Schiller Flexner’s London office hosted a round table event. BSF attorneys David Hunt and Sagar Gupta, alongside A&O counsel Naomi Briercliffe and Farrer & Co partner Hendrik Puschmann, discussed important recent developments in enforcement of awards and judgments in the U.K. We also looked forward to the future of enforcing intra-EU investment treaty awards, developments in the mutual enforcement of judgments and pending developments in enforcement against digital assets.
In February 2022, the Commercial Court Guide was updated to deter unmeritorious challenges to arbitral awards and confirm the power of the courts to sanction parties who bring such challenges. Despite the English court’s reluctance to overturn awards, there were some occasional victories for challenging parties:
- In Dassault Aviation v. Mitsui Sumitomo Insurance Co Ltd  EWHC 3287 (Comm), the High Court considered whether a contractual prohibition of assignment applied in relation to an assignment of rights to an insurer under an insurance policy. The court interpreted the no assignment clause in the contract and concluded that the entry in the insurance policy resulted in a “taint of voluntariness” in respect of the assignment and rendered the tribunal without jurisdiction. On this basis, the tribunal’s award on jurisdiction was set aside.
- In DHL v. Gemini  EWCA Civ 1555, the Court of Appeal was dealing with a challenge to an award on the grounds of lack of substantive jurisdiction, i.e., that the arbitration agreement was invalid. The court expounded on the scope of the separability presumption and held it not to apply to contract formation, The court held that the question of whether an arbitration agreement has been concluded is subject to the usual contract formation rules. As the contract was not validly formed in the first place, the arbitral agreement contained in that contract was also not valid. Therefore, the award was set aside.
- In Ducat Maritime v. Lavender Ship Management Inc  EWHC 766 (Comm), the High Court set aside the award in which a party was ordered to pay around 33% more than the value of the claim due to an obvious accounting mistake. The court held that such a mistake constitutes a failure on the part of the arbitrator to conduct the proceedings fairly and set aside the award on the basis of serious irregularity that caused substantial injustice.
Among the unsuccessful challenges one of the most important cases related to the assessment of the parties’ procedural behaviour:
- In Union of India v. Reliance Industries Limited  EWHC 1407, the High Court clarified that the abuse of process principle in Henderson v. Henderson is a matter of procedural and not substantive law. The court confirmed the importance for the parties to make their case and raise relevant arguments as soon as they can, in order to preserve their right to rely on those arguments later in the proceedings.
Enforcement: Procedural Pitfalls
In 2022, the English courts continued to provide important guidance on the proper procedure for enforcement of awards and orders:
- In EVF v. HVF  EWHC 2470 (Comm), the High Court made obiter observations that interim measures under the UNCITRAL Rules should only be in the form of an order, not an award. The court noted that arbitrators are not empowered to issue interim measures in the form of an award.
- In General Dynamics United Kingdom v. State of Libya  UKSC 22, the U.K. Supreme Court by a majority decision confirmed that proceedings to commence an enforcement action in relation to an arbitration award had to be served on a sovereign state through the Foreign Office in accordance with s. 12(1) of the State Immunity Act.
- In RQP v ZYX  EWHC 2949 (Comm), the High Court held that s. 42 of the Arbitration Act allows the court to enforce an arbitral tribunal’s peremptory order even where there was an open question as to the tribunal’s jurisdiction.
Intra-EU Investment Treaty Awards
Many intra-EU investment treaty awards are yet to be enforced (around 68 intra-EU investment arbitrations are still pending, and several existing awards have not yet been enforced). Enforcement of intra-EU awards is controversial in light of the rulings of the European Court of Justice determining that provisions permitting intra-EU investment treaty arbitration are invalid under the EU law (Achmea B.V. v Slovakia; Republic of Moldova v Komstroy).
In light of this, it appears that New York Convention awards with an EU seat are susceptible to annullment and enforcement of ICSID awards in the EU is becoming increasingly difficult. There may be opportunities to enforce intra-EU awards outside the EU. The English courts have previously confirmed their duty to enforce awards under the ICSID Convention (Micula v Romania). The Full Federal Court of Australia granted the enforcement of the Antin v. Spain award. But this position is not universal: the Supreme Court of Colombia refused to enforce the PV Investors v. Spain award because it was an intra-EU award.
Further developments should be expected. In March 2023, the U.K. High Court is due to hear an application by Infrastructure Services Luxembourg and Energia Termosolar to enforce an intra-EU investment treaty award against Spain. The outcome of these proceedings will determine the prospects of the success of any future attempts to enforce the intra-EU awards in English courts.
As a result of Brexit, it is no longer possible to enforce U.K. judgments in the EU/EEA through the Brussels/Lugano mechanisms. However, the U.K. Ministry of Justice has recently launched a consultation on the accession to the Hague 2019 Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, which would potentially allow a greater range of options for reciprocal enforcement of judgments.
Our speakers also addressed the prospects of enforcement in cases involving digital assets. The English courts have repeatedly recognized digital assets, such as cryptocurrencies as property which can be made the subject of enforcement. However, law reform in this space remains ongoing and several practical issues remain.
The opinions expressed in the article are those of the authors alone and do not necessarily reflect the views of Boies Schiller Flexner LLP or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.