Enforcement strategy and the identification of an opponent’s assets should always be considered before commencing costly arbitration proceedings. Further guidance on steps to preserve assets and post-enforcement options can be found in Fortior’s earlier article: https://fortiorlaw.com/news/enforcement-of-judgments-and-arbitral-awards-in-england-and-wales/
Requirements for enforcement
The Arbitration Act 1996 governs the recognition and enforcement of arbitral awards in England, Wales, and Northern Ireland. Section 66(1) of the Act provides that an award made by a tribunal pursuant to an arbitration agreement may, with the leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. Where such leave is granted, judgment may be entered in the terms of the award (Section 66(2)). Section 66 of the Act is mandatory and applies to arbitrations seated both within and outside England, Wales, and Northern Ireland.
To enforce an arbitral award in England, the award must have been made pursuant to an arbitration agreement in the territory of a State, other than the UK, that is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958 (the “New York Convention”). The English courts are bound to recognise and enforce foreign awards under the New York Convention unless one of the grounds for refusal set out in Section 103 of the Act is established.
The grounds set out in section 103(2) of the Arbitration Act 1996 are exhaustive: Rosseel NV v Oriental Commercial & Shipping Co (UK) Ltd [1991] 2 Lloyd’s Rep. 625. These grounds give effect to the provisions of Article V of the New York Convention itself. These grounds, which have also been closely followed in the provisions of the Model Law, operate as a code, and their consistent interpretation and application across all the contracting states to the New York Convention is therefore of great importance for the successful operation of the modern system of international commercial arbitration.
A challenge to an award invoking one of the grounds under section 103 of the Arbitration Act 1996 is by way of rehearing, not review, and the court will determine the question anew, irrespective of whether a different view on the relevant issues may have been reached by the tribunal.
The court’s power to refuse recognition under section 103(2) of the Act is discretionary: Svenska Petroleum Exploration AB v Government of the Republic of Lithuania [2005] EWHC 9 (Comm.). However, that discretion is subject to legal principles, and it is not open-ended. Where one of the grounds stated under section 103(2) of the Arbitration Act 1996 has been made out, the Court would normally only enforce the award if the right to rely upon one of the stated grounds had been lost, for example by another agreement or estoppel (e.g. a legal principle that prevents a person from going back on their word (or their conduct) when it would be unfair or unjust to another party who has relied on it)), or on some other recognisable legal principle.
For the purposes of enforcement in England under Section 100(1) of the Arbitration Act 1996, an award may be enforced either:
(a) at common law, or
(b) pursuant to Section 66 of the Arbitration Act 1996.
Under either route, the usual limitation periods apply. This is generally six years from the date on which the cause of action accrued (Section 7 of the Limitation Act 1980), or twelve years if the arbitration agreement is executed under seal (Section 8 of the Limitation Act 1980). The cause of action accrues when the other party fails to honour the award: Agromet Motoimport Ltd v Maulden Engineering Co (Beds) Ltd [1985] 1 WLR 762. This is because it is an implied term of an arbitration agreement that any award will be honoured, and a breach of that implied term gives rise to an independent cause of action, distinct from the original dispute.
There are only rare circumstances in which it is advantageous to enforce a New York Convention award by issuing proceedings at common law. Accordingly, the focus here is on enforcement under Section 66 of the Arbitration Act 1996.
Section 66 provides that an award may, with the leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect. Where leave is granted, judgment may be entered in the terms of the award. For completeness, it should be noted that Section 66(3) of the Arbitration Act 1996 provides that leave to enforce an award will not be granted where the person against whom enforcement is sought demonstrates that the tribunal lacked substantive jurisdiction to make the award.
Where and how to make an application
In terms of procedure, Part 62 of the Civil Procedure Rules (“CPR”) applies to enforcement proceedings brought under the Arbitration Act 1996.
An application for leave to enforce an award must be made to the High Court (Commercial Court Registry) by way of an arbitration claim form. The claim form must be supported by an affidavit or witness statement containing the information required under CPR Rule 62.18(6) and must exhibit originals or duly certified copies of both the arbitration agreement and the award.
The claimant must also file two copies of a draft court order granting permission to enforce the award, which will be served on the defendant. The order must state the defendant’s right to apply to set aside the order within 14 days (or such longer period as the court may direct) and confirm that the award will not be enforced until either that period has expired, or any application made by the defendant within the time limit has been finally determined.
Where the claimant seeks to enforce an award that provides for post-award interest, a statement of interest must also be filed, containing the information required under CPR Rule 62.19.
An application for leave to enforce an award under either Section 66(1) or Section 101(2) of the Arbitration Act 1996 may be made ex parte (e.g. without notice to the other party). However, the court has discretion to direct that the arbitration claim form be served, in which case it must be validly served on the defendant, and the enforcement proceedings will thereafter continue as adversarial proceedings.
Important points to note when applying to enforce an arbitral award
A party seeking leave to enforce an award on an ex parte basis is under a duty of full and frank disclosure. This requires the applicant to inform the court of all material facts, including any pending set-aside proceedings. Failure to comply with this duty may result in the ex parte order being set aside or the imposition of costs sanctions.
Under Section 103(5) of the Arbitration Act 1996, the English courts have discretion to adjourn enforcement proceedings pending the outcome of set-aside proceedings at the seat of arbitration. Accordingly, an award cannot be enforced until either the time period for bringing a set-aside application has expired or any such challenge has been finally determined. Once that period has passed, judgment may be entered in the terms of the award, and the award may then be enforced in the same manner as any judgment of the English courts.
Although English law recognises the possibility of enforcing a foreign award that has been set aside at the seat of arbitration where the judgment annulling the award is impeachable, for example, on grounds of fraud, breach of natural justice, or public policy, English courts have to date declined to enforce such awards (see Yukos Capital v OJSC Rosneft Oil Company [2014] EWHC 2188 and Malicorp v Government of Egypt [2015] EWHC 361 (Comm)).
What happens after enforcement
Once the court has granted permission to enforce the award as a judgment, and the time limit for challenging the order has expired, the claimant may pursue any of the wide range of legal tools available to enforce money judgments in England. These are set out in Practice Direction 70 of the CPR and include:
- writs of control;
- third-party debt orders;
- charging orders;
- attachment of earnings orders; and
- the appointment of a receiver.
In addition, the claimant may present a statutory demand or a winding-up petition against the debtor company.
Other procedural tools are also available to assist with enforcement. For example, under CPR 71 the claimant may make a without-notice application for an order requiring the debtor company (in its capacity as judgment debtor) to attend court to provide information relevant to enforcement of the judgment debt. Non-compliance with such an order may result in sanctions.
Assets of the debtor that may be used to satisfy the award include both personal and real property, shares, funds in court, dividends and interest, beneficial interests under trusts, debts owed to the award debtor by third parties, and any wages owed.
Practical tips:
- Verify that the award was made pursuant to an arbitration agreement in the territory of a State, other than the UK, that is a party to the New York Convention.
- Ensure you have the original award and arbitration agreement, or duly certified copies.
- Observe all deadlines carefully, including the period allowed for challenges to the enforcement.
- Maintain full transparency with the court and disclose all relevant facts, including any ongoing set-aside proceedings, to avoid delays or sanctions.
- Consider the full range of enforcement tools under Practice Direction 70 of the CPR to select the most effective method for recovery.
- Seek early legal advice if the award has been challenged at the seat of arbitration or if any foreign enforcement issues arise, to minimise procedural and strategic risks.
- Fortior Law has extensive experience in enforcing foreign awards in England https://fortiorlaw.com/
