Arbitration Awards and Challenges

Introduction

The arbitration award is the final determination by the arbitral tribunal of the issues submitted to arbitration. Under the Arbitration Act 1996, the award is final and binding on the parties and may be enforced through summary court procedures or under the New York Convention in over 170 countries. However, the Act provides limited grounds on which an award may be challenged in the English courts, balancing the finality of arbitration against the need to correct serious procedural irregularities and errors of law. The grounds for challenge are set out in sections 67 to 69 of the AA 1996.

Form and Content of the Award

Section 52 of the AA 1996 prescribes the formal requirements for an award. The award must be in writing, signed by all the arbitrators or a majority, state the seat of the arbitration, specify the date, and contain reasons for the decision unless the parties have agreed otherwise or the award is a consent award recording the parties’ settlement. The requirement for reasons promotes transparency and enables the parties to understand the basis for the decision, while also facilitating any challenge to the award.

The tribunal may make a single final award disposing of all claims, or may make separate awards on different issues. Section 47 permits the tribunal to make partial awards on liability, causation, or specific points of law, enabling the efficient resolution of complex disputes by determining issues sequentially. The tribunal may also make interim awards on jurisdiction, provisional measures, or costs.

Section 67: Challenge to Substantive Jurisdiction

Section 67 of the AA 1996 permits a party to challenge an award on the ground that the tribunal lacked substantive jurisdiction. Substantive jurisdiction includes questions as to whether there is a valid arbitration agreement, whether the tribunal is properly constituted, and whether the matters submitted to arbitration fall within the scope of the arbitration agreement. A challenge under section 67 may be brought at any time before the award is made, and the party challenging must apply promptly after the award is made.

The English courts have emphasised that section 67 provides a full rehearing of the jurisdictional question, not merely a review of the tribunal’s decision. The court considers the evidence available at the time of the hearing, including evidence that was not before the tribunal. If the court finds that the tribunal lacked jurisdiction, it may vary or set aside the award, either in whole or in part. The court may also declare the award to be of no effect in whole or in part.

Section 68: Serious Irregularity

Section 68 provides a challenge on the ground of serious irregularity affecting the tribunal, the proceedings, or the award. The irregularity must be of a kind listed in section 68(2) and must have caused or will cause substantial injustice to the applicant. The categories of serious irregularity include: failure to comply with the general duty under section 33 (fairness and impartiality); excess of powers (other than jurisdiction); failure to conduct the proceedings in accordance with the procedure agreed by the parties; failure to deal with all the issues put to the tribunal; uncertainty or ambiguity as to the effect of the award; and procedural irregularity in the making of the award.

The threshold for a successful section 68 challenge is high. The Court of Appeal in Petrochemical Industries Co (KSC) v Dow Chemical Co (2012) confirmed that section 68 is not a vehicle for appealing the tribunal’s findings of fact or law but is limited to cases where the tribunal’s conduct falls below the standards of fairness and due process required by the Act. The court will not interfere with the tribunal’s procedural decisions unless they are so unreasonable as to amount to a denial of justice.

Section 68(3) provides that the court may remit the award to the tribunal for reconsideration, set the award aside in whole or in part, or declare the award to be of no effect. The court will not exercise its power to set aside unless it is satisfied that it would be inappropriate to remit the matter to the tribunal.

Section 69: Appeal on a Point of Law

Section 69 permits an appeal to the court on a point of law arising out of an award, but only with the agreement of all parties or with the leave of the court. Section 69 reflects a compromise between the finality of arbitration and the development of English commercial law through judicial consideration of legal issues arising in arbitration. The parties may contract out of section 69 by agreement, and many institutional rules and ad hoc agreements exclude the right of appeal to preserve finality.

The court may grant leave to appeal only if it is satisfied that the question of law substantially affects the rights of one or more of the parties; that the question is one which the tribunal was asked to determine; that the tribunal’s decision is obviously wrong or the question is one of general public importance and the tribunal’s decision is at least open to serious doubt; and that it is just and proper in all the circumstances for the court to determine the question.

Even where leave is granted, the court will accord the tribunal’s findings of fact considerable deference. In Braes of Doune Wind Farm (Scotland) Ltd v Alfred McAlpine Business Services Ltd (2008), the Court of Appeal emphasised that the court should not interfere with the tribunal’s findings of fact or its application of legal principles to the facts unless the tribunal’s decision is one that no reasonable tribunal could have reached.

Public Policy and Enforcement

Even where an award is not challenged under sections 67 to 69, enforcement may be resisted on the ground that it would be contrary to public policy to enforce the award. Under section 103(3) of the AA 1996, which implements Article V(2)(b) of the New York Convention, enforcement of a New York Convention award may be refused if it would be contrary to public policy. The public policy ground is narrowly construed and applies only where enforcement would violate the most basic notions of morality and justice of the English legal system.

In Soleimany v Soleimany (1999), the Court of Appeal refused enforcement of an award where the underlying transaction involved the illegal export of carpets from Iran in breach of Iranian revenue law and export controls. The court held that English public policy precluded the enforcement of an arbitration award giving effect to an illegal contract.

Conclusion

The Arbitration Act 1996 provides a comprehensive framework for the form, content, and enforceability of arbitration awards, balanced against limited grounds for challenge. Sections 67, 68, and 69 enable the courts to correct jurisdictional errors, serious procedural irregularities, and errors of law, while preserving the finality and efficiency that are the hallmarks of arbitration. The high threshold for challenges ensures that the arbitration process is not undermined by routine appeals to the courts.