19 November 2018

10 predictions about international arbitration in 2028 in a post-Brexit UK (and a review of relevant English Court decisions of the last quarter)

By Dorothy Murray, Chloé Bakshi, Dina Suliman, Llewellyn 

Spink, Cassandra Ditzel and Valentine Kerboull (London)

  1. The English Courts will still be hard at work promoting the jurisdiction as arbitration friendly …by allowing only limited challenges to arbitral awards and recognising the wide powers and discretions of Tribunals, especially those governed by the Arbitration Act 1996. There will be no change to the approach of the English Courts under s68 or s69 of the 1996 Act as exemplified by the recent cases of Reliance Industries Limited & Ors v The Union of India [2018] EWHC 822 (Comm) and SCM Financial Overseas Ltd v Raga Establishment Ltd [2018] EWHC 1008 (Comm)
  2. In Reliance, the Claimants made nine challenges to an arbitration award in the English Court under sections 67, 68 and 69 of the 1996 Act. All but one of the challenges failed. Two are particularly worthy of note. First, a claim that there was serious irregularity under s.68 as the Tribunal majority reached a conclusion on contractual construction based on a new point on which the parties had not specifically made submissions. The Court held there was no serious procedural irregularity. Where a point of construction is squarely in play and addressed by both parties, the Tribunal is not obliged to put to the parties all aspects of the analysis in support of its conclusion in order to fulfil the Act’s s.33 duty of fairness. A party will have had sufficient opportunity if the “essential building blocks” of the Tribunal’s decision were in play. Second, Claimants also argued that the foreign act of state principle of non-justiciability did not apply to arbitration (whilst the Tribunal had found its jurisdiction was limited, in part, because of this). In the first English authority on this point, the Court found that the principle applies to arbitration just as it applies to litigation. 

    In SCM, the English Court dismissed a challenge under s.68 of the 1996 Act claiming serious irregularity arising from the Tribunal’s refusal to defer their award pending Ukrainian court proceedings which could have had a significant impact upon the Tribunal’s decision. The Court accepted that a decision not to defer the issue of an award until further evidence is available is capable of amounting to a breach of s.33 (and serious irregularity under s.68) but this depends, on all the circumstances of the case. Section 34 of the Act affords arbitrators wide discretion regarding procedure and evidence, and they were entitled in this case not to wait for the Ukrainian court decision.

  3. ...and by upholding the “nuclear weapon” of the World Freezing Order (WFO) and ensuring it continues to have teeth. The recent case of PJSC Commercial Bank Privatbank v Igor V Kolomoisky and ors [2018] EWHC 1910 (Ch) demonstrates the continued challenges to WFOs. Privatbank obtained a WFO against Ukrainian oligarch Igor Kolomoisky and some of his non-trading companies. The English Court ruled that payment by one of the companies of Mr Kolomoisky’s legal fees as co-claimant in an investment arbitration did not fall within the exception for “ordinary and proper course of business”. If this was acting in the “course of business”, said the Judge, then anything he did managing, dealing or disposing of assets would be excluded from the WFO, denuding it of any effect.

  4. There will be no change to the enforcement of awards made in England in other jurisdictions, or of foreign awards in England. The New York Convention which applies to the recognition and enforcement of arbitration agreements and awards will have been entirely unaffected by the departure of the UK from the EU.

  5. The now 11-year old Fiona Trust case[1] will still be the leading decision about the interpretation of arbitration agreements, just as is today. In Dreymoor Fertilisers Overseas PTE Ltd v Eurochem Trading GmbH [2018] EWHC 909 (Comm), Dreymoor and Eurochem entered into contracts for the purchase and resale of fertilizer (which contained arbitration agreements) and Dreymoor acted as Eurochem’s agent under agency agreements (some of which did not). Eurochem alleged in an LCIA arbitration that Dreymoor bribed its employees to secure favourable terms. Dreymoor challenged jurisdiction under section 67 of the 1996 Act contending that Eurochem’s allegations related to the agency agreements and so were not within the scope of the arbitration agreements in the sales contracts. The court applied the liberal interpretation in Fiona Trust and dismissed the challenge: the dispute did fall within the arbitration clauses in the sales contracts. The wording of the arbitration clause was wide enough (and would be considered such by reasonable business people when entering the agreements), to cover the disputes referred to arbitration, including non-contractual claims, including bribery inducing the contract.

  6. People will still be writing articles entitled “West Tankers sails on”, but that ship will no longer call at the UK as English Courts will have regained their full common law powers to issue anti-suit injunctions in support of arbitrations which can be a powerful weapon in international disputes. Post-2028, while the UK government has indicated that it intends to remain in the Hague Convention and Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, the Court of Justice of the European Union (“CJEU”) will no longer have direct jurisdiction in the UK[2]. In the meantime though, the Commercial Court recently confirmed that the decision of the CJEU in West Tankers Inc v Allianz SpA (Case C- 85/07) [2009] AC 1138 that a court in one European member state cannot grant an injunction to restrain proceedings brought in breach of an arbitration clause in another member state remains good law and has not been reversed by recital 12 of the Recast Brussels Regulation and the reasoning of Advocate General Wathelet in Proceedings concerning Gazprom OAO (Case C-536/13) [2015] 1 WLR. In Nori Holding Limited & Ors v PJSC Bank Otkritie Financial Corporation [2018] EWHC 1343 (Comm), the Court refused to grant the anti-suit injunction sought to restrain the pursuit of court proceedings in Cyprus which the Claimants alleged were brought in breach of arbitration clauses. An anti-suit injunction ordered by a court was incompatible with the Regulation, although an award of arbitrators to the same effect was not. By 2028 however, we will see more cases like Atlas Power Ltd & Ors v National Transmission and Despatch Co Ltd [2018] EWHC 1052, where the Court granted an anti-suit injunction to restrain the Defendant from challenging, by way of proceedings in Pakistan, a partial final award issued in a London seated LCIA arbitration. The Court held firmly that it had exclusive supervisory jurisdiction given the London seat and therefore had the power to injunct.

  7. The Court will no longer have to balance the competing obligations under the ICSID Convention and EU as it did in Viorel Micula and others v Romania and European Commission (intervenor) [2018] EWCA Civ 1801. Put simply, an ICSID award will be res judicata from the date of the award, without needing to wait for the result of any annulment procedure, and the English Court will be bound to recognise and enforce it under the Arbitration (International Investment Disputes Act) 1966. In Micula, the Micula brothers sought to enforce their ICSID award against Romania in England under the 1966 Act, but the Court at first instance granted a stay of the enforcement proceedings pending the General Court of the EU’s decision on whether payment of the award sum constituted illegal state aid (the European Commission having decided that it did). The English Court of Appeal considered its competing obligations under the national law, the ICSID Convention and EU law and dismissed an appeal against the stay but ordered Romania to pay security, albeit on the basis that the sanction for non-payment of security was not termination of the stay.

  8. Parties wanting the certainty of English law will have chosen English law plus arbitration as a default provision in their contracts rather than the English courts, given the greater ease and certainty as to global enforcement of arbitral awards (see point 3 above) such that by 2028, the London market and English based arbitration lawyers will see an increase in arbitrations arising under such contracts.

  9. In fact, Brexit will lead into Brinlet (as far as arbitration practitioners are concerned). There will have been such a boom of Brexit-induced London seated arbitration disputes under pre-existing contracts that  EU arbitration practitioners will have set up branch offices in London to compete to take them on (and to cater to their pre-existing and new UK-based international clients). 

  10. By 2028, the debate about transparency and ethical conduct in international commercial arbitration will have progressed such that multiple appointments of the same arbitrator in cases with overlapping subject matter as happened in Halliburton Company v Chubb Bermuda Insurance Ltd and others [2018] EWCA Civ 817 will no longer occur. The tension between party autonomy and arbitrator impartiality will have been resolved in favour of avoiding all risk or perception of bias, given the wider pool of arbitrators available for appointments and the increased transparency that will be seen in commercial arbitrations (more institutions following the ICC’s example since 2016 of publishing arbitrator names for all ICC cases). In Halliburton, one of the three arbitrators, “M” was appointed by Chubb in arbitration proceedings between Chubb and Halliburton. M was subsequently appointed in arbitral proceedings arising from the same set of facts between Chubb and Transocean, but did not disclose this to Halliburton. Halliburton sought his removal as arbitrator. The Court of Appeal clarified that a simple lack of independence was not ground for removal; the test was impartiality. Although there is a link between the two, in this case, M’s involvement (and regretful failure to disclose his involvement) in the other proceedings did not suggest any impartiality. Halliburton’s appeal was dismissed.

  11. By 2028, London will have a new high-tech hearings centre, rivalling those of key Asian centres. Recognising the need to attract international disputes and match facilities provided elsewhere, one global law firm will have created an investment consortium together with Chinese venture capital and the KWM Arbitration Chambers, with its central London location but Asian style, will be a popular choice.


[1] Fiona Trust & Holding Corp v Privalov [2007] EWCA Civ 20.

[2] HM Government, providing a cross-border civil judicial cooperation framework: a future partnership paper (August 2017): https://assets.publishing.service.gov.uk/

Download Crossing Borders: International Arbitration Insights - Where will we be in 2028?

Crossing Borders is a periodic review of developments in international arbitration across the world. Included in this special 10th edition, we explore what arbitrations will be like going into 2028 - where, how and by whom disputes will be decided.

Belt and Road Hub

We explore the opportunities the Belt and Road Initiative brings for your business, and provide our comprehensive, professional services to help.

Belt and Road

A Guide to Doing Business in China

We explore the key issues being considered by clients looking to unlock investment opportunities in the People’s Republic of China.

Doing Business in China
Share on LinkedIn Share on Facebook Share on Twitter
    You might also be interested in

    Arbitration arose as a private out-of-court means to resolve disputes. Autonomy, confidentiality, flexibility, neutrality, and finality attracted users. However, some of these very features have...

    19 November 2018

    One reason for electing for arbitration as a dispute mechanism is confidentiality of proceedings. But what does that mean?

    19 November 2018

    Learn about the new International Court International Centre for Settlement of Investment Disputes Rules

    19 November 2018

    Meet the 10 Arbitration Centres from around the world that you may not have never heard of

    19 November 2018

    This site uses cookies to enhance your experience and to help us improve the site. Please see our Privacy Policy for further information. If you continue without changing your settings, we will assume that you are happy to receive these cookies. You can change your cookie settings at any time.

    For more information on which cookies we use then please refer to our Cookie Policy.