ENGLISH COMMERCIAL COURT RELEASES S68 AND S69 STATISTICS FOR COURT YEAR 2019 – 2020: CHALLENGES DOWN AGAIN AND THE NON-INTERVENTIONIST APPROACH SUSTAINED

The Judiciary of England and Wales has published the minutes of the Commercial Court User Group Meeting that took place at the end of November 2020 (the “2020 Minutes”), providing updated information and statistics relating to challenges to arbitral awards under s68 Arbitration Act 1996 (the “Act”) and appeals on a point of law under s69 of the Act for the legal year October 2019 – September 2020.

The Commercial Court has confirmed the recent practice of producing these statistics on a legal year (rather than calendar year) basis, for better consistency with other statistics released by the Court. Our blog post on the 2019 report that followed the 2019 Commercial Court User Group Meeting (the “2019 Report”), detailing the s68 and s69 statistics for court year 2018-2019 can be found here and key statistics from the 2019 Report have been included below, for the purposes of comparison.

The statistics reported in the 2020 Minutes suggest that while 2020 was marked by disruption to businesses and the courts as a result of the Covid-19 pandemic, matters nonetheless remained very much business as usual in the English courts’ approach to the supervision of arbitral awards. The last legal year saw a similarly low success rate for both s68 challenges and s69 appeals and an apparent decrease in the number of applications in comparison to the 2018 – 2019 court year.

The statistics at a glance

The tables below set out the statistics for s68 and s69 applications for the court years 2019-2020 and 2018–2019:

S68 Challenges

Number of applications

The 2020 Minutes report that the last legal year saw 16 applications to challenge awards under s68 on the basis of a procedural irregularity. This is a slight reduction on the number of applications made in the 2018-2019 court year (as reported in the 2019 Report) and is the second year running that the Commercial Court has reported a decrease in s68 applications.

Successful Challenges

The success rate of s68 challenges to awards remains extremely low, with only one successful challenge to an award reported in the 2020 Minutes across the 2019–2020 legal year. This is in line with the very low success rate seen in the 2018-2019 court year, where no successful challenges were reported.

It clearly remains the case that the English courts continue to demonstrate the non-interventionism that has historically characterised their approach to the supervision of arbitral awards. In fact the 2020 Minutes report that a number of s68 applications last year were dismissed on the papers alone and the one successful challenge highlighted in the 2020 Minutes is likely to be the unusual case of Xstrata Coal Queensland P Ltd (Company Number 098156702) (aka Rolleston Coal Holding PTY Ltd) & Anor v Benxi Iron & Steel (Group) International Economic & Trading Co Ltd [2020] EWHC 324 (Comm) (see our blog post on this decision here), which succeeded on the basis of its own particular facts. In that case an arbitral award was challenged by the award creditors following an unsuccessful attempt to enforce the award in China under the New York Convention. The Commercial Court remitted the award to the tribunal for reconsideration of the identity of the parties to the contract, on the basis that there was uncertainty or ambiguity relating to the identity of a party to the underlying contract and the arbitration agreement.

Notable unsuccessful challenges to awards under s68 determined by the Commercial Court in the last legal year include ASA v TL [2020] EWHC 2270 (Comm) (see our blog post on this decision here), where the Commercial Court considered that the applicant sought to “challenge findings where the arbitrator has taken a different view of matters contrary to its submissions” and sought to “attack an arbitrator’s findings of fact and her evaluation of the evidence on the basis of procedural unfairness when there was none”.

S69 appeals:

Permission to appeal

Whilst in previous years the Commercial Court has tended to only report statistics relating to the number of applications and successful appeals under s69, the 2020 Minutes report that a “key figure” for users of the court is the percentage of s69 cases where permission to appeal was granted.

This “key figure” is no doubt of importance to users of the English courts as a result of the limited availability of appeal under s69, even where the right of appeal for error of law has not been excluded by the parties. Where the right to appeal is available, unless all of the parties to the proceedings agree to bring the appeal, there are a number of stringent requirements that must be satisfied for permission to appeal to be granted:

• The determination of the question of law must substantially affect the rights of one or more of the parties, and be a question that the tribunal was to determine;
• The decision of the tribunal must be obviously wrong or the question must be of general public importance with the decision of the tribunal being open to serious doubt;
• It must also be just and proper in all of the circumstances for the court to determine the question.

The 2020 Minutes report that the Commercial Court believes that historical figures “suggest that this [permission rate] hovers around 30%”, noting that “last year 7 permissions were granted out of 22 determined before the cut off date”. This suggests that last year 31% of applications received permission, which would be in line with the historical proportion of applications given permission. This must be subject to the slight caveat that there are undoubtedly some applications from last year yet to be determined.

Total applications

The 2020 Minutes report that the Commercial Court determined 22 s69 applications in the 2019-2020 legal year. Whilst at first glance it appears that the number of s69 applications decreased significantly from the 2018-2019 court year, the statistic from the 2020 Minutes for last year only concerns applications that have been determined, and not the outstanding applications that are yet to be determined. The 2020 Report observes that there are a “significant number” of s69 applications in 2019-2020 yet to be completed, and so it is likely that any decrease in s69 appeals will ultimately prove  to be less stark than the statistics first appear.

Successful appeals

In terms of the number of successful appeals, owing to the time lag between applications brought under s69 and their completion, the Commercial Court chose not to reveal the precise number of successful appeals under s69. Instead the Commercial Court indicated that the statistics from the previous year are likely to provide a more informative illustration of the success rate of s69 appeals (at around 5%). The emphasis placed on this historical data confirms the continued difficulty in bringing an appeal on the basis of an error of law.

Recent cases involving successful appeals on a point of law under s69 further demonstrate that applicants face a high hurdle. In Alegrow SA v Yayla Argo Gida San ve Nak A.S [2020] EWHC 1845 (Comm) (see our blog post on this decision here), for example, the Commercial Court reiterated that English courts “strive to uphold arbitration awards”, reading them in a “commercial and reasonable way” rather than with a “meticulous legal eye to pick holes, inconsistencies and faults in awards and with the object of upsetting or frustrating the process of arbitration”, highlighting the light touch approach to review under s69.

Comment

The 2020 Minutes show a continued drop in the number of challenges and appeals to arbitral awards in the Commercial Court, perhaps supporting the Commercial Court’s suggestion in the 2019 Report that applicants are being deterred by the high hurdle for success. Users of London-seated arbitration will undoubtedly welcome the trends revealed by the statistics in the 2020 Minutes. Whilst much has changed in the last year, it remains business as usual in the English courts when it comes to the supervision of arbitral awards, and the threshold for any challenge under s68 or appeal under s69 continues to be set very high.

For more information, please contact Craig Tevendale, Partner, Rebecca Warder, Professional Support Lawyer, or your usual Herbert Smith Freehills contact.

The authors are aware of further successful challenges under s68 in 2020 (including Kazakhstan v Worldwide Minerals [2020] EWHC 3068 (Comm)) that are not reflected in the above statistics reported by the Commercial Court as the decisions in these cases were handed down after September 2020. We expect that these further successful challenges under s68 will be reflected in the Commercial Court's forthcoming End of Year Report.