The English court retains its robust approach to challenges to arbitral awards: Commercial Court releases its statistics

The Judiciary of England and Wales has published the Commercial Court Report 2020-2021 (The Report). These reports are released annually to give an overview of the courts' work and decision-making. For arbitration practitioners, they also provide insight into the number of applications made before the English court to challenge arbitral awards and how these applications are resolved. This year's Report continues to show the English courts’ non-interventionist approach to arbitration and the high threshold for a successful challenge within the jurisdiction.

Arbitration matters make up around 25% of the claims issued in the Commercial Court, reflecting London's status as an established seat and important centre of international arbitration. These claims include applications for injunctions in connection with arbitration, for the enforcement of awards and other applications in support of the arbitral process.

However, the bulk of the claims relate to challenges to arbitral awards under the Arbitration Act 1996 (the Act) on the grounds of lack of substantive jurisdiction (s67) and serious procedural irregularity (s68) and appeals on a point of law (s69). The Report provides a set of statistics for s67, s68 and s69 applications made in the Commercial Court for the court years 2018 – 2019, 2019 – 2020 and 2021 – 2022. It should be noted that these numbers may differ slightly from the statistics provided in earlier years' reports. An application is included within the statistics for the court year in which the application is made, not in the year in which it concludes. As applications conclude the data in relation to that matter can be updated and the data becomes more accurate. [1]

Number of applications made

The statistics provided in the Report show a small reduction in the number of applications being made under each of s67, s68 and s69 when viewed over the course of the last three years. The drop off is perhaps the most notable for applications made under s69 of the Act.

However, if we add in the statistics for the court year 2017-2018 (referred to in the Commercial Court Report 2018-2019, the (2019 Report) published in 2020[2]), there is a more pronounced drop. The 2019 Report “expressed hope that parties were hearing the message that the hurdle for these applications is high”. While it is difficult to draw any concrete conclusions as to why the number of challenges and appeals dropped between these two court years in particular, that drop in numbers has been sustained.

Outcome of applications

The Report also indicates the outcome of these various applications with some granularity, including whether and how an application was dismissed (e.g. on paper or at a hearing), whether it was stayed, discontinued, withdrawn or successful. The statistics yet again show the limited chances of success for challenging or appealing an arbitral award in the English court. While there was a slight increase in the number of successful s69 applications in 2019-2020 this would appear to be a one-off event since the Report identifies no successful s69 applications in the 2020-2021 court year.

Comment

The statistics for the last three years show a fairly static and reliable picture of the number of applications being made and a similarly reliable low success rate for those applications. However, the static nature of this data is, in itself, noteworthy, perhaps demonstrating the recognition by potential applicants of the high hurdle for success and the reluctance of the English court to intervene in the arbitral process. It remains to be seen whether the introduction of provisions into the Commercial Court Guide earlier this year to deter and sanction speculative s67 challenges (bringing them in line with those that already apply to s68 challenges) will lead to a decline in the numbers in next year's report. Either way, the Report serves to confirms the very high threshold for challenging an arbitral award under s67, s68 or s69 of the Act and is an important reminder that such challenges should not be undertaken lightly.

For further information, please contact Craig Tevendale, Partner, Vanessa Naish, Professional Support Consultant, or your usual Herbert Smith Freehills contact.

[1] There will therefore be differences between the statistics provided in this blog and earlier blog pieces written by HSF. The most recent HSF blog piece will refer to the most accurate and recent data provided by the Commercial Court.

[2] Note that the statistics given in the 2018-2019 report for the 2018-2019 Court year are not accurate and were later updated by the Commercial Court in subsequent reports, including this Report.