English Commercial Arbitration Round-Up

What were the most important English commercial arbitration developments of 2024? We have put together a round-up below. Do also check out our Inside Arbitration podcast where we discuss the topic that we think has been the most significant this year in terms of caseload and profile.

1. Anti-suit and anti-enforcement relief in England and Wales
2. English Arbitration Bill reintroduced in King's Speech
3. Insolvency and Arbitration: Privy Council changes the tide in the UK
4. International institutional updates 
5. Arbitration and consumer rights: intersection of statutes in the UK
6. Confidentiality of arbitration awards
7. Update to IBA Guidelines on Conflicts of Interest and Case on Arbitrator Disclosures Update
8. Shams, scams and "miracles": fabricated arbitral awards

ANTI-SUIT AND ANTI-ENFORCEMENT RELIEF IN ENGLAND & WALES

There have been numerous applications in the English courts for anti-suit and anti-enforcement injunctions this year, largely relating to proceedings commenced in the Russian courts under Article 248 of the Russian Arbitration Procedural Code in breach of arbitration agreements or exclusive jurisdiction clauses.

One such application culminated in the Supreme Court's judgment in UniCredit Bank GmbH v RusChemAlliance LLC, in which it dismissed RCA's appeal and maintained the final anti-suit injunction in respect of proceedings brought by RCA in Russia in breach of an arbitration agreement (see our most recent blogpost here). The judgment is notable in its robust defence of the Supreme Court's prior decision in Enka v Chubb relating to the law governing arbitration agreements. Determining that the law governing the arbitration agreement was England & Wales, the court concluded that it had jurisdiction to grant anti-suit relief even though the parties had chosen Paris-seated arbitration. The choice of a foreign seat was not in itself a reason why the English court could not or should not uphold the parties' bargain.

Other recent cases involving anti-suit and/or anti-enforcement relief include:

• Barclays v VEB (two judgments: [2024] EWHC 2981 (Comm) and [2024] EWHC 3088 (Comm): the Commercial Court determined that an arbitral tribunal did not have jurisdiction over a dispute on the basis that Barclays had successfully invoked an asymmetric dispute resolution clause in favour of the English courts. See our blogpost here.
• Renaissance Securities v ILLC Chlodwig Enterprises and others [2024] EWHC 2843:  the English Commercial Court rejected an application to extend an ASI to cover claims against third parties. See our blogpost here.
• Airbus Canada v Joint Stock Company Iluyshin Finance [2024] EWHC 789 (Comm):  the English Court reserved a decision on the costs of an anti-suit application for the arbitral tribunal. See our blogpost here. 
• Another case involved an anti-enforcement injunction, which the court granted even though that party had not applied for an anti-suit injunction first.

These cases demonstrate the various tools that the English courts are willing to deploy to protect arbitration agreements. They are helpful illustrations of the circumstances in which is it appropriate to grant relief and the procedural issues that may arise.

ENGLISH Arbitration Bill Reintroduced in King's Speech

Following the general election in July 2024, the new UK government re-introduced the Arbitration Bill to Parliament's legislative agenda. The Bill is intended to support more efficient dispute resolution, attract international business and promote UK economic growth.

The Bill introduces a number of reforms, including codifying arbitrators' duties of disclosure, strengthening arbitrator immunity and making express provision for the summary disposal of issues. The Bill also contains a new default rule for the arbitration agreement to be governed by the law of the seat unless the parties expressly agree otherwise. This is intended to avoid disputes regarding the governing law of the arbitration agreement, as per Enka v Chubb and the decision in Unicredit v RusChem discussed above.

The third reading of the Bill in the House of Lords took place on 6 November 2024. The Bill was passed and presented to the House of Commons on the same day. It will need to continue to pass through the House of Commons and the final stages before it receives Royal Assent. The passage of the Bill can be tracked here.

Insolvency and Arbitration: Privy Council Changes the Tide in THE UK

In Sian Participation Corporation (In Liquidation) v Halimeda International Ltd [2024] UKPC 16, the Privy Council considered an appeal from the Court of Appeal of the Eastern Caribbean Supreme Court (BVI) as to whether a company should be wound up where the debt on which the winding up application was based was subject to an arbitration agreement and was said to be disputed and/or subject to a cross-claim.

The Privy Council concluded that the correct test for the court to apply, regardless of whether the parties have agreed an exclusive jurisdiction or arbitration clause, is whether the debt is disputed on genuine and substantial grounds. It is for the court to decide whether a debt is genuinely disputed on substantive grounds, and if it is not, a creditor should be able to obtain a winding up order without having to first arbitrate (or litigate) the issue.

In reaching its conclusion, the Privy Council found that the English Court of Appeal decision in Salford Estates (No 2) Ltd v Altomart Ltd (No 2) [2014] EWCA Civ 1575, which was the leading authority on this issue up until now, was wrongly decided. The Privy Council directed that the decision reached in this appeal represents the law of England and Wales such that Salford Estates should no longer be followed (see here for our summary of the Salford Estates decision).

The pragmatic approach taken by the Privy Council ought to reassure creditors that their choice of dispute resolution forum should not impact their ability to engage the insolvency process, where required. It should also prevent creditors from having to participate in arbitration proceedings with respect to debts that are not genuinely disputed. For situations where a creditor brings a winding up petition in an attempt to bypass an arbitration agreement, as the Privy Council has noted, the court has other tools at its disposal, including the power to sanction them for abuse of process and order indemnity costs.

For more information, see our blogpost here.

INTERNATIONAL INSTITUTIONAL UPDATES

There have been a number of initiatives launched by the key international arbitration institutions this year. In particular:

• SIAC: Launched the 7^th edition of its rules, which came into force on 1 January 2025. Highlights include the introduction of new procedures such as the Streamlined Procedure, Preliminary Determination and Coordinated Proceedings, enhancements to the Emergency Arbitration procedure and the incorporation of SIAC's online case management system, SIAC Gateway. For more information, see our blogpost here.
• HKIAC:  Released its 2024 Administered Arbitration Rules in May 2024, which came into effect on 1 June 2024. They introduce a range of robust new powers and duties for tribunals and the HKIAC.  Many of these focus on maintaining the efficiency and integrity of the proceedings by combatting guerilla tactics and other obstacles to the swift and cost-effective resolution of disputes.  Diversity, environmental and information security considerations are also expressly addressed for the first time. Further details relating to and analysis of the reforms can be found here.
• LCIA: Released new Equality, Diversity and Inclusion guidelines aimed at fostering a more inclusive and representative arbitration process. The guidelines emphasise the importance of both cognitive and demographic diversity, highlighting how varied perspectives can lead to more balanced and fair outcomes. The guidelines are structured to provide practical advice at different stages of the arbitration process – from commencing an arbitration, identifying arbitrator candidates to establishing hearing procedures. For more information, see our blogpost here.
• ICC: A Task force of the ICC Commission on Arbitration and ADR has recently released a document entitled "Red Flags or Other Indicators of Corruption in International Arbitration".  Forming part of a wider (yet to be finalised) report, it aims to provide guidance to the arbitration community in general and arbitrators in particular, as to what to do and how to respond when issues that may reflect the existence of corruption in disputes arise in disputes before them.

Arbitration and Consumer Rights: Intersection of Statutes IN THE UK

There is a growing body of case law concerning the interaction of international arbitration and consumer protection in the UK. The latest instalment was the Court of Appeal judgment in Eternity Sky Investments Ltd v Xiaomin Zhang (with the CMA as intervener) [2024] EWCA Civ 630. This concerned a challenge to an arbitration award on the grounds of public policy, arguing  that the terms of a guarantee were unfair for the purposes of English consumer legislation. The Court of Appeal dismissed the appeal and upheld the arbitration award. In doing so, it also reversed the High Court's finding that Mrs Zhang was acting as a consumer when she entered into a personal guarantee to secure a HK$500 million corporate convertible bond issue.

The factual background to this case can be found in our earlier blogpost on the first instance decision here. In short, Eternity Sky sought to recover a debt claim from Mrs Zhang, which a sole arbitrator in a Hong Kong-seated arbitration determined was due under the arbitration agreement in question. Eternity Sky obtained permission to enforce the award in England, and Mrs Zhang applied for the enforcement order to be set aside on the grounds that enforcement would be contrary to English public policy within s103(3) of the English Consumer Rights Act 2015 (CRA), arguing that she was acting as a consumer.

The Commercial Court had found that Mrs Zhang was a consumer within the meaning of the CRA, but that the arbitration agreement in question was not closely connected with the UK and therefore fell outside the CRA regime. However, the Court of Appeal concluded that Mrs Zhang was not a consumer and reversed this aspect of the decision, finding that the judge had confused motive (because Mrs Zhang had acted to help her husband's companies) and purpose (which the Court of Appeal considered to be business-related). The Court of Appeal agreed with the Commercial Court that the nature and strength of the connection between the Guarantee and the UK was not a close one.

Notably, though the outcome of the case was unchanged, Males LJ commented obiter that if Mrs Zhang had fallen within the terms of the CRA, enforcing the award would have been contrary to public policy. There would not have been any scope for the exercise of discretion or balancing of the competing public policies of consumer protection as encapsulated by the CRA versus the enforcement of arbitral awards under the English Arbitration Act 1996.

For more information, see our blogpost here.

Confidentiality of Arbitration Awards

One reason parties often choose arbitration over litigation is the perceived confidentiality of arbitral proceedings and awards. However, in certain circumstances, where such awards are being challenged or enforced, whether the judgment remains confidential depends on the national court's rules.

In Mordchai Ganz v Petronz FZA & Abraham Goren [2024] EWHC 1011 (Comm), the English Commercial Court decided to publish a non-anonymised judgment on an arbitration claim concerning challenges to an arbitration award under sections 67 and 68 of the English Arbitration Act 1996. The second defendant objected to the publication of the decision regarding the challenge, on the basis that he had been joined to the arbitration proceedings against his will and that the judgment covered sensitive and confidential information that could have had a detrimental effect on his reputation if published.

The court found that the public interest in the transparent administration of justice outweighed the claimant's interest in confidentiality. It relied on the principles set down in City of Moscow v Bankers Trust [2004] EWCA Civ 314 and emphasised that it must weigh the factors in favour of publicity against the desirability of preserving the confidentiality of the original arbitration and its subject matter.

In this case, the public interest in the court's issuance of guidance regarding the approach to a re-hearing, the use of the summary procedure in the Commercial Court guide, and the issue of expert evidence in the context of case management outweighed the factors raised by the second defendant, namely his expectation of confidentiality and privacy in the arbitration under Art 30 of the LCIA Rules and reputational damage. More broadly, the court emphasised "the desirability of public scrutiny as a means by which confidence in the Courts can be maintained and the administration of justice made transparent".

For more information, see our blogpost here.

UPDATE TO IBA GUIDELINES ON CONFLICTS OF INTEREST AND CASE ON ARBITRATOR DISCLOSURES Update

In March this year, the International Bar Association (IBA) released updated guidelines on Conflicts of Interest in International Arbitration. The Guidelines are a "soft law" instrument intended to assist in unifying the approach to conflicts of interest relating to arbitrators in international arbitration. Whilst they are not binding without party agreement, they are considered to promote best practice and are widely adopted internationally for assessing conflicts of interest and disclosures.

Whilst the spirit of the updated 2024 Guidelines remains unchanged, this update introduces some important changes to both the "General Standards" and the list of practical application of those standards set out in the second half of the Guidelines. In particular, additional examples of circumstances which would require disclosure by arbitrators are now included in the "Orange list". This includes disclosure where two arbitrators have the same employer, or where an arbitrator has been appointed by one of the parties or an affiliate or by the same counsel or law firm, to assist in mock-trials or hearing preparations on two or more occasions within the past three years. This amendment is also repeated in the context of an arbitrator who has been appointed to do so by the same counsel or law firm (although in that context it is on three or more occasions) (see 3.1.4 and 3.2.10).

For further details on the updated guidelines, click here.

The importance of timely and fulsome arbitrator disclosures was also emphasised in the recent case of Aiteo Eastern E & P Company Limited v Shell Western Supply and Trading Limited and others [2024] EWHC 1993 (Comm), in which an arbitrator challenge was upheld due to multiple engagements as arbitrator, expert and advisor. The court found that, on the relevant facts, a fair-minded and informed observer would have considered that there was a real possibility of unconscious bias.

SHAMS, SCAMS, AND "MIRACLES": FABRICATED ARBITRAL AWARDS

When is an arbitration agreement not binding? One obvious – but arguably rare – example is when it turns out that there was no such agreement at all – i.e. the arbitration agreement was fabricated.

In Contax Partners Inc BVI v Kuwait Finance House (KFH-Kuwait) & Ors [2024] EWHC 436 (Comm), the English Commercial Court set aside its earlier decision granting leave to the Claimant, Contax Partners Inc BVI, to enforce an arbitral award under s. 66 of the English Arbitration Act 1996 and entering judgment in terms of the operative part of the Award. The Court found that the award was a fabrication and indeed that there was no arbitration agreement or arbitration giving rise to such award. This conclusion was drawn from factors that included the language of the Award (which bore "miraculous" similarities to a previous judgment of the English High Court), non-compliance with Kuwaiti law despite the award being purportedly conducted under the auspices of the Kuwait Chamber of Commerce, the judges who apparently issued the ruling upholding the Award not being members of the Court of Appeal in Kuwait and others. The Court set aside its previous order granting leave to enforce the award.

This case serves as a reminder to legal practitioners not to accept matters at face value, to exercise caution and always act with diligence when dealing with counterparties. Fortunately, in this case, the facts were discovered before any lasting harm was done to the victims.

For more information, see our blogpost here.