Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
Discuss the latest legal developments, ask questions, and share best practice with other LexisPSL subscribers
Richard Power, partner in the Global Arbitration Group at Clyde & Co LLP, and Catherine Reeves, professional support lawyer at Clyde & Co LLP, discuss the issue of finality in arbitration, which has returned to the spotlight following the Lord Chief Justice Lord Thomas’s 2016 BAILII lecture.
When asked to list the benefits of arbitration over litigation, many would say ‘certainty’ or ‘finality’ of the arbitral process. Indeed, in the Queen Mary/White & Case LLP Survey ‘2015 International Arbitration Survey: Improvements and Innovations in International Arbitration’,
18% of respondents named finality as one of their three most valuable characteristics of arbitration. This ‘certainty’ comes in part from the limited ability to appeal or challenge an arbitral award under national legislation (generally)
and limited opportunity to defend against enforcement (primarily under the New York Convention).
This said, it is the case that some parties to arbitration agreements do not understand the full consequences of their decision to arbitrate at the point of contracting, let alone think through what would happen should an award be made against them, which
may be ‘certain’ but isn’t in their favour.
The rules of the leading arbitral institutions provide, in some form of wording, for their awards to be ‘final and binding’ on the parties. Many, the London Court of International Arbitration (LCIA) and the International Chamber of Commerce
(ICC) being the obvious examples, go further and provide that the parties waive irrevocably their right to submit the award to any form of appeal, review or recourse to any state court or other legal authority so far as such waiver is not prohibited
under any applicable law.
The effect of this under English law as set out in the Arbitration Act 1996 (AA 1996) is to preclude the right to appeal on a point of law (AA 1996, s 69). However, one cannot preclude a challenge for lack of substantive jurisdiction under AA 1996, s
67 or on grounds of serious irregularity under AA 1996, s 68 as these cannot be waived.
Note: a provision for an award to be ‘final, conclusive and binding’ without more is insufficient to exclude an appeal, see: Shell Egypt v Dana Gas  EWHC 2097 (Comm).
The advantage of ‘certainty’ in this regard at the outset of an arbitration can, however, feel painful if an award is made against you and your right of appeal is limited. The tribunal’s findings on the law are unimpeachable regardless
of whether they are right or wrong. In the same survey cited above, 17% also cited a lack of appeal mechanism on the merits as one of the three worst characteristics of arbitration—perhaps those 17% are the ones who have felt the pain of this
right of appeal being precluded.
Parties have been known to try to challenge an award under AA 1996, s 68 where AA 1996, s 69 is not available and the courts are wise to this. In Kershaw Mechanical Services v Kendrick Construction  EWHC 727 (TCC) an appeal was launched on
the basis that the wrong answer to a hypothetical question of law could be inferred from the arbitrator’s findings on a set of facts. The application failed, the judge noting that the application was likely an ‘attempt to present an appeal
on the facts as though it were an appeal on the law’ and that ‘any such attempt must be firmly discouraged.’
Over recent months there has been much discussion in the press and arbitral community about whether the right to appeal arbitral awards under English law should be expanded. The proponents argue that an expanded right of appeal would be in the interests
of the development of English commercial law. Their opponents responding, among other arguments, that it is not the arbitrating parties’ jobs to develop English law and that the drive behind AA 1996 to limit court intervention in arbitration
was partly led by a respect for parties’ choice to arbitrate and resolve their disputes away from the court.
What this does raise, however, is the possibility of expanded right of appeal (or maybe making AA 1996, s 69 mandatory) in the future. This would be a significant change for English arbitration law and potentially impact London’s standing as a leading
arbitral jurisdiction (it is worth noting that other leading arbitral jurisdictions such as Singapore permit an appeal on a point of law to be excluded in the same way as English law which the Singapore International Arbitration Centre Rules preclude
in the same way as the ICC and LCIA).
Have your eyes open—at the outset ensure that you are aware of the consequences of the institutional rules being subscribed to. This includes awareness of the great benefits of arbitration as well as the consequences of your choice (which
must include the limited right of appeal). This is not to say that parties should fear the limited right of appeal as the calibre of the institutions and available arbitrators is high. Nor is it to say to choose one institution over another. It just
ensures parties go in with their eyes open.
Appoint the right tribunal—during the arbitration where a right of appeal on a point of law is excluded, the tribunal’s ability to understand and apply the law is key. While a technical expert on the tribunal may be of great benefit
in understanding parts of the technical case, it is imperative that the tribunal get the law right and this should be a key factor in nominating or appointing the tribunal. Even where you have no right of nomination or appointment, most nominating
institutions will listen to requests of the skills or qualifications a suitable arbitrator may have and all have leading lawyers who sit as arbitrators on their panels.
Don’t be afraid—arbitration has a long tried and tested history. We cannot pretend for one minute that tribunals always reach the right result but it is a commercial, international dispute resolution method with many and varied benefits
for parties who engage it in (however unwillingly). The courts, certainly in England, are there to support the arbitral process which certainly (for now at least) includes enabling parties to have the ‘certainty’ they sought at the time
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234