Resisting enforcement of an arbitral award and the availability of security

​A Supreme Court decision highlights an important distinction in the availability of security from a party challenging enforcement of an award.

When a party seeking to enforce an arbitral award is faced with objections by the party against whom the award was made, it is a major advantage if it can force the objecting party to pay security for the value of the award into court pending the ruling on the objections. Such a step may dissuade the objecting party from proceeding if the objections are weak and at the least rules out the dissipation of assets during the course of the enforcement proceedings.

But the Supreme Court has now held, in the case of IPCO (Nigeria) Limited v Nigerian National Petroleum Copn, that the English Court has no jurisdiction to require a party resisting enforcement of a New York Convention award to give security for all or part of the outstanding award as a condition of it being entitled to oppose enforcement in England. A New York Convention award in this context means an award where the seat was not in England.

The interest of the case is that the Court of Appeal had decided that the English Court did have such power. So why did the Supreme Court take a different view?

The Supreme Court was of the view that the provisions in the Arbitration Act 1996 dealing with the enforcement of New York Convention awards were a self-contained code which provided no power for such security for an award to be granted. The powers to be found elsewhere in the Arbitration Act and in the Civil Procedure Rules which would permit such security to be ordered were not applicable to Convention awards as this would be inconsistent with the terms of the New York Convention.

However, this decision exposes an anomaly between the treatment of New York Convention awards and English-seated awards. In respect of the latter, security for the award can be ordered by the Court if the challenge to enforce is based on what the Court regards as flimsy grounds.

This would suggest that a party seeking to enforce an arbitration award through the English Courts is in a better position if the arbitration itself had been seated in England. Conversely, the party resisting enforcement would be better placed if the seat of the arbitration was not England.

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