Enforcement of an arbitral peremptory order by the court

http://www.bailii.org/ew/cases/EWHC/Comm/2015/3361.html

Section 41(5) of the Arbitration Act 1996 provides that: "If without showing sufficient cause a party fails to comply with any order or directions of the tribunal, the tribunal may make a peremptory order to the same effect, prescribing such time for compliance with it as the tribunal considers appropriate". If the arbitrators make a peremptory order but cannot then enforce it, section 42 of the Act provides that (unless otherwise agreed by the parties), the court may make an order requiring a party to comply with a peremptory order made by the tribunal. One of the arguments raised by the respondents in this case was that section 41(5) only applies where a party fails to comply with an order to do something which is "necessary for the proper and expeditious conduct of the arbitration". This argument was based on section 41(1) of the Act which provides that the parties are free to agree on the powers of the tribunal if a party fails to do something necessary for the proper and expeditious conduct of the arbitral proceedings and so, it was submitted, those were the only powers which the parties are free to agree. It was therefore argued that since the peremptory order here – namely, to pay a sum of money to the claimant (which was not security for costs or an interim payment of costs)– did not fall within that definition, the court had no discretion to enforce it.

That argument was rejected by Burton J: "In this case the parties clothed the Arbitrators with a power to enforce their orders, if necessary by a peremptory order, and including an order for the payment of money. Although the proper and expeditious conduct of an arbitration would normally include the parties' compliance with any order which the tribunal may make, nevertheless it is clear that, although arbitrators will in fact be making orders which they consider necessary for the proper and expeditious conduct of the arbitral proceedings, not every breach of every order will lead to a peremptory order – there must clearly be room for de minimis. I do not however consider that it is a requirement for arbitrators in making every order to spell out either that the order they are making is so necessary, or, once the order is made and a party persists in not complying with it, that it is necessary for the proper and expeditious conduct of the arbitration that the party should so comply".

Here, the interim measures order had been necessary to maintain the parties' status quo, and when that order was not complied with, a further peremptory order was required for the proper and expeditious conduct of the arbitration. Accordingly, the court would exercise its discretion to enforce it.