A recent decision in the Technology and Construction Court (TCC) has highlighted the difficult situation a party may find itself in if it raises new technical points late in proceedings to escape liability. Such arguments may get short shrift from the court.
When seeking to enforce an international arbitral award, there is a longstanding rule that it will be enforced by a competent court of a country which is a signatory to the New York Convention. Most countries in the world are signatories.
Only on six limited grounds can a court choose to decline to enforce an award. And although expressed as a choice, realistically if any of these circumstances does arise a court would almost certainly decline to enforce. These express grounds are set out in Section 103 of the Arbitration Act 1996. A further ground is also reserved for the court to decline to enforce if to do so would be “contrary to public policy”.
Meydan had procured works at the Dubai Racecourse in 2008 for which Honeywell was to be engaged as a subcontractor. After time, relations between Meydan and its main contractor soured and that relationship was terminated. Honeywell was then retained directly to carry out the installation of a low voltage electrical system.
When a dispute arose between the parties, Honeywell referred the matter to the Dubai International Arbitration Centre (DIAC) and won an award after Meydan refused to participate for technical reasons. Honeywell applied successfully to the TCC for enforcement of the award in the UK.
Meydan tried to have the TCC Order set aside by citing eight issues which between them called upon all six of the express grounds, and it also called upon the court to invoke general rules of public policy to stop the enforcement. As the Order had already been granted, a hearing was held to decide whether the application had a realistic prospect of success.
Claims brought under s.103 will merit a degree of analysis and examination of evidence, but it is disproportionate to hold a full trial of the matters. To do so could result in a situation where an applicant seeking to enforce an award (which may have already been fought over long and hard) then needs to jump through unnecessary additional hoops to seek enforcement.
The procedure adopted by courts is, as a result, very similar to the rough and ready approach used in assessing summary judgment applications. The court will need to assess whether there is a real prospect of a party establishing one of the grounds for refusal, or if there is some other compelling reason why the matter should have a full trial.
The TCC took quite a dim view of the issues raised. Allegations that the underlying contract was void for having been procured through bribery were completely new and there was no convincing reason why they should not have been raised before.
Similarly, technical arguments on the exact identity of the respondent party had already been rehearsed and dismissed in previous exchanges and so were not considered persuasive by the court. The fact that the original arbitral award was being contested in the Dubai courts was regarded as immaterial to the enforceability of a DIAC award.
Appeals to the court to invoke doctrines of public policy also failed. Even the bribery allegation was disregarded on the basis that this would not render the contract unenforceable, merely that Meydan would be able to void the contract and claim damages.
Where a party is obliged to take part in an arbitration it should consider as early as possible the various grounds that it may seek to raise at a later date to prevent enforcement of an award should the need arise. Where the award comes out of uncontested proceedings the belated appearance of new reasons why the award should not be permitted are unlikely to get any sympathy in court.