Case Alert - [2018] EWCA Civ 838

Court of Appeal sets out guidelines where enforcement of an arbitration award is challenged on basis of illegality

Section 103 of the Arbitration Act 1996 provides that the enforcement of a New York Convention arbitration award may be refused if it would be "contrary to public policy" to enforce the award. Prior cases have refused enforcement where there had been illegality relating to the underlying claim. In this case, a judge dismissed the claimant's application for enforcement of an award to be refused. The claimant appealed, arguing (amongst other things) that the judge had failed to apply the correct illegality test and should have applied the Supreme Court's approach in Patel v Mirza which, broadly, introduced a more flexible approach than just whether a party's case relied on his own fraud.

The Court of Appeal reviewed earlier decisions and set out the following general principles:

(1) The public policy ground should be given a restrictive interpretation and section 103 embodies a pre-disposition in favour of the enforcement of a New York Convention award.

(2) Exceptional circumstances would be needed to re-open a tribunal's determination that there had not been illegality on the facts.

(3) If there is no illegality under the governing law but there is illegality under English law, public policy will only be engaged where the illegality reflects considerations of international, and not purely domestic, public policy.

(4) When assessing if public policy is engaged, the degree of connection between the claim and the relevant illegality will be important. Patel v Miriza did not affect the principles to be applied when considering enforcement under section 103 - it is instead relevant to the question of whether there had been illegality under English law.

Applying those principles to the facts, the Court of Appeal found that there was insufficient connection between the fraud in this case and the claim for enforcement of the award to engage public policy and refuse enforcement.