As explained in a prior post in the Blog’s Bermuda Form Arbitration Series, some time after the final hearing, the arbitration tribunal will issue an Award. This post focuses on challenges to and enforcement of that Award.
Unless the parties agree otherwise, the Award must contain the reasons for the Award.1 Typically, the parties will receive a detailed and even lengthy Award that addresses all the issues that were submitted for adjudication. Indeed, if the Award does not address all essential issues, it may be open to challenge for that very reason.
As an initial matter, it should be noted that challenges based on errors in the calculation of damages and costs can typically be addressed in the arbitration itself, as the English Arbitration Act gives the tribunal power to correct an award to remove clerical mistakes or errors.2
For more egregious errors, a party may seek to challenge an England-based Bermuda Form arbitration Award through English court proceedings. After the Award is issued, a party may within 28 days commence court proceedings to challenge all or part of it.3 Nonetheless, challenges to awards in England-based arbitrations are exceedingly difficult. In particular, English courts generally conduct a far more restrictive review of foreign law as compared to English law. Thus, a challenge for error in the application of New York law governing the Bermuda Form is unlikely to succeed unless there is evidence that the tribunal consciously disregarded the provisions of New York law.4 Furthermore, an English court will permit a challenge based on an error of law only if certain conditions are met, and the challenger must show that “the decision of the tribunal on the question is obviously wrong” or that “the question is one of general public importance and the decision of the tribunal is at least open to serious doubt.”5 Notably, under no circumstances can a court review challenges to findings of fact.
An Award may also be challenged for serious irregularities, such as a failure by the tribunal to decide all the issues submitted for arbitration, or if the Award was procured by fraud or in a manner contrary to public policy.6 Yet even in these situations, the challenger must show that an irregularity has caused or will cause substantial injustice.7 An Award may also be challenged if the tribunal exceeds its substantive jurisdiction.8 However, because the tribunal is likely to consist of experienced lawyers and adjudicators, such challenges can be very difficult to mount.
Finally, U.S.-based parties seeking to challenge a Bermuda Form arbitration Award naturally may wish to consider challenging the Award in a U.S. court. Generally, the only courts with authority to vacate an arbitral award are courts at the seat of the arbitration.9 Nonetheless, there are narrowly limited circumstances in which a U.S. court can decline to enforce (as opposed to vacate) a foreign arbitral award; for example, a U.S. court may decline to enforce an arbitral award if its enforcement in the United States would be contrary to U.S. public policy.10 Even then, a U.S. court may decline enforcement only if enforcement would violate “‘explicit public policy’ that is ‘well-defined and dominant … [and is] ascertained by reference to the laws and legal precedents and not from general consideration of supposed public interests.’”11