The international business community is well aware of the many potential benefits of resolving commercial disputes in arbitration. Even so, there can be hurdles to the smooth progress of a reference. Difficulties can begin at the earliest stage of seeking to hold a counterparty to the arbitration agreement. Procedural and jurisdictional issues and challenges can arise during the arbitral proceedings. Once an award has been made, issues can arise in relation to recognition, enforcement and recourse.
Arbitration does not sit in isolation and effective arbitration is conducted with the support of the court. Understanding the nuances of the relationship between the courts and the tribunal in a given jurisdiction is a challenging, multi-dimensional task which can bring significant advantages to the arbitral process.
A tribunal derives its authority from the arbitration agreement, from any institutional rules that may apply to the proceedings and in respect of procedural matters, from the law of the seat of the arbitration. Without usurping powers legitimately and appropriately held by the arbitral tribunal, a court has jurisdiction to intervene where expressly provided for in the applicable national law. This should provide for an intelligent use of the court’s powers to overcome obstacles in the arbitral process. In practice, the court can assist to resolve practical problems and uncertainties that arise during the conduct of an arbitration, particularly ad hoc international arbitration.
At the initial stage in an arbitration, a party may need to turn to the court to stay an action commenced in defiance of an arbitration agreement1 or to seek an anti-suit injunction prohibiting another party from pursuing or continuing court proceedings in another jurisdiction2. In arbitration-friendly jurisdictions such as Hong Kong, the court has no choice other than to uphold an arbitration agreement unless it is satisfied that the agreement is null and void, inoperative or incapable of being performed3.
Similarly the court can rule on a challenge to the tribunal’s determination that it has jurisdiction to hear a dispute4. If the tribunal has not been appointed within the contractual timeframe, an application to the court can potentially ‘save’ an arbitration by securing a time extension5. In certain jurisdictions, if the mechanism for the appointment of the arbitrator(s) does not work, the court may also be the default appointing authority to avoid the arbitration failing at the outset6.
In international arbitration, court support can cross national boundaries. The Hong Kong Court has jurisdiction, on the application of any party, to grant interim measures of protection, including interim measures to assist foreign arbitral proceedings7. Incorporating Model Law Art.27, it can assist in the taking of evidence, including ordering a party to attend proceedings to give evidence or to produce documents or other evidence8. It also has special powers to direct the preservation and inspection of property relevant to the arbitration proceedings, in parallel to powers accorded to the tribunal. Similar provisions can be found in other national laws, including the English Arbitration Act 1996.
Effective use of court support can assist a tribunal to manage interlocutory issues robustly, for example if an arbitrator is faced with a recalcitrant respondent who ignores directions and has no wish to defend a claim. Where there has been an initial failure to comply with a procedural order without sufficient cause, it may be open to a tribunal to issue a peremptory order9 to the same effect, setting out a time for compliance. National laws may accord significant power to a tribunal to impose sanctions for non-compliance with a peremptory order, such as drawing adverse inferences from the non-compliance10. A national court may also have the ‘power of last resort’ to enforce peremptory orders made by an arbitral tribunal11.
Courts in arbitration-friendly jurisdictions such as Hong Kong and England regularly provide strong support for the recognition and enforcement of awards. The English Arbitration Act 1996 permits only limited grounds for challenge of or appeal against an arbitration award12 and the English Court is robust in refusing challenges and appeals which do not qualify on these grounds. The UNCITRAL Model Law allows very limited scope to appeal and only in situations where there has been a breach of natural justice.
Effective court support for the arbitral process is a balance of minimum intervention with maximum efficacy. When used appropriately, it can add an additional level of sophistication and strength to the arbitration.