QUEEN'S BENCH DIVISION
Fetter Lane, London, EC4A 1NL
B e f o r e :
|- and -
MR ALAN MACLEAN QC and MR ANDREW SCOTT (instructed by Baker & McKenzie) for the Applicant/Defendant
Hearing dates: 6 March 2015
Crown Copyright ©
Mr Justice Eder:
"2. No steps to be taken by [S] to enforce the Award prior to the determination of [Y's] challenge to the Award in these proceedings under section 67 of the Arbitration Act 1996.
"3. [S] may apply to set aside or vary this Order within 7 days of service of the same."
The Order was served on S on the evening of 15 December 2014, with the result that the set aside date fell in the Court vacation.
"1. Paragraph 2 of the Order of the Honourable Mr Justice Flaux dated 12 December 2014 (the "Order") shall be varied such that:
(1) In respect of the Claimant, the Defendant shall have permission to take steps in jurisdictions other than England and Wales (including without limitation Cyprus) for the purposes of enforcing the Award to the extent of commencing enforcement proceedings and taking steps to preserve assets for enforcement.
(2) It shall not apply to any step to enforce the Award against K.
2. The Application, the evidence filed in support of it, ancillary material such as a note of the hearing, and this Order (the "Application Materials"), shall be served on the Claimant by 4pm on 31 December 2014.
3. Paragraph 2 of the Order as varied shall be discharged unless the Claimant within 7 days of being served with the Application Materials sends to the Defendant's solicitors a letter stating that the Claimant will provide to the Court a cross-undertaking in damages in respect of that paragraph, secured by payment into Court or provision of alternative security in a form and amount which is acceptable to the Defendant or the Court. Any dispute as to the form and/or amount of such security shall be a matter to be determined by a Commercial Court Judge. If the parties are agreed that the cross-undertaking is in appropriate terms as to form and amount of security, then the cross-undertaking may be incorporated into the Order by consent.
4. The Claimant may apply to set aside or vary this Order within 7 days of service of the same.
5. Costs reserved.
6. Liberty to apply."
"The provisions of this Part are founded on the following principles, and shall be construed accordingly-
(c) in matters governed by this Part the court should not intervene except as provided by this Part."
In this context, as submitted by Mr Diwan QC, it is important to note what was said by Lord Mance in Ust-Kamenogorsk Hydropower v AES Ust-Kamenogorsk Hydropower  2 Lloyd's Rep 281 at p289 lhc:
"The use of the word "should" in section 1(c) was also a deliberate departure from the more prescriptive "shall" appearing in article 5 of the UNCITRAL Model Law. Article 5 reads that "In matters governed by this Law, no court shall intervene except where so provided in this Law". Article 5 had been the subject of forceful critique in A New Arbitration Act?, the 1989 report on the UNCITRAL Model Law by the DAC at a time when its chair was Lord Justice Mustill, who had also represented the United Kingdom at UNCITRAL. Even in matters which might be regarded as falling within Part 1, it is clear that section 1(c) implies a need for caution, rather than an absolute prohibition, before any court intervention."
"66. Enforcement of the award
(1) An award made by the tribunal pursuant to an arbitration agreement may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.
(2) Where leave is so given, judgment may be entered in terms of the award.
(3) Leave to enforce an award shall not be given where, or to the extent that, the person against whom it is sought to be enforced shows that the tribunal lacked substantive jurisdiction to make the award.
The right to raise such an objection may have been lost (see section 73).
(4) Nothing in this section affects the recognition or enforcement of an award under any other enactment or rule of law, in particular under Part II of the [1950 c. 27.] Arbitration Act 1950 (enforcement of awards under Geneva Convention) or the provisions of Part III of this Act relating to the recognition and enforcement of awards under the New York Convention or by an action on the award."
As appears from sub-section (1) above and implicit in the words "may" and "by leave of the court", it is plain that the court has a discretion whether or not to grant leave to enforce an award in the same manner as a judgment or order of the court.
This Section of this Part applies to all arbitration enforcement proceedings other than by a claim on the award.
Enforcement of awards
(1) An application for permission under –
(a) section 66 of the 1996 Act …
… to enforce an award in the same manner as a judgment or order may be made without notice in an arbitration claim form.
(9) Within 14 days after service of the order or, if the order is to be served out of the jurisdiction, within such other period as the court may set –
(a) the defendant may apply to set aside the order; and
(b) the award must not be enforced until after –
(i) the end of that period; or
(ii) any application made by the defendant within that period has been finally disposed of.
(10) The order must contain a statement of –
(a) the right to make an application to set the order aside; and
(b) the restrictions on enforcement under rule 62.18(9)(b)."
i) CPR 62.18 is the exclusive and mandatory regime or mechanism for seeking to enforce an arbitral award pursuant to s66 (and s101) of the 1996 Act which requires that: (1) this should be done by way of arbitration claim form (CPR 62.18(1)); and (2) the party seeking permission is precluded from enforcing the arbitral award until the time for making a challenge to the award has expired or the challenge, if made, has been finally disposed of: CPR 62.18(9) and (10).
ii) In other words, pursuant to this mechanism, the enforcing party, with the permission of the Court, obtains an interim order of enforcement or an order 'nisi' only, pending the final disposal of any challenge: see Continental Transfert Technique Ltd v The Federal Government of Nigeria and others  EWHC 780 (Comm) at paragraphs 3-5; MTS v Nomihold Securities  1 Lloyd's Rep 6 (CA) at paragraph 10.
iii) These provisions fulfil this jurisdiction's obligations under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958) (the "New York Convention") not to permit enforcement of awards until the final disposal of any challenge to the Award. These provisions thus constitute an automatic case management order to be made in relation to such orders for permission to enforce.
So far as necessary, I consider these submissions further below.
"Challenge or appeal: supplementary provisions
(1) The following provisions apply to an application or appeal under section 67, 68 or 69.
(7) The court may order that any money payable under the award shall be brought into court or otherwise secured pending the determination of the application or appeal, and may direct that the application or appeal be dismissed if the order is not complied with."
The Discharge Application
"An arbitration award is not a judgment. Section 66 of the 1996 Act provides that an award may be enforced in the same manner as a judgment if the leave of the court is obtained. Until that occurs the usual processes of enforcement or execution appropriate to a judgment cannot be employed. So until leave is given, no question of staying execution can arise. Once leave has been given, a stay of execution under RSC Ord 45, r 11 is unlikely to be appropriate. I refer to Far Eastern Shipping Co v AKP Soveonflot  1 Lloyd's Rep 520. No leave here has been sought under s 66 of the 1996 Act. Nor is it likely to be. For I am told that the buyers have no assets in England.
There is no provision in the Arbitration Acts which provides for the court to make an order preventing steps being taken to enforce an award. Counsel have not found any case in which the court has been asked to make such an order. There is, however, some assistance in s 103 of the 1996 Act. This provides:
'(1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases.
(2) Recognition or enforcement of the award may be refused if the person against whom it is invoked proves ...'
I can omit (a) and (b):
'(c) that he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings or was otherwise unable to present his case ...'
I can then go to (f):
'that the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.'
This reflects art V of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 10 June 1958; UN TS 330 (1959); Cmnd 6419) of 10 June 1958, called the New York Convention. The United Kingdom and Slovakia are parties to the convention, though it is unclear on the information provided to me whether Slovakia is a party because of the accedence of the former Czechoslovakia or because Slovakia itself has acceded.
Article V and s 103.2(f) presuppose that an award may be suspended by a competent authority in the country in which it is made, which authority--I may presume--will normally be the appropriate court. It is but a small step further to hypothesise that such a suspension may be ordered pending an application to set the award aside, perhaps on grounds referred to earlier in the subsection. If an award is suspended, it will be deprived of immediate effect. The article and the section thus pre-suppose that one court has power to order that an award shall not have effect depending on the determination of an application to set it aside and this may be relied on to resist enforcement by a court in another country. In the case of the section, the two countries are a foreign country and England respectively. It is a short further step to ascribe the same power to suspend to the English court in respect of awards made in England, to the enforcement of which art V of the convention will apply abroad. The parties are right to accept that under its inherent jurisdiction the English court has the power in question here." (emphasis added)
The s66 Application
"1. Permission be given to [S] to enter judgment in the terms of the Award pursuant to s66(2) of the 1996 Act.
2. No steps be taken to enforce the Award prior to final disposal of the s67 challenge."
This formulation follows the broad structure of the kind of order that would normally be made without notice under CPR 62.18.
"1. Subject to paragraph 2, permission be given to [S] to enter judgment in the terms of the Award pursuant to s66(2) of the 1996 Act.
2. By [date], Y may apply to set aside this order.
3. No steps be taken to enforce the Award within this jurisdiction prior to [date] or any application made by Y within that period has been finally disposed of."
No doubt, the application to set aside may refer to the existing s67 application and/or the same grounds. But it seems to me that this wording is more appropriate because it follows the structure of CPR 62.18.