In YDU v (1) SAB and (2) BYH [2022] EWHC 3304 (Comm), the Claimant brought a claim for a declaration that an order for specific performance in a Partial Final Award did not constitute an award, alternatively remission of a paragraph of the Partial Final Award to the tribunal for reconsideration under s. 68(2)(f) of the Arbitration Act 1996 (the “1996 Act”).
The underlying arbitration concerned the entitlement of the First Defendant to purchase shares from the Claimant, which the Claimant holds in the Second Defendant under a shareholders’ agreement. The tribunal concluded that the First Defendant was entitled to an order for specific performance for the purchase and transfer of the shares and, accordingly, the Claimant held the shares on trust for the First Defendant. The tribunal ordered that the Claimant not transfer any of the shares to any party other than the First Defendant or its designee, and made orders as to the transfer of the shares and the payment of the purchase price. The tribunal also reserved to itself the ability to resolve any issues as to the meaning and effect of the pre-conditions to specific performance and to vary or revoke its order for specific performance. In the event, by the time of the Commercial Court hearing, the tribunal had varied the order for specific performance, granting the First Defendant two extensions of time in which to complete the transaction, in the form of two further partial final awards.
The Claimant contended that the relevant orders were not an award within the meaning of the 1996 Act. Section 58 of the 1996 Act provides that an award is “final and binding”, and the Claimant contended that the orders were not final, because the Tribunal retained the power to vary, and in fact had varied, them. This was significant for enforcement purposes. On a domestic plane, there is a different enforcement mechanism for enforcement of orders (which is by way of enforcement by the court under section 42 of the 1996 Act but only if the order is a peremptory one), and of awards (which can be enforced under section 66 of the 1996 Act). On the international plane, the New York Convention applies only to awards, not orders.
Butcher J held that the relevant paragraphs did constitute an award.
He noted that the 1996 Act does not define an award, but that the usual position is that if an award has been made, the arbitrator is functus officio in relation to the matters decided. However, Butcher J considered that it was “too dogmatic and absolutist a position to say that something which is ‘an award’ can never be revisited” and that there were three analyses which indicate that the relevant paragraphs did constitute an award:
- First, under section 48(5) of the 1996 Act, unless the parties agree otherwise, an arbitral tribunal has the same power to order specific performance of a contract (other than a contract relating to land) as the court. On this analysis, the decision of the tribunal was “final, in the sense that the tribunal could not have revisited them without some change in circumstances”.
- Second, the paragraph enjoining the Claimant from transferring the shares to a party other than the First Defendant or its designee amounted an interim measure, which, under the arbitration agreement in question, was “deemed to be a final award with respect to the subject matter thereof”.
- Third, the relevant paragraphs constituted a provisional award under section 39 of the 1996 Act. Butcher J noted that while there has been little authoritative consideration of provisional awards under section 39, it is clear from the heading of that section that orders made on a provisional basis may be provisional awards. He held that a provisional award under that section “is an award for the purposes of the [1996] Act, and, for example section 67-69 will apply to such an award”.
Butcher J also considered, obiter, the judgment in Konkola Copper Mines v U&M Mining Zambia Ltd [2014] EWHC 2374 (Comm), [2014] 2 Lloyd’s Rep 649. Although he noted that the “analysis in Konkola is not without some difficulties”, he accepted that if there was a final award in Konkola, where the award provided that it could be changed in light of further submissions as to existing matters, then a fortiori the relevant paragraphs in the present case were final and binding as the tribunal had “only reserved to itself the right to make further decisions in light of developments relevant performance of the SPA ‘as they in fact occur’”.
Accordingly, Butcher J considered, but dismissed, the Claimant’s alternative claim for remission of a paragraph of the Partial Final Award under section 68 of the Arbitration Act arose.
The full judgment is available here.
Simon Colton KC and Sabrina Nanchahal appeared for the Claimant, instructed by Fieldfisher LLP.