JKD v IKC [2026] EWHC 2031 (Comm)
The Claimants (anonymised as 'JHA' in the judgment) sought to challenge the refusal by the Tribunal to grant interim relief in an underlying arbitration conducted under the ICC Rules relating to the construction of a power plant. JHA was contractually obliged to procure the issue by Santander of on-demand bonds (the "Bonds"). The Defendant (anonymised as 'IKC' in the judgment) called on the Bonds, following which JHA obtained an interim injunction in Spain ordering Santander to refrain from paying under the Bonds. IKC commenced Part 8 proceedings in the Commercial Court for payment under the Bonds. The interim relief sought by the Claimants in the arbitration was an interim injunction requiring IKC to suspend and withdraw those Part 8 proceedings, withdraw its calls on the Bonds, and to refrain from making any further calls on the Bonds. The Tribunal, in accordance with English law, applied an 'enhanced merits threshold' of a "particularly strong case" on the merits and refused to grant such relief. The Tribunal issued its decision in the form of a procedural order ("PO4").
JHA sought to challenge PO4 under sections 68(2)(b) and (c) of the Arbitration Act 1996. JHA's claim was premised on the assertion that there was an agreement between the parties that any applications for interim measures in the arbitration would be determined by reference to "international standards" as set out in Gary Born's textbook, International Commercial Arbitration, which requires an applicant only to show a prima facie case on the merits ([13]).
JHA's claim failed for the following four reasons.
First, PO4 was not in substance an award. Dias J approved the relevant guidelines set out in the judgment of Cockerill J (as she then was) in ZCCM Investment Holdings plc v Kansanshi Holdings plc [2019] EWHC 1285 (Comm) ([17]), and held that PO4 did not contain any substantive determination ([24]). JHA argued that the Tribunal had, by refusing relief, materially impacted JHA's substantive rights, but Dias J held that such a commercial impact was distinct from a substantive determination of a contractual right ([23]). As only awards are challengeable under section 68, JHA's claim failed in limine.
Second, there was no agreement as to the relevant test to be applied by the Tribunal. The question of whether there was an agreement was to be determined objectively in accordance with ordinary contractual principles ([46]). JHA relied principally on a previous application in the arbitration by IKC for substantially different interim relief. In the submissions for that application, IKC submitted that a prima facie merits threshold should apply in respect of its application ([36]). The Tribunal dismissed that application (in Procedural Order No. 1) and stated in its reasoning that the relevant test to apply was "generally common ground" ([40]). Dias J rejected JHA's argument that there was an agreement as to the relevant test to be applied by the Tribunal, including on the basis that JHA's own submissions to the Tribunal were that it did not matter whether a prima facie or an enhanced merits threshold was applied ([49]-[51]).
Third, even if there had been an agreement, the Tribunal did not exceed its powers and accordingly the section 68(2)(b) claim failed. The Tribunal had the power to grant or refuse to grant interim measures; JHA's complaint was, at most, an erroneous exercise of a power which the Tribunal undoubtedly possessed, rather than purporting to exercise a power which the Tribunal did not have ([52]).
Fourth, even if there had been an agreement, it was not an agreement as to procedure and accordingly the section 68(2)(c) claim was unarguable. An agreement as to the test to apply to an application for interim measures would, in any event, have been an agreement as to substantive law ([55(b)]). By contrast, section 68(2)(c) was focused on questions of due process, such as by whom the issues are to be determined or the scope and extent of any disclosure ([55(a)]).
Nehali Shah KC and Moritz Grimm acted for the successful defendant, instructed by White & Case LLP.
Laurence Rabinowitz KC acted for the claimants, instructed by Mayer Brown (International) LLP.
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