English court rekindles the debate on the form of interim measures in English-seated arbitrations: order or award?

In the recent decision of EGF v HVF & Ors [2022] EWHC 2470 (Comm), the English Commercial Court (the ‘Court’) dismissed the claimant’s procedural challenges under sections 24, 67 and 68 of the Arbitration Act 1996 (the ‘Act’). In doing so, the Court made obiter observations on the form of interim measures in England seated arbitrations, specifically in the context of the UNCITRAL Arbitration Rules 2010 (the ‘UNCITRAL Rules’). In this post, we consider the rationale of the Court in making these observations in the context of the applicable statutory rules in England and the travaux préparatoires of the UNCITRAL Rules.

The judgment

In a London-seated UNCITRAL arbitration concerning payment for wholesale power supply, the arbitral tribunal issued a partial award pursuant to article 34 of the UNCITRAL Rules, which included an interim payment order directing the claimant, EGF (the respondent in the arbitration), to pay to the first defendant, HVF (a claimant in the arbitration), US$250 million by a specified date. The partial award was labelled as such because the tribunal was not finally determining any merits at that stage of the arbitration.

In response to the partial award and other procedural determinations made by the tribunal, the claimant applied to the Court seeking:

1. the removal of the arbitrators under section 24 of the Act alleging, inter alia, apparent bias and procedural misconduct; and
2. the setting aside of the partial award under section 67 of the Act (lack of substantive jurisdiction) and section 68(2)(b) of the Act (serious irregularity arising from the tribunal exceeding its powers).

The Court dismissed all of the claimant’s challenges. Regarding the arbitral bias challenge, it found on the facts that there was no doubt as to the arbitrators’ impartiality. Regarding the substantive jurisdiction challenge, it found that the claimant’s challenge did not fall within section 67 of the Act. Finally, on the serious irregularity challenge, the court was not satisfied that any substantial injustice has been or will be caused, as required by section 68(2), even if the tribunal exceeded their powers. So, the Court deemed that there was no need to decide whether the arbitrators exceeded their powers.

Separately however, the judge made obiter observations to the effect that had he been satisfied as to substantial injustice, he would have found that the tribunal exceeded its powers under the UNCITRAL Rules by making an award for an interim remedy. In other words, in the Court’s opinion, UNCITRAL tribunals cannot grant interim relief in the form of an award. The reasoning behind this view was that article 34.2 of the UNCITRAL Rules requires all awards to be final and binding. Since no interim measure can be final, the UNCITRAL Rules cannot be said to permit an award to be issued for an interim remedy.

Form of interim measures under the Act

Aa a general matter, an English-seated arbitral tribunal may grant interim relief under section 39 of the Act if it is empowered to do so by the parties. The parties may do so through their choice of procedural rules (such as the UNCITRAL Rules) that include such a power.

There is some confusion about whether the ruling under section 39 should be in the form of an award or an order. This is because, semantically, both the words ‘award’ (in the heading) and ‘order’ (in the body) have been used in section 39. Although this has not been extensively discussed in judgments, English courts have tended to take a pragmatic view in relation to the form of interim relief—at different times, both awards and orders under section 39 have been upheld (see BMBF (No 12) Ltd v Harland & Wolff Shipbuilding and Heavy Industries Ltd [2001] EWCA Civ 862; Pearl Petroleum Co Ltd v Kurdistan Regional Government of Iraq [2015] EWHC 3361 (Comm)).

This linguistic discrepancy in section 39 has been recognised by the Law Commission in its Consultation Paper on the Review of the Arbitration Act. While an order can be enforced through the mechanism of peremptory orders (under sections 41 and 42 of the Act), an award is subject to scrutiny of a court under sections 67 to 69 of the Act. In its consultation paper, the Law Commission has proposed resolving the issue in favour of ‘orders’ rather than ‘awards’.

In contrast to article 34.2 of the UNCITRAL Rules, which requires all awards to be final and binding, the equivalent provision of the Act in section 58 is prefaced by ‘unless otherwise agreed by the parties’. These words imply that an interim remedy may be granted by way of an award, and not all awards need to be final as to all issues decided in it (see Ronly Holdings Ltd v JSC Zestafoni G Nikoladze Ferroalloy Plant [2004] EWHC 1354 (Comm)).

Form of interim measures under the UNCITRAL and other procedural rules

The UNCITRAL Rules do not include any guidance to tribunals on the form of interim measures. The previous version of the UNCITRAL Rules from 1976 included a sentence that ‘[i]nterim measures may be established in the form of an interim award’. This wording was omitted in the 2010 version and remains omitted in the 2021 version of the UNCITRAL Rules.

Leading commentaries on the UNCITRAL Rules including Paulsson & Petrochilos (‘Paulsson et al.’) and Caron & Caplan opine that the UNCITRAL Rules allow for provisional relief to be in the form of both an order and an award. They base their opinion on article 34, which gives the tribunal authority to issue ’separate awards on different issues at different times’.

As noted above, the Court in EGF concluded from article 34.2 of the UNCITRAL Rules (which requires all awards to be final and binding) that since no interim measure can be final, an interim measure cannot be in the form of an award. On the contrary, Paulsson et al. recognise that while ‘interim measures awards are not ‘final’ in the full sense of article 34(2)’, the finality of interim measures awards should be considered in a ‘qualified sense’. The UNCITRAL Working Group’s proceedings that are publicly available support the conclusions of Paulsson et al. and considered the finality of interim measures awards in a different sense, ie that ‘[o]nce rendered, an [interim measures] award shall not be susceptible to revision by the arbitral tribunal’.

Interestingly, other arbitral rules have addressed this issue differently. For instance, the ICC Rules 2021 expressly provide that provisional relief can take the form of an order or an award (article 28(1)) and include interim and partial awards within the definition of ‘award’ (article 2(v)). A similar approach is taken by the SIAC Rules 2016 (articles 30.1 and 1.3) and the SCC Rules 2017 (article 37(3)).

Comment

Ultimately, the form of the interim measures ‘must be guided by the objective of achieving the ends aimed at by the provisional measures’ (see Gary B. Born, International Commercial Arbitration (3rd edn, Wolters Kluwer 2021)). As some jurisdictions require that an interim measure be issued in the form of an award in order to be enforced, tribunals might be minded to issue interim measures in the form of awards rather than orders, in order to aid enforcement. The EGF tribunal had regard to the ‘vagaries of enforcement’ in deciding the form of the provisional relief—a factor that did not hold weight in the Court’s analysis on this issue.

The Court’s comments, while obiter, might be taken into account by arbitral tribunals, particularly in English-seated arbitrations under the UNCITRAL Rules. Finally, more generally, the result of the ongoing arbitration law reforms by the Law Commission in respect of the amendments to section 39 of the Act will likely impact arbitral tribunals’ consideration of the form of provisional relief in English-seated arbitrations.

Sagar Gupta is an associate in the international arbitration and public international law practices of Boies Schiller Flexner in London.

Jan Kunstyr is a foreign qualified lawyer at the London offices of Boies Schiller Flexner.

The opinions expressed in this article are those of the authors alone and do not reflect the opinions or views of Boies Schiller Flexner or its clients.