Interim relief – to order, or to award?

This post addresses two High Court cases that reached contrasting conclusions on whether interim relief can be made by way of an award. In one case, the court held obiter that arbitrators exceeded their powers by making a partial award (rather than an order) for a merely interim remedy under the UNCITRAL Rules. In another case, the court was satisfied that a partial award subject to conditions and amendments rendered under the LCIA Rules was still final and binding and therefore could be considered an award (rather than an order). 

The UNCITRAL Rules do not empower a tribunal to issue interim remedies by way of an ‘award’

In EGF v HVF & Ors, the underlying dispute in an arbitration under the 2010 UNCITRAL Arbitration Rules concerned payment for wholesale power supplied by HVF to EGF. The tribunal issued a “Partial Award Granting an Interim Payment Order” of USD 250 million. This was an award for the respondent to pay this sum on an interim basis, pending a final award. The sum in question was regarded as essentially uncontested.

EGF applied to the court seeking, amongst other remedies, the set aside of the partial award under sections 67 and 68 of the Arbitration Act 1996 (the Act). It argued that a tribunal does not have the power to grant an interim payment order in the form of an award under the UNCITRAL Rules. It was common ground between the parties (and the court) that the partial award was a ‘provisional award’ so far as the terminology used in section 39 of the Act.

The court treated this as an allegation that the tribunal exceeded its powers (section 68(2)(e) of the Act) rather than that it lacked jurisdiction (section 67). The judge dismissed the section 68 challenge to the partial award on the somewhat technical basis that EGF had failed to plead that the award had caused it substantial injustice (which is an essential element under section 68). However, the judge observed obiter that arbitrators operating under the UNCITRAL Rules do not have the power, under Article 34, to issue interim remedies by way of an award (and can only do so by way of an order). The judge would therefore have upheld the challenge under section 68 of the Act on this “narrow ground” had substantial injustice been pleaded.

While acknowledging that this view might be considered “inconvenient” in “certain international arbitration quarters”, the judge said the “unqualified” provision in the UNCITRAL Rules that awards are to be final and binding on the parties was “inconsistent with … the notion that an award can be made the substantive relief granted by which is provisional or interim in nature”.

A partial award under the LCIA Rules was deemed a binding final award despite being subject to conditions and modifications

The underlying dispute in the arbitration under the 2020 LCIA Arbitration Rules in YDU v SAB and BYH concerned the entitlement of SAB to purchase shares from YDU. In what the tribunal termed a “Partial Final Award”, it made an order for specific performance, requiring YDU to sell and transfer the shares to SAB, “on condition” of SAB satisfying certain payment-related requirements. It also expressly ordered YDU not to sell the shares to anyone other than SAB. The tribunal further reserved jurisdiction to vary the terms of the relief granted if it later seemed appropriate (and, in the event, did so in the form of two further partial final awards).

YDU applied to the court for a declaration under sections 67 and 68 of the Act that the partial final award did not constitute an ‘award’. It contended that the conditionality of the relief and the tribunal’s reservation of jurisdiction to modify the relief granted prevented it from being final and therefore an award.

The court held that the partial final award was “final and binding” and thus constituted an award within the meaning of the Act. The judge had deemed it “too dogmatic and absolutist a position to say that something which is ‘an award’ can never be revisited”. The judge took the view that this position could be reached by any of three analyses, one of which was that the partial final award should be regarded as a ‘provisional award’. The making of a provisional award was within the tribunal’s powers under Rule 25.1 of the LCIA Rules and clearly envisaged under section 39 of the Act.

Furthermore, the court stated that “if there is a provisional award under [section 39 of the Act], then it is an award for the purposes of the 1996 Act, and, for example, ss. 67-69 will apply to such an award”.

Implications of these judgments

The distinction between ‘awards’ and ‘orders’ is important, as only ‘awards’ benefit from more certain enforcement and challenge mechanisms under the Act and the New York Convention. The YDU decision confirms a tribunal’s power under the LCIA Rules to issue provisional relief that is subject to later review without this preventing, in principle, its classification as an ‘award’ under the Act. The contrary view was reached in EGF, where the court accepted that section 39 of the Act does allow parties to confer on arbitrators the power to produce an award granting provisional relief, but that the parties did not confer this power on the tribunal by adopting the UNCITRAL Rules.

The judge in EGF was influenced by the fact that the UNCITRAL Rules state simply that “[a]ll awards … shall be final and binding on the parties” (see Article 34(2)), without expressly permitting interim relief to be granted by way of award. The effect of this provision is that relief granted in cases under the UNCITRAL Rules which is, in substance, provisional or subject to later amendment cannot be considered final or, therefore, constitute an award for the purposes of the Act.

The unsettled case law in relation to section 39 was referred to in the recent Law Commission consultation paper on reform of the Act. The Law Commission have suggested that section 39 should be amended to refer to ‘orders’ (and not ‘awards’), given that a ruling under section 39 is explicitly provisional, and subject to reconciliation or even reversal in a final award. This is contrary to the view of section 39 expressed in both EGF and YDU (that section 39 does allow tribunals to grant interim relief in ‘awards’) and does not reflect the international understanding that interim relief can be rendered in the form of an award. 

Judgment: EGF v HVF & Ors [2022] EWHC 2470 (Comm)