Svenska Petroleum Exploration AB v Government of the Republic of Lithuania & Anor

Recognition of a foreign arbitral award may be considered independently of enforcement. Under section 103(2) of the Arbitration Act 1996, the court’s discretion is limited, but may permit recognition where a party participated in a jurisdictional hearing, lost, and failed to challenge the ruling when an available remedy existed. That principle may inform recognition of a foreign award even though section 73(2) applies directly only to English arbitrations.

Recognition does not itself establish an issue estoppel. For that purpose, the award must have finally and conclusively determined the issue according to the law of the country in which the award was made. A jurisdictional award capable of being challenged before that country’s courts may lack that quality.

The claimant sought to enforce an ICC award made in Copenhagen against the Government of Lithuania and AB Geonafta. The tribunal first ruled that the Government was party to the joint venture and arbitration agreements. The Government participated in the jurisdictional hearing, did not challenge the interim award in Denmark, participated in the merits hearing, and did not challenge the final award.

After permission to enforce was granted in England, the Government applied to set aside the proceedings on state-immunity grounds. The claimant applied under CPR Part 24 to strike out or dismiss that application, arguing that recognition of the interim award would create an issue estoppel on the Government’s participation in the arbitration agreement. The central issues were whether the interim award could be recognised at that stage and whether it was final and conclusive for issue-estoppel purposes.

1. Recognition at the present stage. The claimant was entitled to seek recognition of the interim award on its CPR Part 24 application. Recognition may arise independently of enforcement, including where an award is relied upon by way of defence. Considering recognition as a preliminary issue was also appropriate case management because it might avoid a fresh determination of the Government’s status under Lithuanian law.
2. Section 103 discretion. The discretion under section 103(2) of the Arbitration Act 1996 is not open-ended or arbitrary. It may be exercised where, despite the original existence of a listed ground for refusing recognition, a recognised legal principle affects the prima facie right to rely on that ground. The principle reflected in section 73(2) is relevant: a participant who contests jurisdiction, loses, and fails to use an available challenge procedure may be prevented from reopening the same jurisdictional issue.
3. The Government had participated fully in the jurisdictional hearing, had not challenged the interim award in Denmark, and had subsequently participated in the merits hearing. Those circumstances justified recognition of the interim award for the limited purpose of allowing the claimant to rely on it in answer to the state-immunity application, even assuming that the Government could otherwise prove that it was not party to the arbitration agreement.
4. Issue estoppel. Recognition did not establish the necessary estoppel. Whether an award is final and conclusive depended on its status in the country where it was made. Under Danish law, the Government could seek a declaration before the Danish courts that it was not party to the arbitration agreement. That possibility meant that the interim jurisdictional award had not finally and conclusively determined the issue in Denmark. The position differed from an ordinary appeal against a court judgment, because the Danish proceedings could reopen the jurisdictional question itself.
5. The claimant therefore failed to establish issue estoppel. The application to strike out or dismiss the Government’s immunity application was dismissed.