R v V

An arbitral award will not readily be reopened on public-policy grounds where the tribunal had jurisdiction, considered the alleged illegality, gave detailed reasons, and expressly found the agreement lawful. Section 68 of the Arbitration Act 1996 cannot be used to correct alleged errors of fact or law. An enforcement court may inquire further where there is prima facie evidence of illegality, but the inquiry must respect arbitral finality. A consultancy agreement involving genuine negotiation, lobbying and advisory services is not necessarily an unlawful sale of personal influence. The court must examine the substance and real object of the transaction.

R challenged an ICC award made in London under sections 68(2)(g) and 81(1)(c) of the Arbitration Act 1996. The award required R to pay V, a company beneficially owned by Mr F, $3 million and further success fees under a consultancy agreement concerning oil-development plans and production quotas in Libya.

The tribunal rejected R’s arguments that the agreement lacked consideration, breached fiduciary duty, or was illegal under Libyan law and contrary to English public policy. R argued that the court should look behind those findings and treat the agreement as an unlawful sale of personal influence. The issues were the permissible scope of review under sections 68 and 81 and whether enforcement would offend public policy.

1. Application dismissed. R failed to establish that the award or its enforcement could be challenged on public-policy grounds.
2. Section 68 concerns serious irregularity causing substantial injustice. It cannot be used to circumvent the statutory restrictions on intervention or to obtain review of alleged errors of fact or law. The tribunal had jurisdiction to decide illegality, R participated fully, the panel was experienced, and detailed reasons were given. There was no want of due process, collusion or bad faith.
3. Section 81 preserves the common-law power to refuse recognition or enforcement on public-policy grounds, but section 81(2) does not revive jurisdiction to set aside or remit an award for errors of fact or law. The award expressly found that the agreement and its performance were not illegal under Libyan law and did not offend English public policy.
4. Soleimany v Soleimany [1999] QB 785 establishes that an English court controls enforcement under the lex fori. Where prima facie evidence suggests illegality, the enforcement judge may inquire further, but should not immediately conduct a full retrial.
5. Westacre Investments Inc v Jugoimport SPDR Holding Co Ltd [2000] 1 QB 288 was binding. The court followed its approach of respecting an award where the tribunal had jurisdiction and had determined that the agreement was not illegal. The present case disclosed no material distinction.
6. Article 257 of the Libyan Penal Code was concerned with obtaining money for mere intercession through claimed influence over a civil servant without real work. Mr F performed substantial intermediary and advisory functions, so the agreement was not shown to infringe the provision.
7. The substance and real object of a transaction must be examined. Genuine negotiating, lobbying and advisory services are not unlawful merely because the consultant has influence or relationships. The agreement and services performed did not establish a corrupt purpose, illegal influence, or intended abuse of influence.