Sovarex SA v Romero Alvarez SA

Section 66 of the Arbitration Act 1996 provides a general enforcement procedure. Although ordinarily summary, it may be case-managed so that disputed factual issues concerning substantive jurisdiction are determined within the same proceedings. The award-holder retains the benefit of the statutory starting position that the award is valid, and the resisting party bears the burden under section 66(3). A party does not take part in arbitration merely by protesting that no arbitration agreement exists and asking the tribunal to defer to another court. Participation requires invoking the tribunal’s jurisdiction to determine the jurisdiction issue. The English court, as the court of the seat, may determine the validity of the arbitration agreement and need not stay enforcement proceedings because of foreign proceedings which have not determined that issue.

Sovarex applied under section 66 of the Arbitration Act 1996 for permission to enforce a FOSFA arbitration award and enter judgment in its terms. The award concerned damages for the alleged repudiation of a contract for the sale of sunflower seeds, governed by English law and containing a London arbitration clause.

Romero Alvarez denied that any contract or arbitration agreement had been concluded. It argued that it had preserved its jurisdictional objection because its correspondence with FOSFA did not amount to participation in the arbitration. It also relied on Spanish proceedings, the Brussels Regulation, lis pendens and forum non conveniens. The issues were whether the objection had been lost, whether section 66 proceedings could determine disputed facts, and whether enforcement should be declined or stayed.

1. Jurisdictional objection preserved. The correspondence protested that there was no contract or arbitration agreement and asked FOSFA to defer to the Spanish court. Objectively understood, it did not invite the tribunal to determine its own jurisdiction or recognise that it possessed jurisdiction. Romero Alvarez therefore had not taken part in the arbitration and had not lost its right to object under sections 66(3), 72 and 73 of the Arbitration Act 1996. The distinction is between asserting non-jurisdiction and invoking the tribunal’s jurisdiction to decide the issue.
2. Section 66 procedure. The court may determine disputed issues of fact within section 66 enforcement proceedings. The word show in section 66(3) indicates that the resisting party must prove the tribunal’s lack of substantive jurisdiction, rather than merely establish a triable issue. This preserves the award-holder’s statutory benefit of starting from a presumption of validity. CPR Part 62 permits case-management directions suitable for determining factual issues, including directions analogous to those given on a section 67 challenge. A fresh action on the award is therefore unnecessary, although it may be appropriate in a complex case.
3. No stay or jurisdictional deference. The Spanish proceedings had been dismissed and, as matters stood, would not determine whether the contract existed. The earlier Spanish orders did not decide whether an arbitration agreement had been concluded and did not establish that only the Spanish court had jurisdiction. Enforcement by the court of the seat was not an interference with the Spanish proceedings.
4. Discretionary stay refused. The English arbitration and enforcement proceedings were substantially advanced, the award already existed, and the English court was the natural forum for deciding whether a London-seated award should become an English judgment. Romero Alvarez’s application to dismiss or stay was rejected. Directions were ordered for determination of its jurisdictional challenge.

First-instance decision. No appellate history is stated in the judgment.