African Fertilizers and Chemicals Nig Ltd (Nigeria) v BD Shipsnavo GmbH & Co Reederei Kg

A declaratory arbitration award may be enforced under section 66 of the Arbitration Act 1996 where entering judgment in its terms would provide a real material benefit to the successful party. The statutory expression “enforced” includes the remedies available in an ordinary action on the award, including declaratory relief. It is not necessary for every award to contain a sum certain or a coercive obligation. The relevant question is whether judgment in the terms of the award can assist in securing its benefit, including by establishing its primacy over an inconsistent foreign judgment. A court-approved settlement is materially different from an arbitral award because the award’s contents result from the tribunal’s adjudication rather than the parties’ contractual agreement.

The claimant ship-owner obtained leave under section 66 of the Arbitration Act 1996 to enforce an arbitration award and enter judgment in its terms. The award declared that a London arbitration clause had been incorporated into the bill of lading, bound the defendant, and conferred jurisdiction over disputes concerning general average and related claims.

The defendant sought to set aside the order, arguing that a purely declaratory award could not be enforced under section 66. It also argued that an English judgment entered in the terms of the award would not qualify as a judgment under article 34(3) of the Brussels Regulation. The application required determination of whether the section 66 order could provide a material benefit by protecting the award against a potentially inconsistent Romanian judgment.

1. The defendant’s application to set aside the section 66 order was dismissed. Teare J had jurisdiction to grant leave to enforce the award and to enter judgment in its terms.

2. Section 66 provides a summary means of enforcing an award, alongside an ordinary action on the award. The statutory terms “enforcement” and “enforced” bear their ordinary meaning, informed by what can be achieved in an action at common law. The legislation should be construed clearly and without unnecessary technicality, consistently with The Amazon Reefer.

3. At common law, declaratory relief is among the contractual remedies available in an action to enforce an arbitral award. A declaratory judgment may also, in exceptional circumstances, be enforced by sequestration under the court’s inherent jurisdiction, as explained in Webster v Southwark LBC. The availability of such remedies means that the declaratory nature of an award does not by itself prevent enforcement under section 66.

4. Margulies Brothers is properly understood as turning on uncertainty and ambiguity arising because the award did not specify a sum certain and required further arithmetic. It does not establish an absolute rule that a declaratory award cannot be enforced. The material question is whether the award is framed clearly enough to translate into a judgment.

5. The present award could provide a real material benefit. There was an appreciable risk of an inconsistent Romanian judgment, and an English judgment in the award’s terms could establish the award’s primacy for the purposes of article 34(3) of the Brussels Regulation.

6. Solo Kleinmotoren v Boch did not require a different conclusion. That decision concerned a court-approved settlement, which was essentially contractual. An arbitral award, although based on consent to arbitration, results from the tribunal’s adjudication and is not equivalent to a settlement.

First-instance decision. The judgment states that the earlier section 66 order was made by Teare J on 4 August 2011 and varied on 15 August 2011. It also records earlier orders by Beatson J and Field J concerning the Romanian proceedings, but those orders were not under challenge in this application.