West Tankers Inc v Allianz Spa & Anor

Section 66 of the Arbitration Act 1996 permits an award to be enforced as a judgment where doing so will secure the award’s material benefit. This can include a declaratory award where there is a real prospect that an inconsistent foreign judgment will otherwise be recognised or enforced in England. The court need not finally determine that hypothetical recognition issue when deciding the section 66 application. A declaratory award will generally not be converted into a judgment merely to restate rights where no practical enforcement benefit would result.

The defendants applied to set aside an order made by Simon J under section 66 of the Arbitration Act 1996. The order gave leave to enforce an arbitral award and entered judgment declaring that the claimant was under no liability to the defendants following a collision in Italy.

The defendants argued that a purely declaratory award could not be enforced under section 66. The claimant relied on the risk that the defendants might obtain an inconsistent judgment in Italy and seek its recognition or enforcement in England under the EC Regulation 44/2001. The central issue was whether that risk supplied sufficient utility and jurisdiction for the section 66 order.

1. The application to set aside Simon J’s order was dismissed. The court held that Simon J had jurisdiction to grant leave under section 66 and to enter judgment in the terms of the declaratory award.

2. Section 66(1) and (2) should be construed as providing a means by which the successful party in an arbitration can obtain the material benefit of the award without suing on it. The court adopted the approach of the New South Wales Court of Appeal in Tridon Australia Pty Ltd v ACD Tridon Inc [2004] NSWCA 146.

3. Where an award is declaratory and there is no appreciable risk of an inconsistent foreign judgment being enforced in England, leave will generally not be granted because it adds no practical benefit. Where, however, the purpose of the order is to establish the primacy of the award over a potentially inconsistent judgment, the order can facilitate the realisation of the award’s material benefit.

4. The court need only be satisfied that the party seeking enforcement has a real prospect of establishing the primacy of the award over an inconsistent foreign judgment. It is neither necessary nor appropriate to decide that hypothetical recognition question finally before the inconsistent judgment exists.

5. The decision in Margulies Brothers, Ltd v Dafnis Thomaiedes & Co (UK) Ltd [1958] 1 Lloyd’s Rep 205 was distinguishable. In that case, converting the award into a judgment would not have assisted the successful party in obtaining the fruits of the award, whereas the present order could protect the award against an inconsistent judgment.

6. The claimant comfortably satisfied the threshold requirement. The section 66 order was therefore maintained.

The judgment concerned an application to set aside an order made by Simon J on 15 November 2010 granting leave under section 66 of the Arbitration Act 1996 and entering judgment in the terms of the award. The application was dismissed.