West Tankers Inc v Allianz SPA & Anor

Under section 66 of the Arbitration Act 1996, the court may enter judgment in the terms of a declaratory arbitral award, including a negative declaration. Enforcement is not confined to coercive execution. It includes giving judicial force to the rights determined by an award, for example through res judicata.

The jurisdiction is discretionary. The court must decide whether judgment is appropriate, taking account of the award’s validity, the interests of justice and whether the order would serve a useful purpose.

Arbitrators declared that shipowners had no liability to charterers or their subrogated insurers for collision damage. The insurers were pursuing an inconsistent claim in Italy. The shipowners obtained an order under section 66 of the Arbitration Act 1996 permitting enforcement of the declaratory award and entering judgment in its terms.

Field J refused to set aside that order: [2011] EWHC 829 (Comm), [2011] 2 Lloyd’s Rep 117. The insurers appealed. They abandoned their challenge to the exercise of discretion, leaving the sole question whether section 66 conferred jurisdiction to enter judgment in the terms of a negative declaratory award.

1. Appeal dismissed. Section 66 of the Arbitration Act 1996 empowered the court to enter judgment in the terms of a declaratory award, including a negative declaration. Lloyd and Carnwath LJJ agreed with Toulson LJ.

2. The expression “enforced in the same manner as a judgment or order to the same effect” was not confined to the ordinary methods of coercive execution under the procedural rules. It extended to other means of giving judicial force to the rights established by an award. A declaration is not ordinarily executable, but it can have practical or compulsive effect. It may support res judicata, and exceptional circumstances may justify sequestration.

3. The broader construction accorded with the purpose of the legislation and the operation of arbitration. The efficacy of an arbitral award ultimately depends on judicial assistance. Describing the court as enforcing only the rights determined by an award, rather than the award itself, was an unconvincing distinction. Enforcement of any judgment or award is enforcement of the rights which it establishes.

4. Margulies Brothers Ltd v Dafnis Thomiades & Co (UK) Ltd [1958] 1 Lloyd’s Rep 205 did not prevent that conclusion. Its essential difficulty was that the unquantified award lacked sufficient certainty, rather than that it was declaratory in form. The wider contrary observation in Tongyuan (USA) International Trading Group v Uni-Clan Ltd was not accepted.

5. At common law, the beneficiary of a declaratory award could sue on it and, where appropriate, obtain a declaration in corresponding terms. Section 66 provides a simpler route to an equivalent result, while section 66(4) expressly preserves an action on the award.

6. The power remains discretionary. An application is not an administrative rubber-stamping exercise. Leave may be refused where the award’s validity is seriously questioned, an order is unnecessary, or the interests of justice do not favour it. The insurers no longer challenged the exercise of discretion in this case.

1. Court of Appeal (Civil Division): The insurers’ appeal was dismissed by [2012] EWCA Civ 27 . The court affirmed that section 66 conferred jurisdiction to enter judgment in the terms of the negative declaratory award.
2. High Court, Commercial Court: Field J dismissed the insurers’ application to set aside the section 66 order but granted permission to appeal: [2011] EWHC 829 (Comm) , [2011] 2 Lloyd’s Rep 117.
3. High Court: Simon J had permitted enforcement of the award and entered judgment in its terms on a without-notice application.