Diag Human Se v Czech Republic

Recognition and enforcement of a New York Convention award under Arbitration Act 1996, section 103, is subject to a pro-enforcement scheme, but enforcement is unavailable where the award remains open to ordinary recourse. The enforcing court applies an autonomous English-law meaning of “binding”, while consulting the law governing the arbitration where necessary to identify whether a genuine merits review remains available. Extraordinary recourse, such as setting-aside proceedings for procedural irregularity, does not ordinarily prevent an award from being binding. A foreign enforcement decision may create an issue estoppel where the foreign court had jurisdiction, gave a final decision on the merits, and decided the same issue. An award that is not binding cannot be partially enforced merely because an identified part of the amount appears indisputable.

Diag Human sought enforcement in England of a Czech arbitral award dated 4 August 2008. Burton J had granted leave to enforce the award and entered judgment on 21 July 2011. The Czech Republic applied to set that order aside under section 103(2)(f) of the Arbitration Act 1996, contending that the award had not become binding because the arbitration agreement permitted a review by other arbitrators and review applications had been made.

The Czech Republic relied primarily on an Austrian Supreme Court decision in related enforcement proceedings, while Diag Human disputed the resulting issue estoppel and argued that the review applications were unauthorised or had been withdrawn. Diag Human alternatively sought partial enforcement of an earlier capital sum and accrued interest.

1. Disposition. The Austrian Supreme Court’s decision created an issue estoppel that the award was not binding. Burton J’s enforcement order was set aside. Partial enforcement was refused.
2. Section 103 gives domestic effect to the relevant New York Convention provisions but stands as an independent statutory provision. Its language has an autonomous meaning, informed where appropriate by international materials and foreign decisions. The Convention embodies a pro-enforcement policy: the refusal grounds are exhaustive, narrowly construed, and must be proved by the party resisting enforcement.
3. The question whether an award is binding is for the English enforcing court. The distinction between ordinary and extraordinary recourse is material. An award subject to a genuine further merits review is not binding. The availability of extraordinary recourse, including setting-aside proceedings, does not by itself prevent binding effect. The court declined to give either category a rigid definition.
4. A foreign judgment can create an issue estoppel in later English enforcement proceedings, including a foreign decision made under the New York Convention, where the foreign court was competent, the judgment was final and conclusive and on the merits, the parties and subject matter are identical, and applying the estoppel would work justice. The Austrian decision clearly determined that the award was not binding. The fact that the English court might disagree with its reasoning was immaterial.
5. Even without the Austrian estoppel, the award was subject to ordinary recourse. The review tribunal had jurisdiction under Czech law to determine the authority and withdrawal issues. The Czech Republic’s review application was validly triggered by one or more of the letters served on 22 August 2008. The Minister had authority; alternatively, the applications by the OGRPA director or his authorised employee were effective. Any defect could, in any event, be retrospectively cured by ratihabition.
6. The withdrawal issue was left undetermined. Because the award was not binding, the court had no power to enforce part of it merely because a capital sum or interest calculation was said to be indisputable.

First-instance decision. The judgment records that Burton J granted leave to enforce and entered judgment on 21 July 2011. That order was set aside by Eder J.