Y v S

Under Arbitration Act 1996, the court should intervene in arbitration matters only with caution. An order restraining enforcement is unnecessary where enforcement in England already requires leave and CPR 62.18 automatically prevents enforcement pending a challenge. A party may obtain permission to enter judgment under section 66 before a section 67 challenge is determined, but the order should preserve the ordinary restriction on enforcement within England. Security should not ordinarily be imposed under section 66; an application for security belongs within the statutory procedure governing the challenge.

S sought discharge of an order made without notice restraining enforcement of an LCIA award pending Y’s challenge under section 67(1)(a) of the Arbitration Act 1996. S also sought leave under section 66 to enforce the award as a judgment before determination of that challenge. The original order was later varied to permit enforcement steps abroad and to provide for possible security. The issues were whether the restraint should remain, whether a final enforcement order could be made before the section 67 challenge, and whether enforcement should be conditional on security.

1. Discharge application. Section 1(c) of the Arbitration Act 1996 requires caution before court intervention, although it is not an absolute prohibition. The court assumed, without deciding, that an inherent jurisdiction existed to suspend enforcement, as suggested in Apis AS v Fantazia Kereskedelmi KFT [2001] All ER 348.
2. The restraint was unnecessary and inappropriate. It was not intended to affect enforcement abroad, there was no evidence of assets in England, and any English enforcement in the same manner as a judgment required leave. Under CPR 62.18, an order nisi would automatically prevent enforcement until the period for setting aside expired and any application had been disposed of. Paragraph 2 of the Flaux J Order, as varied by the Andrews J Order, was therefore discharged.
3. Section 66 application. Section 66 confers a discretion whether to grant leave. The fact that the application was made with notice did not place S in a better position than an applicant using the ordinary without-notice procedure. The appropriate order was permission to enter judgment in the terms of the award, coupled with permission for Y to apply to set aside and a restriction on enforcement within England until the specified date or final disposal of that application.
4. Security. The court rejected the submission that the restriction should be conditional on Y providing security. Its tentative view was that CPR 62.18(9) contains no mechanism for such a condition. Section 70(7) applies to applications under sections 67, 68 and 69, not to section 66. Any application for security should therefore be made separately under section 70(7), with adequate evidence. The present record did not show that the section 67 challenge was flimsy or establish the relevant prejudice.
5. The discharge application and section 66 application were granted in terms to be settled, without a security condition. Liberty to apply was granted, including for a future section 70(7) application.