FRANEK JAN SODZAWICZNY v SIMON JOHN MCNALLY

Section 66 of the Arbitration Act 1996 gives the court a discretion to permit enforcement of an award as a judgment or to enter judgment in its terms. The court should readily grant relief, but may refuse an order if the award is unclear, ambiguous, non-arbitrable or would improperly affect third-party rights.

The court must not revisit discretionary issues decided between the parties in the arbitration. It may independently consider third-party interests, the court’s own supervisory interests, later events and whether enforcement would serve a useful purpose. A declaration may be refused where conversion into a court order would add no practical benefit.

The claimant obtained a third partial award in an LCIA arbitration concerning a property in Mallorca. The arbitrator declared that the claimant was the ultimate beneficial owner, declared that the defendant held relevant powers or interests on trust for the claimant, and ordered the defendant to take steps to transfer the property or its indirect ownership.

Cockerill J granted permission under section 66 of the Arbitration Act 1996 to enforce the award as a judgment. The defendant applied to set aside that order in relation to the property, arguing that the award was unclear, non-arbitrable, ineffective against third parties and incapable of compliance. The central issues were the proper scope of the court’s discretion under section 66 and whether each part of the relief had practical utility.

1. Disposition. The defendant’s application was granted in relation to the declaration that the claimant was the ultimate beneficial owner of the property. It was refused in relation to the declaration concerning the defendant’s powers and interests and the transfer order.
2. Section 66 approach. Section 66 of the Arbitration Act 1996 provides two alternative forms of relief: permission to enforce an award in the same manner as a judgment, or entry of judgment in the award’s terms. The jurisdiction is discretionary and summary. The court should not be astute to identify construction difficulties, but must refuse relief where the award cannot sensibly be translated into a judgment or would require the court to go behind the award and reconstruct the tribunal’s reasoning. The distinction between section 66(1) and section 66(2) also meant that the order made here did not itself engage the court’s contempt jurisdiction.
3. Discretionary relief. Issues concerning discretionary prescriptive relief which arose only between the parties, including control of the relevant asset, were ordinarily not open to reargument at the section 66 stage. The court could, however, determine for itself whether enforcement would affect third parties or engage an independent interest of the court. It could also consider appropriate post-award events. A declaration could be refused where no useful purpose would be served by converting it into a court order, and the court could enforce only separate, non-interdependent parts of an award.
4. Preliminary and arbitrability issues. The burden under section 66(3) lay on the party resisting enforcement to show lack of substantive jurisdiction. The dispute concerning the property was an in personam dispute about fiduciary obligations and rights in companies within the ownership structure. It did not involve adjudication of title to Spanish land and was not rendered non-arbitrable by the Mocambique rule. The award bound only the parties and those claiming through or under them. It did not impose relief on true third parties, and a registered mortgage was unaffected.
5. Application to the relief. Declaration (1) was sufficiently clear between the parties, but its conversion into a court order would add no realistic utility because the arbitral declaration was already binding. Declaration (2) was sufficiently clear and had practical utility in relation to trust obligations and interim relief. The transfer order was also workable: “whatever is necessary” imposed an absolute obligation, “indirect ownership” referred to the relevant corporate chain, and “or” gave the defendant alternative means of performance. Questions about present inability to comply could be considered at a later enforcement stage.

High Court (Commercial Court) The defendant applied to set aside part of an order made by Cockerill J on 18 April 2021 granting permission under section 66 of the Arbitration Act 1996 to enforce the third partial award as a judgment. Foxton J granted the application only in relation to Declaration (1).