Consilient Health Ltd v Gedeon Richter PLC

Under section 103(5) of the Arbitration Act 1996, the enforcing court has a wide and unfettered discretion to adjourn enforcement of a New York Convention award while a set-aside application is pending in the court of the seat.

The court should assess all the circumstances, including whether the challenge is bona fide, whether it has at least a realistic prospect of success, the likely delay and prejudice to the award creditor, and the risk of irremediable prejudice to the award debtor if enforcement proceeds. The assessment is broad-brush and applies equally to mandatory and monetary awards.

Consilient sought recognition and enforcement in England of a Dutch-seated ICC arbitral award under section 101 of the Arbitration Act 1996. The award required Gedeon Richter to transfer trade marks, marketing authorisations and registration dossiers following Consilient’s exercise of a contractual purchase option.

Richter opposed enforcement and sought an adjournment under section 103(5), relying on set-aside proceedings in Amsterdam based on Dutch res judicata principles. The central issue was whether enforcement should be deferred pending the Dutch challenge, having regard to the prospects of that challenge, delay, prejudice and the potentially irreversible disclosure of proprietary know-how.

1. Adjournment ordered. Enforcement proceedings were adjourned under section 103(5) of the Arbitration Act 1996 pending judgment of the Amsterdam Court of Appeal in Richter’s challenge to the award. Richter was required to provide security and give further undertakings protecting Consilient against financial losses and other prejudice. Consilient retained liberty to apply if circumstances changed.
2. The discretion under section 103(5) is wide and unfettered. The court must consider all the circumstances. Relevant matters ordinarily include whether the foreign challenge is bona fide and not tactical, whether it has a realistic prospect of success, the extent and consequences of delay, and prejudice to both parties. The list is not exhaustive.
3. The merits are assessed briefly and on a summary basis. The court should place the case on a sliding scale between an award that is manifestly invalid and one that is manifestly valid. A challenge need not be likely to succeed before an adjournment can be granted.
4. There is no separate rule for mandatory awards. The mandatory nature of an award is part of the factual context, but the same discretionary approach applies as for monetary awards.
5. The Amsterdam challenge was bona fide and had a realistic, though less than even, prospect of success. Delay would cause Consilient commercial prejudice, but that prejudice was partly mitigated by Richter’s proposed compensation, security and other protections. Immediate disclosure of the registration dossiers, however, created a serious risk of irreversible prejudice to Richter because the dossiers contained valuable manufacturing know-how whose misuse could be difficult to detect or prevent.