The French State v The London Steam-Ship Owners’ Mutual Insurance Association Limited

A partial arbitral award which finally determines substantive issues is an “award” for the purposes of Arbitration Act 1996, even if the precise relief and costs remain to be determined. A challenge must therefore be brought within the statutory period, subject only to an exceptional extension of time.

An arbitral tribunal applying English curial law lacks a default power under section 48(5) to grant an injunction against a foreign State where section 13(2) of the State Immunity Act 1978 prohibits such relief. Equitable compensation remains available for breach of an equitable obligation to arbitrate. Recognition of a foreign judgment does not extinguish that breach or bar compensation which neutralises its practical effect.

The French State applied under section 69 of the Arbitration Act 1996 for permission to appeal two partial awards made by Dame Elizabeth Gloster in an arbitration brought by the London Steam-Ship Owners’ Mutual Insurance Association. The awards concerned alleged breaches of an equitable obligation to pursue claims by London arbitration, and granted declaratory relief, equitable compensation and an anti-enforcement injunction.

The application was made within 28 days of the Second Partial Award but outside the period applicable to the First Partial Award. The French State sought an extension of time and permission to appeal four questions concerning the tribunal’s power to grant an injunction, the availability of equitable compensation, and the effect of recognition of the Spanish judgments under English law.

1. First Partial Award. The First Partial Award was an award within section 69 of the Arbitration Act 1996. It was formally an award, complied with section 52, determined substantive rights and liabilities, and finally decided the issues addressed in it. Leaving the precise terms of relief and costs for later did not make it provisional or uncertain. It was a partial award under section 47. An unchallenged award was final and binding under section 58 and created an issue estoppel.
2. Extension of time. Applying the factors in Kalmneft and Terna, an extension was granted for Grounds 1 and 2 but refused for Grounds 3 and 4. The delay was substantial, and the French State had not acted reasonably in allowing the statutory period to expire. Concerns about waiver of state immunity did not justify the delay because an application invoking adjudicative jurisdiction did not waive immunity from the distinct enforcement jurisdiction under section 13(2)(a) of the State Immunity Act 1978. The absence of prejudice and the apparent strength and public importance of Grounds 1 and 2 nevertheless made an extension just in those respects.
3. Ground 1. Adopting the reasoning in the contemporaneous Spain judgment, the court held that the tribunal lacked power under section 48(5) of the Arbitration Act 1996 to grant an injunction against the French State absent written agreement by the State to that power. The court deferred the issue whether section 13 should be read down under Benkharbouche pending the Court of Appeal’s decision in Resolute.
4. Ground 2. The appeal was dismissed. Equitable compensation was available for breach of the equitable obligation to arbitrate. The obligation arose from the rights pursued and was not avoided by characterising the claims as direct statutory claims rather than assigned or subrogated claims.
5. Grounds 3 and 4. The proposed appeals were not open to serious doubt. Recognition of a foreign judgment and the private-law obligation not to obtain that judgment otherwise than by arbitration concerned distinct matters. Compensation, or an injunction if otherwise available, could therefore neutralise the practical benefit of a judgment without logical inconsistency. No permission was granted on these grounds.

The court’s final conclusions were subject to the reserved section 13 issue, with submissions invited on the form of order.

First-instance arbitration claim under section 69 of the Arbitration Act 1996. The court reviewed the First Partial Award dated 8 February 2023 and the Second Partial Award dated 2 May 2023, granting limited procedural relief and determining the permission and appeal issues described above.