Barclays Bank PLC v VEB.RF

An application under section 32 of the Arbitration Act 1996 is exceptional because it permits the court to determine jurisdiction before the tribunal has done so. The statutory threshold conditions are cumulative and conjunctive: the court must be satisfied that determination is likely to produce substantial costs savings, that the application was made without delay, and that there is good reason for court determination.

The likelihood of a later section 67 rehearing may be material, particularly where it would create duplicated hearings, substantial costs, delay and uncertainty. Tribunal permission and a reasoned tribunal decision are relevant but not decisive. The court must assess the criteria afresh and resolve them by reference to the facts of the particular case.

Barclays Bank PLC applied under section 32 of the Arbitration Act 1996 for a declaration that an LCIA tribunal lacked jurisdiction over VEB.RF’s claim arising from currency swap transactions. Barclays also sought amendment of an existing anti-suit injunction.

The parties’ agreement contained asymmetric arbitration and court-jurisdiction provisions and required disputes to be resolved with exceptional urgency. VEB.RF had commenced proceedings in Moscow and later LCIA arbitration. The arbitrator granted permission for a section 32 application after concluding that a court determination was likely to save substantial costs, that the application was made without delay, and that there were good reasons for court determination.

The judgment addressed only whether those statutory threshold conditions were satisfied.

1. Threshold conditions. The court held that section 32 operates as a derogation from the tribunal’s usual power under section 30 to determine its own jurisdiction. The conditions in section 32(2)(b) restrict the court’s intervention and must all be satisfied.
2. Costs saving. The application was made without delay. On the facts, a section 67 challenge was highly likely because of the amount in issue, the importance of the jurisdictional dispute to both parties, and their opposed preferences as to the decision-maker. A tribunal determination followed by a de novo section 67 rehearing would create substantial duplication, delay and expense. Determination by the court at this stage was therefore likely to produce a substantial saving of costs.
3. Good reason. Good reason existed because immediate court determination would promote efficiency and finality, avoid enforcement uncertainty, and give practical effect to the parties’ agreement that disputes required resolution with exceptional urgency. The bespoke and fact-sensitive nature of the issues did not make the dispute one of general legal importance.
4. Tribunal permission. The arbitrator’s reasoned decision was a material consideration, but it was not decisive. The court was not a rubber stamp and assessed the criteria afresh. Tribunal consent alone would not constitute sufficient good reason.
5. Disposition. All the threshold conditions were satisfied. The court should therefore determine the jurisdictional issue on its merits. This judgment did not determine that substantive issue.