JKD & Anor v IKC

An arbitral tribunal’s final determination of an application for interim or conservatory relief is not necessarily an “award” for the purposes of the Arbitration Act 1996, section 68. The court must assess substance and form objectively, including finality, the nature of the issues, whether the tribunal is functus officio, the decision’s form, the reasonable recipient’s view, applicable formalities and context. A discretionary refusal of interim relief which leaves substantive rights for a final award will ordinarily remain a procedural order. Section 68 is a narrow longstop. It does not permit challenges based only on an error of law or the erroneous exercise of an available power. A merits threshold is substantive law, not agreed procedure under section 68(2)(c), and any agreement said to circumscribe the tribunal’s powers must be objectively clear.

The claimants, a contractor, sought to challenge an arbitral tribunal’s refusal of interim measures intended to restrain calls on on-demand bonds and related court proceedings. The decision was called Procedural Order No. 4. The claimants argued that it was an award and that the tribunal had committed serious irregularity under sections 68(2)(b) and 68(2)(c) of the Arbitration Act 1996 by applying an enhanced merits threshold rather than a prima facie threshold allegedly agreed through international standards described in Born’s textbook. The defendant disputed the characterisation, agreement, statutory grounds, substantial injustice and waiver. The central issues were whether PO4 was an award, whether any agreement constrained the tribunal’s powers or prescribed procedure, and whether the statutory requirements were met.

1. Disposition. The application failed. Procedural Order No. 4 was not an award for the purposes of section 68 of the Arbitration Act 1996, so the challenge failed at the first hurdle.
2. Award or procedural order. The court applied the guidelines accurately summarised in ZCCM Investment Holdings plc v Kansanshi Holdings plc, [2019] EWHC 1285 (Comm). The assessment is fact-specific and considers substance, finality, whether the tribunal is functus officio, the nature of the issues, the tribunal’s description, the reasonable recipient’s view, formal requirements and context. PO4 finally determined only an application for discretionary interim relief. The tribunal expressly left the contractual rights and liabilities for its final award, remained able to decide them, and had not finally determined any substantive right. Commercial risk from refusal of relief did not alter that conclusion.
3. Formal and comparative considerations. Article 28.1 of the ICC Rules permitted the tribunal to issue either an order or an award. Failure to comply with the award procedures in Articles 34 and 35 supported the procedural character of PO4, although it would not alone have been decisive. YDU v SAB, [2022] EWHC 3304 (Comm), and Lord v Kinsella, [2023] EWHC 2748 (Ch), concerned materially different decisions. The conditional support provided by Braspetro, [2000] ASA Bull. Vol. 18 No. 2 p. 1056, did not assist on the facts.
4. Section 68. The court adopted the narrow longstop approach in Lesotho Highlands Development Authority v Impregilo SpA, [2005] UKHL 43. Section 68 distinguishes an excess of power from an erroneous exercise of an available power or an error of law. The parties’ agreement could create and delimit the tribunal’s powers, but no agreement objectively required the prima facie test for all interim applications. Even if such an agreement had existed, applying an allegedly wrong merits threshold under the broad discretion in Article 28.1 would have been an error in exercising an available power, not an excess of power. The reasoning in Essar Oilfields Services Ltd v Norscot Rig Management PVT Ltd, [2016] EWHC 2361 (Comm), supported that distinction.
5. Agreed procedure and other issues. Section 68(2)(c) concerns due process, such as the decision-maker, timing, disclosure, evidence, submissions and time limits. A merits threshold is substantive law, not procedure. The court relied on PAO Tatneft v Ukraine, [2019] EWHC 3740 (Ch), and Secretary of State for Defence v Turner Estate Solutions Ltd, [2014] EWHC 244 (TCC). The court’s observations on written agreement under section 5 and substantial injustice were unnecessary to the result. Waiver was not addressed. The application accordingly failed.

not stated in the judgment.