Party A v Party B & Anor

The court has no power under Civil Procedure Rules 1998 rule 3.1(2)(g) to stay arbitral proceedings. The court’s intervention in an arbitration is limited to powers conferred by Part 1 of the Arbitration Act 1996. In particular, an arbitration may continue while an application to remove an arbitrator is pending. Any jurisdiction to restrain the arbitration pending a challenge would arise only in exceptional circumstances, such as vexatious, oppressive or unconscionable conduct. The existence of a removal or serious-irregularity challenge, potential wasted costs, delay, or possible forensic prejudice is insufficient. Procedural orders governing the conduct of an arbitration are not awards and cannot ordinarily be reviewed before an award is made.

Party A applied to stay two LCIA arbitrations between it and Party B, conducted by the Second Defendant as sole arbitrator. The application followed procedural orders refusing consolidation and oral examination of witnesses and experts. Party A had also challenged the arbitrator under section 24 of the Arbitration Act 1996 and intended to pursue a section 68 challenge concerning the procedural decisions. The central issues were whether the court could stay or enjoin the arbitrations pending those applications and whether the procedural orders were interim awards.

1. The application was mischaracterised as one for a stay. Rule 3.1(2)(g) of the Civil Procedure Rules 1998 concerns proceedings in court and does not apply to arbitral proceedings. The application therefore failed insofar as it relied on that rule.

2. The substance of the application was an injunction restraining the further pursuit of the arbitrations. No proper evidence supported such relief. More fundamentally, section 1(c) of the Arbitration Act 1996 required the court not to intervene except as provided by Part 1. Section 24 contained no power to halt an arbitration pending a removal application, and section 24(3) expressly permitted the tribunal to continue the proceedings and make an award while the application was pending. The court doubted that it had jurisdiction to grant the injunction.

3. Alternatively, any such power could be exercised only in exceptional circumstances. Where the arbitration agreements were applicable, those circumstances would involve continuation of the arbitration being vexatious, oppressive or unconscionable. The existence of a section 24 challenge, even one supported by an arguable or good arguable case, was not exceptional. Potential wasted time and costs, delay, and the possibility that written witness answers might affect later cross-examination did not amount to oppression or vexation.

4. The same conclusion applied to the section 68 challenge. The ordinary position was that the court could not interfere with the procedural conduct of an arbitration before an award, consistently with Elektrim SA v Vivendi Universal SA [2007] EWHC 571 (Comm). The December Orders were procedural orders, not awards, because they did not determine substantive rights. Party A’s remedies were to challenge any award for serious irregularity or seek removal of the arbitrator. The application was dismissed.