To Order or to Award? An Unbiased View

On 16 September 2022, Mr Justice Andrew Baker handed down his oral judgment in the matter of EGF v HVF, HWG, TOM, DCK, HRY¹. The judgment addressed a challenge under the Arbitration Act 1996 (AA 1996) concerning allegations of apparent bias on the part of the arbitral tribunal and considerations of a tribunal's powers when making a partial award pursuant to the UNCITRAL Rules. The judge's obiter comments on what is within a tribunal's gift by way of interim relief pursuant to the UNCITRAL Rules are relevant reading for any arbitration practitioner.

Key takeaways are that (i) there is a high threshold to establish bias on the part of an arbitral tribunal such that it should be removed and/or that its awards should be set aside and (ii) though arbitral practice may permit interim remedies to be recorded in a tribunal's award, rather than in an order, practitioners should consider whether an express request for relief in the precise form specified in the UNCITRAL Rules is advisable, if there is a risk of such relief being challenged before an English court.

Challenge to the tribunal and its partial award

This judgment was made in relation to the challenge of a London-seated arbitral tribunal, and its partial award. In that award, the tribunal, amongst other things, included an interim payment order (expressly described as such) directing the claimant to pay a sum of US USD250 million by a specified date.

The claimant:

1. applied for the removal and replacement of the arbitrators, and for the partial award to be set aside, on grounds of apparent bias under sections 24 and 68 AA 1996. The claimant alleged that a procedural ruling issued by the tribunal concerning the late admission of a witness statement created an appearance of bias against the claimant. The claimant also challenged the tribunal's refusal to set out their reasons for that decision; and
2. challenged the partial award pursuant to sections 67 and 68(2)(b) AA 1996 on the basis that the tribunal did not have the jurisdiction to make an interim payment order in the partial award and had exceeded its powers in doing so.

The judge dismissed the claims, finding that:

1. there was nothing in the procedural ruling regarding witness statements that would cause any reasonable observer to think the arbitrators were not keeping an open mind in respect of the underlying factual issue;
2. the claimant had not pleaded that it had suffered substantial injustice as required by section 68(2) AA 1996 and it was not fair to allow the claimant to put forward a new case in argument. The judge accordingly dismissed the challenge under section 68 AA 1996;
3. had the judge been required to decide the point, he would have held that the tribunal had exceeded its powers by including an order for payment of an interim remedy in the partial award pursuant to Article 34 of the UNCITRAL Rules;
4. however, the tribunal did have power under Article 26 UNCITRAL Rules to order by way of interim remedy a provisional payment on account.

Apparent bias

Ahead of issuing its partial interim award, the tribunal had, on the final day of a hearing on the issues to be decided in that award, permitted the first defendant to enter into evidence a witness statement served that same morning. The tribunal did not permit the claimant to conduct any cross-examination in relation to that evidence, because to do so would require an adjournment of what was intended to be the final hearing in the case.

In reaching its decision that there was no justifiable doubt as to the arbitrators' impartiality, the court noted that the witness statements in question went to "a specific, narrow point of fact, of possible but marginal relevance to the case", that the tribunal's ruling was a "rational and reasonable response within the range of case management solutions that an impartial tribunal might consider" to allow the parties to address the relevant allegations, and that the tribunal had acted even-handedly.

Although the tribunal had refused to permit the claimant to cross-examine the witnesses on the newly admitted evidence, this was on the basis that the claimant would nevertheless have a fair opportunity to argue that the statements should be discounted. Indeed, the claimant was explicitly reassured that it would be entitled to rely on the fact that there had been no time for cross-examination. In the circumstances, the judge considered there was no doubt as to the arbitrators' impartiality and went so far as to say that "there was never any serious basis for proposing that such doubt existed".

Arbitral powers

• Article 26 of the UNCITRAL Rules permits a tribunal to grant interim measures at the request of a party.
• Article 34(2) of the UNCITRAL Rules states that “[a]ll awards…shall be final and binding on the parties".

The claimant argued that the effect of Article 34 of the UNCITRAL Rules was that the tribunal's grant of interim relief ought to have been granted by way of an order, not by way of an award.

Since the judge had already determined that, in the absence of a proper plea of substantial injustice for the purposes of section 68(2) AA 1996, the claimant's challenge based on excess of power must be dismissed, the judge was not required to decide the issue in respect of Article 34 UNCITRAL Rules.

However, the judge went on to comment, obiter, that Article 34.2 UNCITRAL Rules makes clear that an award is not intended to provide provisional or interim substantive relief, even if it may be "a practice in the international arbitration community of expressing orders by way of interim remedy in UNCITRAL Rules arbitrations in the form of an award". The parties, therefore, had not granted the tribunal a power to order on a provisional basis any relief it would have the power to grant in a final award. Accordingly, the judge would have found that the tribunal had exceeded its powers by making an award for an interim remedy. However, the judge would have nevertheless refused to invalidate the interim payment order, in light of the tribunal's power under Article 26 UNCITRAL Rules to order payment on account of a money claim.

Comment

Although the judge's decision in relation to apparent bias is fact-specific, it offers an insight into the relevant considerations when assessing potential bias. More notably, the judgment raises wider considerations for arbitral practitioners in relation to their application of the UNCITRAL Rules. Industry commentary on the interpretation and effect of Article 34 UNCITRAL Rules has specifically considered that interim measures may be made by way of award, on the basis of the wording not only of Article 26, but also Article 34. ² The judge's disagreement with this interpretation (though he was not referred to this commentary specifically) shows that the frequent issuance of interim "awards" by tribunals in UNCITRAL arbitrations may not reflect the accepted interpretation in all jurisdictions.

Though the judge's comments were made obiter, they provide a helpful insight into the English Court's interpretation of the powers afforded to a tribunal under the UNCITRAL Rules.

The judgment also illustrates that common practice in international arbitration may not necessarily conform with an English court's interpretation of arbitral rules. The tribunal itself is noted to have commented in its award that "having regard to the vagaries of enforcement, we prefer to frame the relief in the form of an award". For example, certain jurisdictions may not consider an order for interim measures from an arbitral tribunal to carry the same weight as an award, and therefore may not consider an interim order to be enforceable in the same way.

The judge did not consider this issue as such, instead focusing on the wording in Article 34.2 that an award be "final and binding" on the parties, which he considered to be inconsistent with a grant of interim relief. The judge clearly considered this to be an overriding consideration, not least as an English court would in most instances enforce interim measures granted by a tribunal in the form of an order.

If interim relief is sought by parties in England, this judgment would suggest that parties should specifically request any such relief to be given in the form of an order, rather than an award. We note this may not be the case in all jurisdictions and practitioners should therefore be mindful not only of the relief they seek in an arbitration but the form in which that relief is ordered in the context of the relevant jurisdiction.