It is well-recognised that an advantage of London-seated arbitration is the limited grounds on which an arbitration award may be challenged or appealed in the English courts. The three grounds of challenge / appeal under the English Arbitration Act 1996 (the “Act”) are:
- lack of substantive jurisdiction of the arbitral tribunal (s.67);
- serious irregularity affecting the tribunal, the proceedings or the award that has caused or will cause substantial injustice to the applicant (s.68); and
- appeal on a point of law (s.69).
- The Commercial Court statistics for the court year 2018-2019 show that there has been a significant decrease in the number of applications under s.68 and s.69 (there are no statistics available for s.67 applications). Specifically, there were:
- 19 s.68 applications, compared with 71 in 2017-2018
- 39 s.69 applications, compared with 87 in 2017-2018.
- The statistics also highlight the very low success rate of these applications. The minutes of the Commercial Court Users’ Group Meeting (at which the statistics were reported) record that there were “very few” successful s.68 challenges in 2018-2019, and “Teare J expressed hope that parties were hearing the message that the hurdle for these applications is high.” None of the s.69 applications were successful in 2018-2019 (there were only two successful s.69 appeals the previous year).
Why has there been such a dramatic decline in applications under s.68 and s.69 in the space of a year?
Were fewer arbitration awards issued in 2018-2019 meaning that there were less arbitral awards for parties to challenge/appeal? The caseload statistics issued by some of the major arbitral institutions that administer London-seated arbitrations (LCIA, ICC and LMAA) for the calendar year 2018 (which partly overlaps with the 2018–2019 court year to which the Commercial Court statistics relate) suggest not – there appears to have been a modest increase in arbitrations commenced and arbitral awards rendered in 2018 compared with 2017. (As regards s.69 appeals – we note that the ICC and LCIA Rules exclude the ability of parties to appeal under this section, but the LMAA Rules do not.)
Does the decline reflect party satisfaction? Perhaps the decline in s.68 and s.69 applications should be viewed as a sign that parties are happy with the arbitration process and the quality of awards being rendered by tribunals in arbitrations seated in London and are, therefore, less inclined to challenge/appeal those awards in the English courts.
And/or, are parties deciding not to bring applications because of the low chances of success? As Teare J suggested, perhaps parties are deciding against bringing applications in circumstances where the “hurdle for these applications is high.”
Are the 2018-2019 statistics evidence of a trend towards fewer appeals/challenges?
Some caution should be exercised before attempting to extrapolate a trend of sharply decreasing s.68 and s.69 applications by comparing the 2017-2018 and 2018-2019 statistics alone. The statistics for 2015-2016 (34 s.68 applications, one successful challenge and 60 s.69 applications, four successful appeals) and 2016-2017 (31 s.68 applications, no successful challenges and 46 s.69 applications, no successful appeals) indicate that 2017-2018 was an anomaly because it saw a significant spike in s.68 and s.69 applications.
The spike in 2017-2018 makes the decrease in 2018-2019 appear sudden and dramatic, whereas if the 2018-2019 figures are compared with the 2015-2016 and 2016-2017 figures they suggest a gentler trend of gradually decreasing applications over the last few years.
We shall have to wait for the statistics for subsequent years to see the true picture, however, in the meantime, perhaps the 2018-2019 statistics should should be viewed as: (i) demonstrating the satisfaction of parties arbitrating in London with the arbitral process and awards rendered; (ii) a sign that parties are becoming increasingly pragmatic regarding the chances of success of s.68 and s.69 applications; and, (iii) a reflection of the robust and pro-arbitration stance of the English courts.
Annabel Maltby and Georgia Davies