It has always been a dispute whether a matter falls under arbitrability and the decision given by the tribunals is obligatory or suggestive. Arbitral tribunals as well as courts while considering a request to set aside an award should generally determine arbitrability in accordance to lex arbitri. Over and above the general rules of arbitration of different jurisdiction affect the acceptance of an award. Article V(2)(a) of New York Convention says that a court also has a right to deny enforcement of the award however only in the cases where the dispute at hand is not arbitrable as per the mandatory law of the concerned jurisdiction. Julian Lew said that the ultimate purpose of an arbitration tribunal is to pass an enforceable award; on contrary it should be aware of that the award should be pronounced in accordance with relevant jurisdictions. 

While concerning the Riverrock case, the parties were England and Russia, where the seat of arbitration was London, as decided by the parties themselves. While concerning England, the arbitral awards made by arbitration tribunal, pursuant to any arbitration agreement is immediately enforceable. In a case where the losing party refuses to agree to the award, the enforcement proceedings are commenced where the award is given the same effect as a domestic court judgement, serving as an official basis of execution. English Arbitration Act 1996 provides for three routes of enforcement; 

1. Section 100 to 103 of the New York Convention talks about limited grounds for refusal, recognition and enforcement of the award. 
2. Section 66 provides for permission to enforce without notice akin to summary procedure which can be availed for domestic as well as foreign awards under CPR 24.
3. With a limitation of six years, a new cause of action required to bring an action on the award for breach of implied term that were agreed upon between the parties.

While concerning Russia, the arbitration awards would be responsible when they are decided on their merits and require actual enforcement, subject to the refusal grounds to enforce. The court practice on the enforceability of the arbitration cases finally resolving on the merits of the claims is not uniform and lacks any statutory provisions. The awards which are declaratory in nature, contains injunctions or prohibits performance of acts do not need to go through the enforcement proceedings, however the decision on the provisional measure are not enforceable. While concerning the foreign arbitral awards, the commercial and non-commercial matter which do not require enforcement are recognised without any further proceedings and are covered under an international treaty or a federal law. 

The England and Whales High Court granted Riverrock anti-suit injunction with respect to their bankruptcy proceedings brought against RSL in the Riverrock Securities Limited v. International Bank of St. Peterburg. The contention raised was that while the dispute resolution method was arbitration and the seat agreed between RSL and Riverrock for arbitration was LCIA London seated arbitration, therefore the claim shall not be entertained by the Russian courts. Applying the principles of Enka v. Chubb, the courts said that as the seat chosen is in London. That clearly meant that the parties have submitted themselves to the jurisdiction of London, including submitting to a jurisdiction the power of London courts to grant anti-suit injunction in such a case. As England is a pro-arbitration seat, it therefore reaffirming the pro-arbitration approach of holding parties to their agreements. “The English courts have adopted the principle that if the seat of the arbitration is England, then an anti-suit injunction to restrain foreign proceedings will readily be granted and that forum non-conveniens considerations do not come into play”. Section 37 of Senior Courts Act, 1981 provides jurisdiction to English courts to grant anti-suit injunction in the proceeding brought in breech of an arbitration agreement despite existence or continuation of any proceedings. The claim raised by RSL about this proceeding interfering with the DA’s work to which English courts said that the work would not be interfered as the anti-suit injunction is directed at IBSP. The clear policy of upholding arbitration agreement cannot be overruled by no other public policy. English courts in decided that granting anti-suit injunction would create a risk of inconsistency and therefore the English courts granted anti – suit injunction. 

Avoidance actions are the action where one of the contracting is filing for or as insolvency/insolvent, then the debtor commences an avoidance clause for its estate. After IBSP was declared insolvent, it tried to base its claim to escape liability using Article 61.2(1) of Russian Bankruptcy Law, which provided for the avoidance of transactions entered into an unequal consideration and also accused the creditor of purposeful harm as well as Article 10 accusing abuse of rights involved in the transaction. It was ruled that the claim was under the scope of arbitration clause, Foxton J questioned whether claim was arbitrable to begin with. Though IBSP used Larsen to prove the non-arbitrability of avoidance clauses however, Foxton J belonging to a pro-arbitration court disagreed as in his view “submission force was limited to the cases where arbitration clause is a contract between the company and its management and in which the circumstances in which the arbitration agreement had been concluded did not themselves provide a basis for impugning that agreement.”

Foxton J advocated modified universalism which advocates for international co-operation in corporate insolvency and ensuring that a consolidated distribution system of all creditors is achieved. As avoidance claims would be characterised as insolvency claims in English law however this characterisation is no way conclusive of the non-arbitrability of the claim. Therefore “a contractual avoidance claim by a liquidator, would operate inpersonam against the counter-party to the contract, irrespective of assertion under the statute or in arbitration, till such time as there is a realisation of the assets as a consequence of the arbitrator’s award.”

References

1. Christopher Boog; Benjamin Moss, Arbitrability,Foreign Mandatory Law and the Lazy Myth of the Arbitral Tribunal’s Obligation to Render an Enforceable Award: A Case Note on SwissFederal Supreme Court Cases 4A_654/2011 and 4A_388/2012*Decision 4A_654/2011 of 23 May 2012, ASA Bull. 3/2013, p. 635, and Decision 4A_388/2012 of 18 March 2013, ASA Bull. 3/2013, p. 625.
2. Karishma Vora and Natasha Peter, Enforcement of Arbitration Awards (including state immunity from execution); https://www.4-5.co.uk/uploads/docs/PDF_VERS_KV_NP.pdf
3. Edward Bekeschenko, Vladimir Khvalei, Dmitry Lysenko, Anton Maltsev and Taisiya Vorotilova, Enforcmeent of judgements and arbitral awards in the Russian federation; https://uk.practicallaw.thomsonreuters.com/w-023-0475?transitionType=Default&contextData=(sc.Default)&firstPage=true 
4. https://www.arbitrationlawmonthly.com/reliefs-and-remedies/injunctive-reliefs-and-orders/anti-suit-injunctions/
5. https://www.cms-lawnow.com/ealerts/2020/10/arbitration-and-foreign-bankruptcy-proceedings-the-english-courts-pro-arbitration-stance?cc_lang=en

Aishwarya Says:

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