ENGLAND & WALES Law and Practice Contributed by: James Stacey, Peter Wickham, Samantha Holland and William Humphries, Slaughter and May
The English courts have enforced foreign arbitral awards for punitive damages, despite arguments that this would be contrary to English public policy ( Pencil Hill Ltd v US Citta di Palermo Spa [2016] EWHC 71 (QB)). 10.3 Recovering Interest and Legal Costs The parties can agree how costs are allocated, but an agreement that one party is to pay part or the whole of the costs of the arbitration is valid only if that agree - ment is made after the dispute has arisen (Section 60). In the absence of agreement between the parties, the tribunal can allocate the costs of the arbitration between the parties (Section 61 (1)). This is done on the general principle that “costs should follow the event” (ie, the losing party pays the successful party’s legal costs), unless this is inappropriate in the circum - stances (Section 61 (2)). “Costs” include the arbitrators’ fees and expenses, the fees and expenses of any arbitral institution, and the legal and other costs of the parties (Section 59). If the parties do not agree costs, the tribunal can determine the recoverable costs (Section 63 (3)). If it does so, the tribunal must specify the basis on which it has acted and the items of recoverable costs and the amount referable to each. If the tribunal does not determine the recoverable costs, either party can apply to the court (Section 63 (4)). The tribunal can direct that the recoverable costs of the whole or part of the arbitration are limited to a specified amount (Section 65 (1)). Where contingency fee arrangements apply, Sec - tion 58 (A)(6) of the Courts and Legal Services Act 1990 provides that a costs order made in proceed - ings (including arbitral proceedings) “may not include provision requiring the payment by one party of all or part of a success fee payable by another party under a conditional fee agreement”. Unless the parties agree otherwise (including in a contractual term), the tribunal has broad discretion to award pre-award and post-award interest on a simple or compound basis, at such rates and with such rests
as the tribunal considers meet the justice of the case (Section 49).
11. Review of an Award 11.1 Grounds for Appeal There are three grounds upon which to challenge an arbitral award: • lack of substantive jurisdiction (Section 67); • serious irregularity that has or will cause substan - tial injustice (Section 68); and • appeal on a point of law (Section 69). Section 67: Challenge to the Tribunal’s Substantive Jurisdiction A challenge to the tribunal’s substantive jurisdiction is usually based on one of the following three grounds: • the existence or validity of the arbitration agree - ment; • the constitution of the tribunal; or • the scope of the arbitration agreement. A challenge can be made to a final award on the mer - its, or to a preliminary award on the tribunal’s jurisdic - tion. If the challenge is against a preliminary award on jurisdiction, the tribunal may continue with the arbitra - tion proceedings and make a further award while the challenge is pending (Section 67 (2)). Following a successful challenge under Section 67, the court may confirm the award, vary the award, remit or set aside the award or declare the award to be of no effect, in whole or in part (Section 67 (3)). The powers to remit or declare the award to be of no effect, in whole or in part, were introduced by the 2025 Act to ensure consistency with the remedies available for Section 68 and Section 69 challenges (described below). Section 68: Challenge on the Grounds of Serious Irregularity The applicant must show both that: • there has been a “serious irregularity”; and
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