Enforcing Arbitration Awards: Cross Border Enforcement
14 August 2015
Alternative Dispute Resolution (“ADR”) is increasingly becoming the favoured option for both commercial entities and individuals who find themselves in difficulty.
Arbitration is one such alternative means, and involves the appointment of an impartial person to make decisions and effectively resolve matters between the parties. As per the Arbitration Act 1996, an arbitration award shall be “recognised as binding on the persons as between whom it was made” and “may, by leave of the court, be enforced in the same manner as a judgement or order of the court to the same effect.”
In this way, it is clear that arbitration is not merely a pit stop on the road to litigation; as a process, it is intended to have teeth. Recognition or enforcement of an award may only be refused if the person against whom it is invoked proves that “he was not given proper notice of the appointment of the arbitrator or of the arbitration proceedings” or that he “was otherwise unable to present his case.”
This issue of enforcement, and in particular cross jurisdictional enforcement, recently came to the fore in the Northern Irish case of Tesco (Ireland) Limited (“Tesco”) v. William Moffett, Richard McLaughlin, James McLaughlin and Anson Logue, In which Litigation Partner, Darren Toombs, was instructed for the Plaintiff Applicant, Tesco.
The Defendants in this matter had been in the construction business, and were engaged by the Plaintiff to construct a supermarket in Monaghan. On 2nd December 1994, a Development Agreement was signed by the Defendants (as Newbay Properties) and the Plaintiff’s predecessor in title. This provided for the reference of any dispute to a single arbitrator to be agreed by the parties.
Notably, the Development Agreement also stated that:
“Any notices required to be served by any party hereunder shall be deemed to be validly served if sent by pre-paid registered post to the developer…and in respect of the company if sent as aforesaid to its address specified in the description of the parties and the developer irrevocably appoints Gore & Grimes as their agent for the service of any proceedings hereunder.”
By 2001, dispute had arisen and an arbitrator was duly appointed. Following various interim awards, in 2013 the arbitrator finally determined that a sum of €1.174m was owed by the Defendants to the Plaintiff, with interest of 5% after 30 days. The Defendants were also to bear the fees and expenses of the arbitration.
The Plaintiff’s subsequent application to enforce this award in Northern Ireland, (the Arbitration having been conducted in the Republic of Ireland), however, was opposed by the Defendants on the basis that they did not have proper notice of the arbitration proceedings, and were unable to present their case.
By way of support for this claim, the McLaughlin Defendants asserted that notice of the arbitration had been given to the solicitor for their partnership and that they had earlier left the partnership and were not notified by the solicitors.
However, the court considered that a notice of arbitration could constitute “proceedings” within the meaning of the 1994 Development Agreement existing between the parties. As such, no particular method of service was mandated by the Agreement; instead, it was sufficient that notice be provided in any proper fashion to the irrevocably appointed agent, namely Gore and Grimes solicitors. The court thus considered that service by post on Gore and Grimes satisfied the legal requirement here.
It was also emphasised that throughout several years of interim hearings and such, Gore and Grimes appeared and made submissions on behalf of all the Defendants; on various occasions it was stated on behalf of the McLaughlins that they should not be parties to the arbitration because they were no longer investors in the property company. Meanwhile, submissions were made that Moffett and Louge were bankrupt and not in a position to actively participate in the arbitration.
In this way, then, the court held that a solicitor had indeed appeared on behalf of the McLaughlins, albeit that the McLaughlins had not been informed of this. The proper claim, then, was perhaps between the McLaughlins and the law firm as regards alleged mismanagement of proceedings; it was not, however, possible for the McLaughlins to assert that they were unable to present their case.
Consequently, the court in this instance found for the Plaintiff, and gave leave for the arbitration award to be enforced against the defendants.
Irrespective of this outcome, however, the court also provided some helpful discussion on the exercise of discretion as it relates to arbitration enforcement more generally. The full judgement is therefore perhaps useful reading for interested parties, and is publically available below:
To discuss this case or for advice on a similar matter, please contact Darren Toombs.