As explained in a prior post in the Blog’s Bermuda Form Arbitration Series, some time after the final hearing, the arbitration tribunal will issue an Award. This post focuses on challenges to and enforcement of that Award.
Unless the parties agree otherwise, the Award must contain the reasons for the Award.1 Typically, the parties will receive a detailed and even lengthy Award that addresses all the issues that were submitted for adjudication. Indeed, if the Award does not address all essential issues, it may be open to challenge for that very reason.
As an initial matter, it should be noted that challenges based on errors in the calculation of damages and costs can typically be addressed in the arbitration itself, as the English Arbitration Act gives the tribunal power to correct an award to remove clerical mistakes or errors.2
For more egregious errors, a party may seek to challenge an England-based Bermuda Form arbitration Award through English court proceedings. After the Award is issued, a party may within 28 days commence court proceedings to challenge all or part of it.3 Nonetheless, challenges to awards in England-based arbitrations are exceedingly difficult. In particular, English courts generally conduct a far more restrictive review of foreign law as compared to English law. Thus, a challenge for error in the application of New York law governing the Bermuda Form is unlikely to succeed unless there is evidence that the tribunal consciously disregarded the provisions of New York law.4 Furthermore, an English court will permit a challenge based on an error of law only if certain conditions are met, and the challenger must show that “the decision of the tribunal on the question is obviously wrong” or that “the question is one of general public importance and the decision of the tribunal is at least open to serious doubt.”5 Notably, under no circumstances can a court review challenges to findings of fact.
An Award may also be challenged for serious irregularities, such as a failure by the tribunal to decide all the issues submitted for arbitration, or if the Award was procured by fraud or in a manner contrary to public policy.6 Yet even in these situations, the challenger must show that an irregularity has caused or will cause substantial injustice.7 An Award may also be challenged if the tribunal exceeds its substantive jurisdiction.8 However, because the tribunal is likely to consist of experienced lawyers and adjudicators, such challenges can be very difficult to mount.
Finally, U.S.-based parties seeking to challenge a Bermuda Form arbitration Award naturally may wish to consider challenging the Award in a U.S. court. Generally, the only courts with authority to vacate an arbitral award are courts at the seat of the arbitration.9 Nonetheless, there are narrowly limited circumstances in which a U.S. court can decline to enforce (as opposed to vacate) a foreign arbitral award; for example, a U.S. court may decline to enforce an arbitral award if its enforcement in the United States would be contrary to U.S. public policy.10 Even then, a U.S. court may decline enforcement only if enforcement would violate “‘explicit public policy’ that is ‘well-defined and dominant … [and is] ascertained by reference to the laws and legal precedents and not from general consideration of supposed public interests.’”11
This post is part of the Blog’s Bermuda Form Insurance Arbitration Series.
* * *
A partner in Hunton & Williams LLP’s insurance coverage practice, Lorelie Masters is a member of the American Bar Association’s Board of Governors and a founder and former President of the American College of Coverage and Extra-Contractual Counsel. She is co-author, with English Barristers, Richard Jacobs QC and Paul Stanley QC, of Liability Insurance in International Arbitration: The Bermuda Form (Hart Publishing, 2d ed. 2011) (“The Bermuda Form”), which won the 2012 Book Prize of the British Insurance Law Association for outstanding contributions to the literature on insurance coverage.
Paul Moura is an associate attorney in Hunton & Williams LLP’s insurance coverage practice, where he represents clients from a diversity of industries in insurance recovery and related commercial disputes. Prior to joining Hunton & Williams, Paul was a policy researcher at a think tank based at the London School of Economics, where he helped to develop a network of policymakers, academics, and lobby groups collaborating in areas involving consumer protection and digital rights.
1 See English Arbitration Act 1996, Section 52(4).
2 Id. at Section 57.
3 Id. at Section 70.
4 See A v. B  EWHC 1626 (Comm), paras [25-31] (court rejected challenge based upon tribunal’s failure to apply Spanish law); Ruby Roz Agricol LLP v The Republic of Kazakhstan  EWHC 439 (court declined to apply expansive interpretation of Kazakh law).
5 See English Arbitration Act 1996, Section 69; Enterprise Insurance Company Plc v U-Drive Solutions (Gibraltar) Limited  EWHC 1301 (QB) (court lacked jurisdiction over appeal because Section 69 conditions were not met, despite parties’ stipulation to allow appeal).
6 See English Arbitration Act 1996, Section 68.
7 Symbion Power LLC v Venco Imtiaz Construction Co.  EWHC 348 (TCC) (illicit ex parte contact between party-appointed arbitrator and party did not amount to serious irregularity that constituted a substantial injustice); The Secretary of State for the Home Department v Raytheon Systems Limited  EWHC 4375 (TCC) (failure to address issue submitted to arbitration constituted a substantial injustice).
8 See English Arbitration Act 1996, Section 67.