English Commercial Court supports enforcement through speed in service

M v N [2021] EWHC 360 (Comm) is a powerful reflection of the robust stance of the English courts to the enforcement of arbitral awards. In this case, the Commercial Court upheld a decision to bypass the Hague Service Convention in order to secure prompt service of an order granting enforcement of an award.

Background to the application

Just over 2 years ago, the claimant (“M”) obtained an award against the respondent (“N”) in a GAFTA arbitration with seat in England. N did not challenge the award, but nor did it pay up

In December 2020, M therefore applied to the English High Court for measures to help it have the award satisfied. In particular:

• an order giving M permission to enforce the award in the same manner as a judgment or order of the English court, under section 66(1) of the Arbitration Act 1996 (“AA”) (the “Order”); and
• N to disclose its worldwide assets, under s 37(1) of the Senior Courts Act 1981.

As is usual, the application for the Order was dealt with “on the papers”, with enforcement of the award within England stayed until the Order was served on N (and N’s right to apply to set it aside had either expired or been determined).

N was in Egypt which is (along with the UK) party to the Hague Service Convention (“HSC”). So ordinarily the Order, as a UK judicial document, would have had to be served in accordance with it. Since Egypt objects to the derogable means of service in Article 10 HSC this meant that Egypt’s designated authority would have to be used. Evidence (discussed further below) showed that this would face delays. Accordingly, M had obtained permission to serve the Order by alternative methods; namely via email on N’s vice chairman and recorded delivery to N’s address.

N applied to the English courts to set aside that grant of permission for alternative service.

Decision of Foxton J

Foxton J reviewed past authorities in this area. Under CPR 6.15 (1), English courts may make an order permitting alternative service where there is “good reason”. However, in cases where the judicial document is otherwise to be transmitted into a HSC Contracting State that has objected to service other than through its designated authority, permission for alternative service is only granted by the English courts in “exceptional” or “special” circumstances.

Foxton J held that the order for alternative service granted by Cockerill J was “amply justified”, despite this high standard. The main factors in his reasoning were:

• M’s application was made to assist in enforcing its arbitral award. In respect of this, Foxton J noted [11-13] that in English seated arbitrations, where a party has English lawyers in the jurisdiction acting for it on the arbitration, then it is routine practice for the court to authorise the service of ancillary court proceedings on those lawyers even if the HSC would otherwise be engaged. This was not motivated by a mere desire for speed but was central to a prompt and just disposal of arbitration related applications; which contributed to finality in the arbitral process. He deemed this policy of “speedy finality” to be equally applicable in the present context.
• N had fully engaged in the arbitral proceedings through English lawyers, and therefore it was not the case that alternative service would initiate the connection between N and the English court.
• There would be significant delay in enforcement if alternative service was not permitted. The arbitral award had remained unsatisfied for two years. There was also evidence before the court that service via the relevant HSC authority in Egypt would take at least 12 months due to the impact of the Covid-19 pandemic (being three months longer than the usual time estimated). This would therefore increase the period for which the Order would remain stayed and open for challenge, which was against the policy of speedy finality.
• The method of service was likely to be (and in fact was) effective in bringing the order and application to N’s attention.

Comment

This decision is of interest in extending, into the enforcement sphere, the policy behind the court’s approach to permitting service of ancillary court proceedings on English lawyers in English seated arbitrations. In fact, Foxton J considered that the policy of “speedy finality” in arbitration was even more compelling at the enforcement stage given that the parties’ substantive dispute will have been determined. This stance shows that the English courts can be expected to take a robust approach to the enforcement of arbitration awards.

Reyna Ge would like to thank Robert Anderson for his assistance in the preparation of this article.