Form of interim measures under the UNCITRAL Rules considered by the English High Court
In EGF v HVF and others  EWHC 2470 (Comm), the English High Court handed down a judgment of potential importance to English seated arbitral tribunals applying the UNICTRAL Rules, in particular concerning the form in which they may order interim remedies.
The case concerns an arbitration under the UNCITRAL Rules (the “Rules”) and seated in London in which HVF (and others) sought, from EGF, the recovery of outstanding debts under long-term commercial contracts. In the arbitration, the tribunal had issued a partial award whereby it ordered EGF to make an interim payment (the “IPO”) to HVF of US$250 million (the “Award”).
EGF challenged the Award before the English courts. One basis (not covered any further here, but rejected by the court) concerned impartiality of the tribunal. The next concerned whether there had been a serious irregularity under s.68 of the Arbitration Act 1996 (the “AA”), in particular whether the tribunal had exceeded its powers in making the IPO. In that respect EGF relied on two arguments.
Did Article 26 of the Rules allow the interim payment order?
Article 26 permits a tribunal to grant interim measures, and sets out an indicative list of what those might be. In this respect, EGF pointed to the use of the word “temporary” in Article 26.2 and argued that an IPO, by its nature, did not have that characteristic. The court disagreed and explained how an IPO was temporary in nature. [109-115]
Was the IPO properly made by way of award (rather than procedural order)?
For English seated arbitrations, the power of the tribunal to order relief on a provisional basis is generally set out by s.39 AA. This permits party agreement on the point, and the judge was also of the view that, all other things being equal, where the parties do so agree the section is wide enough to contemplate that the relief may be made by an award. However, in his view, under the Rules, the tribunal’s ability to make awards only extended to awards which are “final and binding” (Article 34(2), and, as the judge remarked, there is no exception to this in the Rules). Hence, a “provisional or interim” award would not be possible, and the IPO should have been made by procedural order. [116-124, 128-129].
Although the court’s ruling on the above points were technically obiter (EGF’s challenge was ultimately dismissed because the court found that, on the facts before it, there was no substantial injustice caused by the procedural irregularity), its position on the form of relief may need to be taken into account by English seated tribunals applying the UNICTRAL rules (or other institutional rules insofar as their provisions on awards are structured in the same way; e.g. LCIA Rules Articles 25.1(iii)/26.8) when granting interim measures. In particular, the conservative position would be that they need to proceed by way of procedural order, rather than award, otherwise the latter may be open to challenge on a procedural basis. If that order then needs to be “enforced” the first step would be for the tribunal to make a peremptory order under s.41(5) AA, which can be backed up by a court order under s.42AA. Depending on the nature of the relief, parties could also, of course, consider approaching the English court directly under s.44 AA.Click here for a copy of the judgment.