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House of Lords refuse to interfere in an arbitration award

Wednesday 6 July 2005 at 11:47 pm | In News | Post Comment

Lesotho Highlands Development Authority-v- Impregilo SpA and Others [2005] UKHL
[ADR – arbitration – courts reluctant to interfere with arbitration findings – statutory interpretation]
D built a dam in Lesotho (Africa) for C. The parties took a dispute about additional labour costs to an arbitration tribunal in London. The Tribunal made an award in sterling and euros rather than the local Lesothan currency. Under the 1996 Act, a party may apply to the court challenging an award if the Tribunal has exceeded its powers. However, International Chamber of Commerce (ICC) Rule 28.6 provides that all parties forego any right of appeal to the courts, except for a serious irregularity under the 1996 Act.

Held: Their Lordships refused to disturb the Tribunal’s award. They upheld the principle – of “great importance” – of minimal intervention in arbitration proceedings.

C won

Comment: The Act was examined textually. A high threshold was required for the courts to intervene in arbitrations. Lord Steyn adopted a purposive approach upholding that the 1996 Act was intended to promote one-stop adjudication. A major purpose of the 1996 Act was to reduce drastically the extent of intervention of courts in the arbitral process. “The Act has however given English arbitration law an entirely new face, a new policy, and new foundations. The English judicial authorities . . . have been replaced by the statute as the principal source of law. The influence of foreign and international methods and concepts is apparent in the text and structure of the Act, and has been openly acknowledged as such. Finally, the Act embodies a new balancing of the relationships between parties, advocates, arbitrators and courts which is not only designed to achieve a policy proclaimed within Parliament and outside, but may also have changed their juristic nature.”