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Knowledge Counsel London
"…it is relevant that the parties to the contract were sophisticated and experienced and were required to act in the spirit of mutual trust and cooperation."
Construction
On a project for the construction of water pipelines under an NEC3 Engineering and Construction Contract, a dispute arose as to whether milestone completion had been achieved and so whether payment was due in respect of Milestone 11. The matter went to adjudication and the adjudicator found in favour of the employer. When the contractor did not pay the sum of £3.27m as ordered, the employer commenced enforcement proceedings. In response the contractor commenced Part 8 proceedings, asserting that the adjudicator made an error of law. The court held that the issues raised by the Part 8 proceedings were not suitable for determination using that procedure. It was not simply a question of considering the words of the contract and applicable legislation, and the evidence currently available was not sufficient for the court to determine the relevant issues. The court therefore awarded summary judgment on the action to enforce the adjudication decision.
Arbitration – Costs
The Commercial Court has been asked to consider a challenge to a costs award from an LCIA arbitration on the basis that there had been substantial injustice. The dispute arose from the termination of two Production Sharing Contracts for the exploitation of oil and gas reserves in the Kurdistan Region of Iraq. The tribunal issued a partial final award in favour of the Kurdistan Regional Government of Iraq (“KRG”). When subsequently assessing costs, the tribunal made an award of approx. US$26m (reduced from the US$35.5m claimed), even though KRG had provided little in the way of a breakdown of the costs per workstream and fee earner. GEMBBL challenged the costs award under section 68 of the Arbitration Act 1996 (“AA 1996”) (the LCIA Rules exclude any appeal on a question of law under section 69). It asserted that the tribunal had exceeded its powers by making an award that did not comply with section 63(3) AA 1996, which required the award to “specify the items of recoverable costs and the amount referable to each.” The court held that Article 28 of the LCIA Rules provided a complete code for the assessment of legal costs in the arbitration. As a result, the default rules under section 63 were excluded entirely and the section 68 challenge was dismissed.
Jurisdiction – Maritime
In a dispute relating to the carriage of a cargo of urea, the insurers of the original consignee brought proceedings against the contractual carrier in Brazil. The carrier applied without notice for an anti-suit injunction on the basis that disputes should have been brought in arbitration in London. The court considered the bills of lading and the references to incorporation of charterparty terms. Rather than a charterparty in the conventional sense, there were two booking notes covering the relevant cargo and the court concluded that these were what was referred to in the bills of lading. The booking notes contained a London arbitration agreement and this had been incorporated into the bills of lading. Where a subrogated insurer seeks to enforce the subrogated rights, it must do so in the appropriate forum, which here was London arbitration. The injunction was granted.
G2 Ocean AS v Tokio Marine Brasil Seguradora SA [2026] EWHC 997 (Comm), 23 April 2026
Enforcement – Arbitration
In a dispute arising out of currency swap transactions, an arbitration award was made against the defendants (Rusal and RTI). The English court gave permission to enforce the award and effect service by alternative methods. Rusal applied to set the permission order aside. It submitted that enforcing the award would be contrary to public policy because at the time the margin call should have been paid RTI reasonably believed that payment would breach Jersey sanctions law. This was a defence that should be given effect to as a matter of English public policy. The court weighed up the importance of the sanctions regime, as well as the importance of enforcing arbitration awards. It was not obligatory to take the defence and it had not been raised before the tribunal. The court concluded that Rusal had no real prospect of successfully raising objections based on English public policy.
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