By Timothy St. John Ellam, KC, FCIArb and Alison Bond

The enforcement of arbitral awards is one of the reasons parties choose to arbitrate rather than litigate in the courts. In YDU v SAB and BYH [2022] EWHC 3304, the English High Court held that an order for specific performance with conditions that could be varied by the tribunal constituted a final and binding “award” within the meaning of the Arbitration Act 1996, the statute which governs arbitrations in England and Wales. The decision is important for enforcement purposes, particularly to the extent that it confirms that there are circumstances where a tribunal may retain continuing jurisdiction to supervise the performance of its award.

Overview of the Case

The arbitration concerned SAB’s purchase of YDU’s preference shares in BYH, a joint venture in which both parties had an interest.[1]  A dispute arose as to SAB’s entitlement to purchase the shares, and the tribunal ordered specific performance, requiring YDU to transfer preference shares to SAB, with certain conditions that could be varied by the tribunal.[2]

YDU made an application to the English High Court for a determination that certain paragraphs of the order were not an award within the meaning of the Arbitration Act and were not final and binding. YDU asserted that certain paragraphs “were not final, because the tribunal intended to be able to vary them, and indeed had varied them in certain respects. An arbitral tribunal does not have the same powers as a court. If it makes an award, it cannot revisit it; If it can revisit a determination, it is not an award.”[3]

SAB argued that the paragraphs of the order in question constituted a final award because they “were substantive and not procedural in nature and that was the critical indication that they were awards.”[4] In the alternative, if the paragraphs were not a final award, SAB relied upon section 39 of the Arbitration Act, Rule 25.1 of the London Court of International Arbitration (“LCIA”) Rules and the arbitration agreement in the shareholders agreement to contend that they were either a provisional award or preemptory order.[5]

The Court’s Decision

The Court concluded that the disputed paragraphs constituted an “award” and were final and binding for the purpose of the Arbitration Act. In that regard, the court considered the tribunal’s reservation of its jurisdiction to revisit the award. The Court stated that “[t]he usual position is that if an award has been made, then the arbitrator is functus in relation to the matters decided” but went on to state that it was “too dogmatic and absolutist a position to say that something which is an award can never be revisited.” [6]

The Arbitration Act does not define “award”. Section 52 sets out the form of an award and section 58 simply sets out that the effect of an “award” is that it is final and binding. However, on the basis of three analyses, the Court decided that the relevant paragraphs of the tribunal’s order constituted an award. These analyses are:

(a)            The Arbitration Act gives the tribunal the same powers as the court to order specific performance unless the parties agree otherwise.[7]  The court stated that, consistent with that and the general principles of section 1 of the Arbitration Act, it “should give effect to procedures and decisions adopted by a tribunal which seek to make effective and to provide supervision over an order for specific performance which it has made.”[8]
In the present case, the tribunal made an order for specific performance and set out the terms on which that should take place, reserving jurisdiction to make further awards on whether and how specific performance was effected.[9]  The court stated that on this analysis the tribunal’s decision was final because the tribunal could not have revisited the contested paragraphs without a change in circumstances.[10]

(b)            The most contested paragraph amounted to an interim measure “preserving rights or property pending a specified event or further order”.[11] Under the arbitration agreement, an interim measure was a final award.[12]

(c)            The relevant paragraphs constituted a provisional award.[13]  The court found that the making of a provisional award was within the jurisdiction of the tribunal under the LCIA rules and such an award would remain subject to the tribunal’s final adjudication.[14]

Significance of Decision

The court’s decision supports one of the key advantages of arbitration – being the enforcement of arbitral awards.  The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards facilitates the enforcement of arbitral awards among contracting states. By accepting that an award may be issued on conditions, with the tribunal reserving the jurisdiction to vary those conditions, the court confirmed that there is scope as to what constitutes an award. Moreover, the decision confirms that the tribunal can rightly reserve jurisdiction over certain matters and even vary an award in certain circumstances. Accordingly, even when tested in the courts, the final and binding nature of arbitral awards and the tribunal’s jurisdiction over them are secure and parties can benefit from the enforcement mechanisms that are important to them.  The court understandably did not address the potential practical complications associated with the tribunal’s continuing supervisory jurisdiction, and the presumed need, at some point, for it to terminate.

[1] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 2.

[2] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 9.

[3] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 20.

[4] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 24.

[5] YDU v SAB and BYH [2022] EWHC 3304 (Comm), paras. 25-26.

[6] YDU v SAB and BYH  [2022] EWHC 3304 (Comm), paras. 33 – 34.

[7] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 35.

[8] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 35.

[9] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 35.

[10] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 36.

[11] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 37.

[12] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 37.

[13]YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 38.

[14] YDU v SAB and BYH [2022] EWHC 3304 (Comm), para. 35.

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Timothy St. John Ellam, KC, FCIArb is a Partner in the Litigation group of McCarthy Tétrault in Calgary, Alberta and London, UK and is co-chair of the Firm’s international arbitration practice group. Mr. Ellam is a member of the Law Society of Alberta and The Law Society of England and Wales.

Alison Bond is a Partner in the Litigation group of McCarthy Tétrault in Toronto, Ontario and is a member of the firm’s international arbitration group. Ms. Bond is a member of the Law Society of Ontario and The Law Society of England and Wales.