Execution of arbitration in cross-border disputes



A TCC ruling final week carried out an arbitration award rendered in a development contract for a resort undertaking in London that was topic to Italian regulation and with an unique jurisdiction clause in favor of French courts. The judgment examines the newly relevant Hague Conference, which replaces the Brussels recast Regulation after Brexit, and finds that the execution of selections falls beneath the “interim measures” exception of Article 7 of the Conference . This seems to be the primary determination to think about enforcement of selections referring to an unique jurisdiction clause and doubtlessly has wider software past the Hague Conference.

Cross-border litigation: the authorized framework

The Housing, Building and Regeneration Subsidies Act 1996 (as amended) (the “Building Act”) Supplies for a compulsory choice system for development contacts. The regulation applies to contracts referring to the efficiency of development operations in the UK, no matter whether or not a international authorized system is in any other case relevant to the contract.

Though the proper to adjudicate isn’t affected by clauses which confer unique jurisdiction on the courts of a international state, it was beforehand unclear whether or not such clauses would require the enforcement of a judicial determination within the international jurisdiction or whether or not UK courts, such because the TCC, would retain residual enforcement jurisdiction.

Previous to the UK’s departure from the European Union, these points regarding different EU nations needed to be resolved by the Brussels recast regulation. These rules now not apply from 1 January 2021 and have been changed by laws giving impact to the Hague Conference on Alternative of Courtroom Agreements of 2005 (the “Haye Conference”). The UK has additionally utilized to affix the Lugano Conference, which is similar to the Brussels recast regulation, however its accession has but to be authorised by the EU. Within the meantime, the principles of the Hague Conference will apply to cross-border disputes involving EU nations and sure different jurisdictions, together with Singapore.

Below the Hague Conference, when the events have agreed to confer unique jurisdiction on a rustic that has acceded to the Conference, that alternative have to be honored. If proceedings are opened in a foreign country, the Conference obliges the courts in that nation to dismiss the proceedings topic to sure exceptions. One among these exceptions, set out in Article 7, issues “provisional measures” and states that:

“Interim measures of safety aren’t ruled by the Conference. This Conference doesn’t require or prohibit the grant, denial or withdrawal of interim measures of safety by a court docket of a Contracting State and doesn’t have an effect on the query whether or not a celebration could request or a court docket ought to grant, refuse or terminate these measures ”.

An analogous exception might be discovered within the Brussels recast regulation and the Lugano conference. A current ICC determination examined whether or not this exception applies to determination enforcement proceedings.

Motacus Constructions Restricted v Paolo Castelli SPA

This dispute involved a provide and set up contract for fitting-out work for a resort in London. An arbitration award was obtained by Motacus for the fee of £ 454,678.65 from Paola Castelli. Fee was not made in accordance with the arbitrator’s determination.

Motacus requested the TCC for abstract judgment to implement the choice. Nonetheless, the contract was topic to Italian regulation and gave unique jurisdiction to the French courts.. Paola Castelli defended the enforcement on the grounds that the English courts weren’t competent to implement the choice.

Making use of Article 7 of the Hague Conference, the CLC determined that the execution of judgments was an interim measure of safety:

“For my part, the notion of provisional protecting measure extends to a choice of an arbitrator which, by software of the 1996 regulation and the regime, isn’t remaining and doesn’t bind the events. The operate of the arbitrator’s determination is to guard the profitable occasion’s place on an interim foundation pending the ultimate decision of the events’ dispute by regular court docket proceedings (or arbitration). “

The Conference makes it clear {that a} court docket which grants an interim measure does so beneath its personal regulation. Due to this fact, the ICC might settle for jurisdiction and implement the arbitrator’s determination by issuing abstract judgment.

Future implications

This determination reinforces a key goal of the Building Act which is to allow the speedy decision of development disputes on an interim foundation with a view to bettering money stream. The TCC utilized this “pay now, chat later“To convey the judgment inside the framework of the exception of” provisional measures “to the enforceability of an unique jurisdiction clause. Though this determination solely considers the Hague Conference, the prevalence of “provisional measures“Exceptions in different contexts make it a doubtlessly wider software.

Though not raised by Paola Castelli on this case, a possible problem to the Courtroom’s reasoning could possibly be made as regards to final 12 months’s Supreme Courtroom ruling within the Bresco vs. Lonsdale litigation. The Supreme Courtroom overturned the Courtroom of Enchantment’s discovering {that a} determination by an organization in liquidation that would by no means be enforced could be a futile train and could possibly be stopped by an injunction. The Supreme Courtroom drew consideration to the broader objective of arbitration as a full-fledged dispute decision instrument:

“A vital underlying goal, each of the arbitration and of the opposite suggestions which had been finally carried out within the 1996 regulation, was the advance of money stream to finance the work in progress on the initiatives. of development. … However fixing the money stream downside shouldn’t be seen as the only real goal of arbitrage. It was designed to be, and extra importantly, has confirmed to be a full-fledged dispute decision mechanism, producing de facto remaining decision of most disputes which might be referred to an arbitrator. … There’s a refrain of observations, from skilled CTC judges and textbook writers, that arbitration outcomes, usually, in a decision of the underlying dispute which turns into remaining as a result of it doesn’t isn’t contested thereafter.

This determination can be notable as the primary post-Brexit judgment beneath the Hague Conference. It’s as much as the authorized groups to understand that the jurisdiction safety clauses granted by the Hague Conference are much less complete than beneath the Brussels recast regulation.

The references:

Motacus Constructions Ltd v Paolo Castelli SpA [2021] EWHC 356 (TCC).

Bresco Electrical Companies Ltd v Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25.



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