Exclusion of Rights of Appeal

One difference between arbitration and litigation is that arbitration offers a greater degree of finality in the sense that, by and large, a general right of appeal against the tribunal’s award will not be available. The precise degree of recourse will depend on the law of the seat of arbitration, but, commonly, the ability to apply to its courts to challenge the award is restricted to limited matters such as public policy, or procedural irregularities (as opposed to the merits/substance of the tribunal’s decision).

Sometimes, the law of the seat may provide for broader recourse and/or the ability to exclude certain rights of recourse against the award by agreement, so it is prudent to ascertain, as part of understanding the consequences of a choice of seat, what the scope of the ability to challenge an award is. Whilst limited recourse rights (of the kind discussed above) are usual (and in any event may be mandatory), broader court intervention in the tribunal’s decision making can lead to duplicative proceedings and/or delay.

Accordingly, in international commercial arbitration, an exclusion of rights of appeal against the award is typically included in arbitration agreements. For example, provisions of the main institutional rules very often do this (see, for example, ICC Rules Article 35(6), LCIA Rules Article 26.8). If they do not or where the agreement is for ad hoc (or UNCITRAL) arbitration, the starting point will be to add such wording (as the ad-hoc/UNCITRAL clauses on the site do). Part of understanding the regime of appeals at the seat will be understanding the degree to which any such waiver, including where and how it is expressed, is effective.      

Taking arbitration seated in England as an example, s.68 of the Arbitration Act 1996 (a mandatory provision) permits limited recourse against the award in cases of serious procedural irregularity. Other than that, s.69 AA provides a right of appeal on a point of English law. This is a non-mandatory section, which is subject to limitations but which, in any event, is usually excluded by agreement (as the English courts have held that provisions of institutional rules such as those cited above can have such an effect under s.69 when those rules are chosen). s.45AA also provides another, albeit different, route for court involvement in the merits in providing a mechanism whereby a point of English law can be referred to it for preliminary determination. S.45 is also non-mandatory but, due to its different focus, exclusion agreements (such as those in institutional rules referred to above) which deal with appeals against the award are considered unlikely to exclude it. Upcoming changes to the English AA mean, however, that it is now arguably more pertinent for parties seeking to minimise court intervention in the tribunal’s decision making to do so (for more click here). Simple drafting which we, therefore, suggest to include in English seated arbitration agreements to effect this, and to overtly deal with s.69 in the same place, is as follows:    

“For the purposes of arbitration pursuant to this clause [number], the parties waive any right of application to any court to determine a preliminary point of law or appeal on a point of law under Sections 45 and 69 of the Arbitration Act 1996”

(Whilst, technically, under those sections the court can only, in the first place, consider points of English law, inclusion of such wording can still be beneficial even if the parties have chosen a different law to govern their main contract. This is because, depending on the circumstances, it may still be possible for points of English law to arise as a matter of wider legal context in such disputes).