The recent case of Nestor Maritime Sa v Sea Anchor Shipping Co. Ltd [2012] will be welcomed by users of London arbitration as it demonstrates once again the English court's determination to ensure that arbitration awards are final and immediately enforceable unless there are compelling reasons why that should not be so.
In Sea Anchor, the dispute concerned the sale of a Panamax tanker on the strength of a CAP1 rating that turned out to have been fraudulently procured by the sellers. The resulting dispute was heard by an LMAA tribunal who unanimously found the sellers guilty of fraud. The sellers took objection to the finding that they had behaved dishonestly and sought to challenge the award. All of the seller's initial challenges were summarily dismissed.
The arbitration rules state that parties wishing to contest an award must do so within 28 days of the publication of the award, unless the court gives permission otherwise. Exceptionally, the sellers brought a s.68 challenge (on the grounds of "serious irregularity") just before the hearing of their initial challenges. This later challenge, accusing the buyers of obtaining the award on the basis of fraudulent evidence, was brought over eight months after the award had been published. Where one party makes very serious allegations of fraud, the starting point for any court is that the witnesses are telling the truth, and so the allegations should not be dismissed on a procedural technicality, such as being submitted out of time. Permission is accordingly often given in these circumstances. However, in this case, the judge refused to take that shortcut, dealing with the application in detail and dismissing it on four separate grounds. Therefore, the Sea Anchor case demonstrates the English Commercial Court's commitment to upholding arbitration awards, and the parties' legitimate expectations that they should be final and enforceable unless something has gone seriously wrong.
For a more detailed analysis of the case, please see our full update by clicking here.
Clyde & Co acted for the successful buyers in this case.
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