Tag Archives: Company 1 v Company 2 [2017] EWHC 2319 (QB)

Forum shopping for interim measures in international commercial arbitration

By Prof Jonathan Hill, Professor of Law (University of Bristol Law School).

Interim measures of protection have an important role to play in international commercial dispute resolution. Because of the inevitable time delay between a dispute coming to a head and the resolution of that dispute by arbitration or another formal dispute-resolution process, a claimant (C) faces a number of risks. For example, the respondent (R) may attempt to make itself ‘award-proof’ by hiding or dissipating the assets against which C, if successful in the arbitration, might reasonably hope to enforce the award; or R might take steps to destroy evidence which is crucial to C’s claims; or R may engage in conduct which, if allowed to continue unchecked, will exacerbate the dispute or even render any arbitration of the parties’ dispute nugatory. Because of such risks, most systems of arbitration law confer on arbitral tribunals the power to order interim measures of protection, whose purpose is, depending on the circumstances, to maintain the status quo, provide a means of preserving assets out of which an eventual award may be satisfied or preserve evidence that may be relevant to the resolution of the dispute (see, eg, art 17.2 of the UNCITRAL Model Law on International Commercial Arbitration).

However, conferring powers on the arbitral tribunal may be inadequate. Unlike national courts, arbitral tribunals do not have coercive powers to back up their orders and have jurisdiction only over the parties to the arbitration. Furthermore, if interim measures are required as a matter of urgency, giving powers to the arbitral tribunal is frequently meaningless; once a dispute has been referred to arbitration, it may well be weeks or months before the arbitrators can be appointed. Accordingly, some mechanism is needed to fill the gap between C’s triggering of the arbitration clause and the constitution of the tribunal. The rules of an increasing number of arbitration institutions fill this gap by making provision for the appointment of an emergency arbitrator (see, eg, art 29 of the ICC Arbitration Rules; art 9B of the LCIA Arbitration Rules). Failing such a procedure, the gap can be filled only by national courts.

But, as with many issues involving the relationship between international commercial arbitration and national legal systems, there is a territorial issue to be addressed: which national court (or courts) should be competent to exercise the power to grant interim measures of protection in support of arbitration and which competent court(s) should actually exercise such powers? This is an issue which had to be addressed by the High Court in the recent case of Company 1 v Company 2 [2017] EWHC 2319 (QB).  Continue reading