Setting aside an arbitration award under sections 67 and 68 of the Arbitration Act 1996 (Buheiry v VistaJet)

Ian Chai (Barrister – Associate) of our Litigation team examines the London Commercial Court’s decision in Buheiry v VistaJet Ltd [2022] EWHC 2998 (Comm) and particularly the high hurdles to set aside arbitration awards, in a new article for LexisPSL. Ian was junior counsel for the Claimant on this matter.

Arbitration analysis: Mr Buheiry, the claimant, sought to set aside a London Court of International Arbitration (LCIA) arbitration award under sections 67 and 68 of the Arbitration Act 1996 (AA 1996) made in favour of the defendant, VistaJet Ltd. The court’s decision confirms again the high hurdles to set aside arbitration awards. The challenges under section 67 (dovetailing AA 1996, s 30) was that there was no valid arbitration as the defendant had a) failed to take a valid assignment of the contract between one of its group companies and the claimant, and b) failed to provide correct notice of the request for arbitration. As such, there was no valid arbitration agreement and matters had not been submitted to arbitration in accordance with the arbitration agreement. The challenge under AA 1996, s 68 was parasitic upon the section 67 challenge, in that there must have been serious procedural irregularity on the basis that the wrong party was bringing the arbitration. The court also considered the principles of kompetenz-kompetenz and severability in making its decision, ultimately finding that a) there was a valid assignment and b) notice was given properly, so that the claim must necessarily fail.

What are the practical implications of this case?

Every case is fact sensitive. However, Mr Justice Jacobs’ thorough judgment highlights that there are numerous hurdles for claimants to overcome in order to set aside an arbitration award. This builds on section 0.8 of the Commercial Court Guide (11th Edn) the drafting of which should further deter parties from making weak or speculative claims.

The success rate of such applications is very low. As a recent marker, the Commercial Court’s report 2020–2021 showed:

• in 2019–2020 of all the section 68 applications, only 11% of 28 applications were successful or partly successful, with that figure being 8% for the year before
• in 2019–2020 of section 67 applications, similarly only 11% of 19 applications were successful

There is unlikely to be any sea change in the attitude of the court. Parties should therefore consider carefully whether making such a challenge is in their interests, as cost consequences will follow should they lose the application. Interest will also usually continue to run on the underlying award, and in some cases, this may be a substantial sum—in this claim, there was some 14 months between the claim issued on 5 October 2021 and judgment given on 25 November 2022…

Read the full article on LexisPSL (subscription required)