Interim measures in English seated arbitrations - do they measure up?

This is the third article in Clyde & Co’s international arbitration series covering the availability of interim measures across various European jurisdictions. In this piece, associate Alexander Stewart from our London office provides the legal and procedural perspective from England and Wales.

Interim and conservatory measures are increasingly a necessary component of international arbitrations, as they are in litigation. The Arbitration Act 1996 (the Act) outlines the various powers of the Tribunal and, where necessary, the English courts to grant interim and conservatory measures in order to protect the rights of parties in English seated arbitrations.

English law governing the order of interim measures by arbitral tribunals

The starting point under the Act is that the parties are free to agree on the powers of the tribunal to grant interim measures.[1] As has been noted in a previous article in this series,[2] the major arbitral institutions all provide for the tribunal’s power to grant interim or conservatory measures. The powers provided for under these institutions’ rules can be very broad - for example, the tribunal, pursuant to Article 28(1) of the ICC Rules 2021, can ‘order any interim or conservatory measure it deems appropriate’. By incorporating institutional rules (or by bespoke agreement between the parties), the tribunal can be granted significant powers to grant interim measures as a matter of English law.

In the absence of any agreement between the parties, the tribunal’s powers are much more limited under the Act. The default position is that the tribunal can grant the following interim and conservatory measures:

1. security for costs;[3]
2. ‘directions in relation to any property which is the subject of the proceedings or as to which any question arises in the proceedings and which is owned by or is in possession of a party to the proceedings - (a) for the inspection, photographing, preservation, custody or detention of the property by the tribunal, an expert or a party, or (b) ordering that samples be taken from, or any observation be made of or experiment conducted upon, the property’;[4]
3. ‘direct that a party or witness shall be examined on oath or affirmation, and may for that purpose administer any necessary oath or take any necessary affirmation’;[5]
4. giving ‘directions to a party for the preservation for the purposes of the proceedings of any evidence in his custody or control’.[6]

These powers are clearly very limited in scope.[7]

Furthermore, the parties may grant the tribunal the power ‘to order on a provisional basis any relief which it would have power to grant in a final award’.[8] However, the Act makes clear that the tribunal does not have this power by default, and the parties must agree to confer the power on the tribunal if it is to be exercised.[9]

In these circumstances it is generally in the interests of parties to agree on such expanded powers. If they are not agreed upon, parties may have to apply to the courts, rather than the tribunal, to obtain necessary interim or conservatory measures.

English law governing the order of interim measures by arbitral tribunals

The Act provides the English courts with more significant powers in relation to the support of arbitration proceedings, and specifically interim and conservatory measures. It is worth noting that the English courts have held that they are not the only courts competent to order interim measures in support of an English seated arbitration.[10] Parties could, therefore, apply to foreign courts to obtain interim and conservatory measures where applicable.

Section 42 of the Act confirms that, unless otherwise agreed by the parties, ‘the court may make an order requiring a party to comply with a peremptory order made by the tribunal’. However, the court shall not act unless satisfied that ‘the applicant has exhausted any available arbitral process in respect of failure to comply with the tribunal’s order’[11] and any time limit in the order has expired (or a reasonable time has passed if no time limit is in contained in the order).[12]

Section 43 of the Act confirms that a party to arbitral proceedings may use ‘the same court procedures as are available in relation to legal proceedings to secure the attendance before the tribunal of a witness in order to give oral testimony or to produce documents or other material evidence’.[13] This is a mandatory provision, i.e. the parties cannot agree to contract out of it (unlike section 42 above and section 44 below); however, any application to court can only be made with the permission of the tribunal or the agreement of the other parties.[14]

The court is granted further powers under section 44 of the Act, unless the parties agree otherwise. The court has the same power to make orders in arbitration as it has in litigation where the following are concerned:

1. taking witness evidence;[15]
2. preservation of evidence;[16]
3. making orders relating to property which is the subject of the proceedings or as to which any question arises in the proceedings;[17]
4. sale of any goods which are the subject of the proceedings;[18] and
5. granting an interim injunction or appointing a receiver.[19]

These are quite wide-ranging powers and the most notable of them is the court’s power to grant interim injunctions, including freezing injunctions. [20]

It should be noted that the court’s powers under section 44(2) are moderated by the remainder of section 44 of the Act - in particular, section 44(5), which makes clear that the court ‘shall act only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively’. In other words, the court will not exercise its powers under section 44 to grant interim relief if the tribunal itself is able to grant effectively the same relief. For example, if a tribunal has not been constituted, it would evidently not be in a position to act effectively.

Pursuant to section 44(6) of the Act, the court can stipulate that any order it makes pursuant to section 44 shall cease to have effect in whole or in part on the order of the tribunal. In other words, the court may leave it to the tribunal to decide how long an interim or conservatory measure should remain in force, or whether it should be overturned. This is particularly relevant in circumstances where a court orders an interim measure prior to the constitution of the tribunal. 

A final interim power of the court is provided for by section 45 of the Arbitration Act, which allows the court, on agreement between the parties, to determine a preliminary point of law.

Do they measure up?

By allowing the parties significant freedom to decide on the tribunal’s power to grant interim and conservatory measures, the Act is in keeping with the spirit of the arbitration and the parties’ freedom of contract. However, the default position is limited.

The Act does, however, provide the courts with fairly substantial powers to support the arbitral process via interim and conservatory measures, in particular regarding the issuance of injunctions. This could be argued to “balance out” the lack of powers afforded to the tribunal by default. However, parties needing recourse to the courts in order to ensure justice is done is arguably not in keeping with the spirit of international arbitration.

In this regard, it should be noted that the Law Commission is currently conducting a review of the Act, with a consultation paper due to be published in late 2022. One of the issues that may be dealt with by the Law Commission is the extent of the courts’ powers to support arbitral proceedings.[21] Accordingly, the English law position may change on interim and conservatory measures in the not-too-distant future.