As a form of alternative dispute resolution, arbitration is frequently used by commercial organisations to resolve disputes without the need to go to court.
An arbitration tribunal will be appointed, will hear the evidence and will make a decision. The decision may involve an award, which if not paid, will subsequently need to be enforced.
Application to court
Once made, the arbitration award may be enforced in the court in the same way as a judgment or order would be, with permission from the court.
The actual enforcement can be carried out by High Court Enforcement Officers (HCEO) in the same way as they would enforce other judgments and orders.
The issue of a writ of control and seizure by an HCEO prevents the debtor from disposing of or selling any goods and if necessary these goods can be sold to repay the sums due under the award. Further, it is a criminal offence to interfere with seized goods punishable by a fine and up to 51 weeks imprisonment.
Here at The Sheriffs Office, we have a great deal of experience in handling such cases, recently recovering over £1.2 million in such a matter – please do get in touch if you would like further information.
Domestic and international arbitration awards
Arbitration awards between companies based in the UK will normally be enforced in the UK. However, international arbitration awards can also be enforced in UK courts.
The international arbitration award might have been issued in the UK (with the UK being the seat of the award), even if only some or none of the parties involved was based in the UK. If this is the case, then the enforcement is deemed to be domestic.
If the award was issued in a different country, it can still be enforced in the UK and is deemed to be an international enforcement.
The decision on where to enforce will be influenced by where assets owned by the defendant are located.
In his video on the subject of the enforcement of international arbitration awards, Matthew Weiniger QC, Partner at Herbert Smith Freehills gives this advice to aid successful enforcement:
- Think about enforcement at the point of drafting the arbitration clause in the contract
- Pick a seat for the arbitration that is one of the 150 countries that has signed up to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, also known as the New York Convention
- If sovereign immunity could be called into play, make sure immunity is waived
- Structure transactions so that money goes through major jurisdictions, for example London or New York
I do recommend you watch Matthew’s short, highly informative video, which you can view here.