Isle of Man: Curiouser And Curiouser: The Enforcement Of Arbitration Awards

Last Updated: 2 May 2018
Article by Andrew Webb

Arbitration has always represented one of the less flashy aspects of dispute resolution, not least because of its informality and addiction to commercial common sense, where parties recognise that they want to avoid the high drama of eighteenth century dress, forms of address and liturgy. Altogether a good thing. To that end, in the Isle of Man we have the Arbitration Act 1976 (the Act), modelled on the 1950 Act of Parliament of the same name, blending into it some of Parliament's afterthoughts.

The Act deals in Part I, with domestic arbitration and arbitration agreements. Part I does not purport to have extra-territorial effect upon the constitution or effect of arbitration proceedings taking place outside of the Isle of Man under foreign laws. This principle was confirmed in the English Court of Appeal in International Tank and Pipe S.A.K. v Kuwait Aviation Fuelling Co. K.S.C [1975] Q.B. by Lord Denning Master of the Rolls, confirming that the preliminary question was whether English law applied and whether, if it did, a provision of the English Arbitration Act 1950 could be invoked.

Thereafter, in Parts II and III the Act deals with the enforcement of foreign awards made under the Geneva Convention 1927 (Part II) and the New York Convention 1958 (Part III). The Conventions extend to the Isle of Man either by implication, in the case of the Geneva Convention, or expressly, in the case of the New York Convention. Since the UK is the Contracting State under both Conventions, and the Isle of Man has no international status as a state, the UK contracts for us, with our agreement. For all purposes under the Conventions, the Isle of Man is part of the Contracting State. Part II and Part III of the Act represent procedures which by virtue of section 27 of the Act and the Rules of the High Court, allow for foreign awards (other than those of the UK) to be enforced by action at common law or, with leave of the court, "in the same manner as a judgment or order to the same effect". So far, so sensible. In short this means that foreign, but not UK arbitration awards, can be readily enforced.

There are a number of protective provisions in the Act in respect of foreign awards so that injustice does not arise, such as the validity of the agreement for arbitration, a properly constituted tribunal, adherence to laws of the forum, finality of award, due notice and proper scope of the award, as well as there being no grounds for refusal based on public policy. In short, provisions which protect the subject of the award from unfairness and oppressiveness. These considerations are reflected in private international law as defences when foreign judgments, as opposed to arbitration awards, are enforced at common law and again in the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 in the case of qualifying judgments made by the courts of the UK, the Channel Islands and a handful of European and other designated states.

In the Manx ex parte case last autumn, Golar LNG NB13 Corporation v Sahara Energy Resource 27 October 2017, the First Interim Final Award dated 26 July 2017 of Michael Baker-Harber and Olufune Adekoya, SAN, Arbitrators, sitting in London and applying the rules of the London Maritime Arbitrators Association, was enforced by the Isle of Man Chancery Court on an ex parte (without notice) basis under section 27 of the Act. As provided by the Court Rules, Sahara was given the right to set aside the order. But how did the Chancery Court find the jurisdiction to make the order under the Act? Neither Convention applied, since the Award was made in London under English law and not, on the face of the written judgment, in terms of either Convention. As already mentioned, to enforce under Part II or Part III of the Act, the Award must be foreign, to the exclusion of the UK. The Court expressed itself satisfied that the Award was "final and conclusive. Based on the evidence presented to the court there is no prima facie case for refusing to enforce the Award on public policy grounds such as fraud, lack of natural justice or upon any other grounds." Given that neither Convention could apply, it is curious that these statutory defences were raised, recognising that the Award was "foreign" yet still capable of being enforced under the Act, which has no application to the conduct of English law arbitration proceedings or the enforcement of their awards. One can only assume that the ground for jurisdiction was unreported.

In 2001, Tynwald enacted section 9A of the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 providing an elegant solution to what had long been regarded by practitioners as the lack of reciprocal enforcement of arbitration awards, which had however been recognised for the purposes of the reciprocal enforcement of court judgments:

"9A The provisions of this Act, except sections 1(4) and 6, shall apply as they apply to a judgment, in relation to an award in proceedings on an arbitration which has, in pursuance of the law in force in the place where it is made, become enforceable in the same manner as a judgment given by a court in that place."

The provision preserves the right to sue under the common law, but makes it abundantly clear that you can enforce an arbitration award as if it was made by one of the recognised courts, the list of which includes, of course, the UK courts.

It is gratifying that with the benefit of the Geneva Convention, the New York Convention, the Judgments (Reciprocal Enforcement) (Isle of Man) Act 1968 and the common law, the Isle of Man has a complete armoury of provisions capable of being used to enforce foreign, including UK, awards and that at the same time enforcement continues to be subject to concepts of fairness and public policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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