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High Court Stamps Out Collateral Attack on £3.8 Million Arbitration Award

One of the primary objectives of the justice system is to achieve finality in dispute resolution and, as one High Court case strikingly showed, judges are astute to prevent collateral attacks on contract arbitration awards by dissatisfied parties.

The relevant arbitration concerned a contract by which two corporate lawyers (lawyers A and B) had agreed to cooperate in exploiting a foreign market. The arrangement ended acrimoniously after each accused the other of repudiatory breaches of the contract, which incorporated a London arbitration clause and was subject to the law of England and Wales.

Lawyer A launched arbitration proceedings against lawyer B alleging, amongst other things, that he had breached his fiduciary duty by diverting away clients from their joint venture and concealing assets. An arbitration panel in London found lawyer B liable for certain fees, commissions and other benefits that he had received.

However, the panel found that lawyer B was entitled to the value of his shares in the joint venture and lawyer A was ordered to pay him net sums exceeding £3.8 million. Lawyer A had mounted a number of unsuccessful challenges to the award and the sums concerned had not been paid. After his corporate vehicle took assignment of various linked causes of action, he had launched proceedings against lawyer B in Australia.

In confirming an anti-suit injunction that restrained lawyer A from taking any further steps in those proceedings, the Court found that the issues that they raised were in substance the same as those that had been definitively decided in the arbitration. The two men had agreed to submit their dispute to the panel and should be held to that bargain. In the circumstances, it would be unfair and contrary to the principle of finality that lawyer B should be vexed by further litigation.