Worldwide cooperation between states in the enforcement of arbitration awards is an essential part of modern international commerce. However, as one High Court case showed, it is vital to maintain consistency of judicial decision-making across national borders.
An arbitration panel in Sweden had awarded damages in excess of $500 million to a consortium of investors against an oil-rich state. The underlying dispute concerned exploration and extraction of hydrocarbons and the panel found, amongst other things, that the state’s breaches of the Energy Charter Treaty had caused the delay and abandonment of a project to construct a liquid petroleum gas plant.
The consortium launched enforcement proceedings in the UK and the USA and the state failed in an application to a Swedish court to set aside the award. A UK court granted the consortium permission to enforce the award in this country, but the state applied to set that decision aside. It argued that the award had been procured by fraud and that its enforcement would be contrary to public policy.
In granting the state permission to pursue the fraud allegation to a full hearing, the High Court rejected the consortium’s plea that the state’s resistance to enforcement was an attempt to go behind unfavourable decisions of the Swedish and US courts and was thus an abuse of process. Evidence of the alleged fraud could not, with reasonable diligence, have been discovered by the state prior to the award and justice demanded that it be fully examined on its merits at trial.