After the award: trends in arbitration challenges – England and Wales

Transcript:

Trisha: Hello, and thank you for joining Arbitral Insights. I am Trisha Mitra Veber a senior member of the International Arbitration Team at Reed Smith in the London office. And today we are looking at what happens after an arbitral tribunal issues its award. So when can a party challenge that award before the courts of England and Wales? How often do those challenges succeed? And what should parties and council take? From the data. Our starting point is the England and Wales chapter of the Reed Smith International Arbitration Report, published in December 2025. It forms part of a multi-jurisdictional data-driven analysis of how courts in leading arbitral seats determine challenges to arbitration awards. The England and Wales chapter examines reported English court decisions from 1st January 2018 to 31st December 2024. Looking at the grounds invoked, success rates, timing, and costs. It also considers the targeted amendments to the Arbitration Act 1996 introduced by the Arbitration Act 2025, particularly the changes affecting jurisdictional challenges under Section 67. Now we found that 178 applications challenging awards had been made during the review period, all under London seated arbitrations. Now to talk us through the findings, I am delighted to welcome Elizabeth Farrell, global co-chair of the Energy and Natural Resources Group and one of the authors of this chapter. Elizabeth, welcome.

Elizabeth: Thank you, Trisha. It's a real pleasure to be here and talking about this with you.

Trisha: So before we turn to the numbers, Elizabeth, why does London as a jurisdiction matter so much in the international arbitration landscape?

Elizabeth: It's a combination of factors that I think very few arbitral seats can match. So London for many years has been regarded as a neutral ground for international transactions. It offers a really experienced arbitration community, both in terms of arbitrators who are physically based in London, many of them from the London bar, as well as lawyers, solicitors like us who are there ready to support on the ground. There's also factors like the leading hearing facilities that are based in London. It's very easy and convenient to host a large hearing in London. And that's a practical point that actually does make a real difference. And of course, there's a wide range of arbitral institutions who can oversee arbitrations with a London seat. But the other factor is that often in commercial negotiations of an arbitration agreement, it may well be that the seat of the arbitration quite naturally is chosen to match the governing law. And there are some real advantages to choosing English law to govern commercial transactions, particularly important in sectors like shipping, maritime, commodities, energy transactions, insurance, finance, where there is a huge body of English case law that can be drawn upon to make sure that, you know, should a dispute arise, it is possible to advise with a high degree of certainty what the outcome of that dispute likely will be because the arbitrators are going to apply English law. But beyond that, there's the English court system. It's very supportive of arbitration. So the English courts, which Are still known, very much for their independence, for their commercial judgment, but also their arbitration friendly approach. The excellent judges you get in the High Court in London will, where necessary, on the application of parties, provide carefully limited supervision of arbitration, respecting the party's decision to arbitrate.

Trisha: Thank you, Elizabeth. That's that's very clear. And I think it's a good cue to jump into the report. But before we go into the report, if there is one thing our listeners should take away from that data, the headline finding of the report, what would it be?

Elizabeth: Well, I'd say the headline is just how rarely London-seated arbitrations are challenged relative perhaps to arbitrations seated in other jurisdictions. For instance, we estimate that somewhere between 700 and 1,000 awards were very likely issued in London-seated arbitrations in, say, 2019, by way of example but the data set we reviewed identified only 24 awards and decisions issued that year that were challenged before the English courts. So that's a really striking gap and I think it reinforces what we already know about London's reputation as a safe seat where arbitration awards are generally respected. And if we look at the success rate by which we mean success from the point of view of the person applying, for an arbitration award to be revisited or overturned. It was around 38 % of the applications in the reported data set that succeeded. But I do want to make two important qualifications to that. First, unsuccessful challenges, particularly those that are dismissed very early on because they have very little prospect of success are much less likely to be reported, and we only looked at reported decisions. So the true success rate is therefore likely lower than the reported figure suggests. Secondly, the Section 69 data, we'll remind people what we mean by Section 69 in a moment, Section 69 data covers only appeals on a point of law for which permission to appeal was granted. So it doesn't include cases in which permission for an appeal was refused. So that reported success rate therefore applies only to the appeals that managed to get off the ground by crossing the threshold gaining permission to appeal and then got to the stage of being determined on their merits. So looking at it altogether, I would say the data tells us three things. One, that challenges to London's seated awards are exceptional. Two, that succeeding is certainly more difficult than the headline figures from the data we reviewed suggests. And thirdly, that prospects of success, of course, as you might expect, vary significantly depending on which route is taken towards appeal, by which I mean which section of the Arbitration Act is relied upon to pursue an appeal.

Trisha: Right, so the headline still remains that London's safe seat reputation is intact. And while courts are willing to intervene where statutory tests are not met, but the figures do not suggest that awards are routinely vulnerable. and that's probably a good thing for us London practitioners.

Elizabeth: Exactly. So the data is showing a court system that is supportive of arbitration whilst still performing a meaningful supervisory role. One more thing to note before we move on perhaps, 46%, so close to 50 % of the 13 appeals from the High Court to the Court of Appeal in the period we looked at was successful. It's a small sample of course, but it's an interesting one. And I think it actually shows that the Court of Appeal takes on those cases which are really very... difficult as a matter of law to determine and therefore, it is in those cases always quite a high possibility that if the Court of Appeal allows permission to appeal that there's something, really tricky for them to look at.

Trisha: You mentioned this a minute ago, but for listeners who do not work with the English Arbitration Act every day, could you briefly explain the three principal routes for challenging an award?

Elizabeth: So in a London seated arbitration, the English Arbitration Act sets out three key routes for challenging an award. Each one is very different. Occasionally you might have a case where there's a possibility of an appeal on more than one ground, but generally it would be one of the three grounds that might be a possibility. And we refer to those reference to the section number in the Arbitration Act, so sections 67, 68, 69. Section 67 relates to the tribunal's substantive jurisdiction. So broadly dealing with issues such as whether there is a valid arbitration agreement, whether the tribunal was properly constituted, and whether the dispute was referred to arbitration in accordance with the arbitration agreement. Section 68 relates to a serious irregularity affecting the tribunal, the proceedings or the award. So something's really gone seriously wrong if we're thinking about a Section 68 appeal. Things like tribunal failing to act fairly and impartially, a failure to agree, to follow an agreed procedure, failure to deal with all of the issues that are put to the tribunal, which is something which is one reason why arbitration awards can be very lengthy because the tribunal needs to be careful to cover all the issues raised before them. Possibly uncertainty or ambiguity as to the effects of the award. And then there's issues around awards being obtained by fraud or being contrary to public policy. And then finally, there's section 69, which is a right of appeal on a question of law. I'll just say that it is possible to exclude that right to appeal under section 69 in your arbitration agreement. But many of our clients really like the comfort that they will have the ability to appeal a London-seated arbitration award that has gone wrong on the law to the English High Court. And they're real expert judges who can look at that decision on the law if it has gone wrong.

Trisha: To that, I would add, and I think this is you know, this is something that our clients routinely ask us, is that what are the remedies available once you have appealed an award? And of course, setting aside is one of the remedies available, but it isn't the only remedy available. Under section 68 and 69, the English courts actually generally prefer to remit the award back to the tribunal, unless in limited circumstances it considers that inappropriate.

Elizabeth: Right, I mean that really reinforces an important point, which is that a successful challenge through an award doesn't necessarily mean that somehow the award disappears altogether. The outcome depends on the basis of the appeal and the remedy that the court considers appropriate.

Trisha: That's exactly right. Now we've talked about the three sections of the Arbitration Act and what they are. Now let's look a little more closely at how the results varied between those three different grounds of challenge. And Elizabeth, if you don't mind telling our listeners which of the three grounds was invoked most frequently and how successful was it?

Elizabeth: So is section 69, so an appeal on a Question of Law, that was most frequently invoked and the most successful route? It was invoked 72 times in the period we looked which is beginning of 2018 to the end of 2024. And appeals on section 69 succeeded on half of those occasions, 50%. Otherwise, there was Section 67, so substantive jurisdiction, invoked 58 times, succeeded 28 % of the time. And Section 68, serious irregularity, succeeded only 16 % of the time. Which is perhaps not terribly surprising to me because, know, it is more likely that there will be room for debate about whether an arbitration tribunal have gone wrong on a point of law than whether they have jurisdiction or whether a serious irregularity has arisen.

Trisha: Right. And and the 50% success rate in Section 69 appeals probably still needs some context because unless both parties to the dispute have agreed to the appeal, and which is very rare, the appellant must first obtain permission from the court to pursue a section 69 appeal. And so the data set that we covered in our report includes only those appeals which were reported, which would have been the ones for which permission was granted. However, when we also compared our findings with the commercial courts statistics, and what was interesting is that the commercial courts statistics were much lower than our findings. And for example, between 2022 and 2024, the success rate was only 19.5% so it still seems that more broadly, appeals from arbitration awards have accounted for approximately a quarter of the commercial cases, commercial courts cases in recent years, and yet they are rarely successful. So on that note, let's perhaps move on to section sixty-eight. And Elizabeth, what did our report tell us about the serious irregularity challenges under section sixty-eight?

Elizabeth: So those challenges succeeded only 16 % of the time. If we look in a little bit more detail at the breakdown of reasons for the challenges, grounds related to arguments about natural justice were invoked 66 times, but succeeded in only 13 cases. So about 20 % success rate. But an alleged failure by the tribunal to comply with its general duties, that was around 49 challenges and 12 successes. then one of the least frequently invoked grounds was failure to follow the agreed procedure, alleged 15 times without success. There are some grounds available under the Arbitration Act under Section 68 which produced no successful challenges at all. For example, challenge concerning a failure to follow the agreed procedure or comply with the formal requirements for an award failed, perhaps because the arbitral institutions tend to do such a good job at reviewing awards and making sure those formal requirements are followed. There was one public policy challenge that succeeded, but there were no challenges brought at all on the grounds that an arbitral tribunal or institution or somebody else entrusted with powers by the parties had exceeded those powers. The most common Section 68 complaint was that the tribunal had decided the case or the amount to be awarded on a basis that neither party had advanced. So the tribunals have come up with their own grounds for making a decision, something that hadn't been argued in front of them by the parties. For example, a tribunal might reject a claimant's calculation of damages to threat, decide in favour of the claimant on merits, but award damages on an alternative basis that has not been mentioned by either party.

Trisha: Yeah, that that's a that's a tricky situation, isn't it? okay, so we've seen about fifty percent success rate under section sixty nine, or about twenty percent looking at commercial code statistics, about sixteen percent success rate under section sixty eight. How does that compare with jurisdictional challenges under section sixty seven?

Elizabeth: Well, Section 67 challenges around substantive jurisdiction fared somewhat better, succeeding 28 % of the time in the reported data set. That of course means still that the vast majority failed. I think the practical takeaway from that is that jurisdictional objections must be raised really promptly within the arbitration. And if you try to challenge later without having objected at the time the problem arose, you may well lose the right to challenge, unless there's a basis to say that you couldn't reasonably have discovered the grounds at the relevant time. And that is reinforced by the Arbitration Act in its new, guise 2025 version. It really moves away from a full rehearing under section 67. So generally, subject to arguments about the interest of justice, the court will not ordinarily reconsider grounds or evidence that has already been considered by the tribunal or admit new grounds or evidence that could reasonably have been raised or put before the tribunal during the arbitration.

Trisha: So the reforms to the Arbitration Act are intended to prevent parties from using a Section sixty seven challenge as a second bite at the cherry, by advancing new arguments or evidence that could have been presented to the tribunal.

Elizabeth: Exactly. Parties need to raise and fully develop their jurisdictional objections at the earliest opportunity. They can't assume that they will somehow be able to rebuild their case before the court.

Trisha: Exactly. Now the prospects of success are one part of the picture. But our clients often ask us, how long does it typically take for English courts to determine a challenge? Elizabeth, what were our findings on this point?

Elizabeth: So the answer to that question essentially depends on how busy the courts are in any particular period of time. I would say, I think it's pretty universally acknowledged that during COVID the English courts move really, really quickly to adapt and to make sure that despite having to move to remote hearings, there was no significant delay in how long they were taken to deal with cases and how long they were taking to deal with challenges to arbitration awards. But across the whole data set, 2018 to 2024, the average time between the award and the appeal being made and the English court's judgment eventually being handed down, which requires a number of steps to be taken in that period, was around 419 days. But in 2023 and 2024, the courts were very, very busy. There was a lot of litigation going on and that average time rose to almost 540 days. Now, those years do include in the data set cases that reached both the Court of Appeal and the Supreme Court, challenges involving investment treaty awards, and one very, very long case where, two and a half thousand days that elapsed between the award and the High Court's decision due to particular complexities of peculiar to that particular case. So that is also a reason why the average increased over that period. But generally speaking, think thinking around somewhere between 400 and 500 days is a reasonable estimate of how long it will take from the moment of the arbitration award being handed down to the moment of getting the decision from the English court. And we have to be aware that sometimes challenges may be brought partly to delay enforcement of an award, rather than because it has strong prospects of success. think that frankly explains why the majority of challenges ultimately fail.

Trisha: Absolutely. And the other question we often get asked by our clients is costs, isn't it? And yeah, we we did look into data about costs recovery in the case of a successful challenge to an award. What does the data tell us?

Elizabeth: Well, yeah, it's a really important question. So rule of thumb in high court appeal to the English high courts, the successful party will usually recover around 60 to 75 % of its actual legal costs. So I think that means that the position in England and Wales is somewhere between Singapore, where costs recovery is generally a bit more restricted, and Hong Kong, where indemnity costs award a much higher percentage of costs being awarded is the presumptive consequence of an unsuccessful challenge. In England and Wales it can be possible to get indemnity costs but those are only in quite unusual situations.

Trisha: Thank you, Elizabeth. So just as a recap, we have covered sort of what are the grounds of appeal available in England and Wales. We've looked at the success rate for each of those grounds. We've looked at how long it typically takes for English courts to determine a challenge. What are the consequences of those challenges? Before we wrap up, what would we like our listeners to take away from today's discussion?

Elizabeth: So there are a number of points. mean, one, be realistic about the prospects. When you receive a disappointing arbitration award, it is easy to react by thinking, well, surely we must be able to appeal. But the reality is that only a very small minority of London-seated awards can be successfully challenged. Secondly, if the possibility of a successful appeal is something that you're being advised is possible, it's for the lawyers to really identify the correct statutory route. Certainly a disagreement with the tribunal's reasoning or factual findings should not be repackaged as a procedural complaint. Thirdly, for lawyers to think about during the arbitration itself is the importance of raising objections at the right time. Jurisdictional and procedural objections should be made promptly before the tribunal. Section 67 reforms introduced in the 2025 Arbitration Act, making it much harder to introduce grounds or evidence before the court that could have been presented during the arbitration. Finally, I'd say plan for the time and the cost Now, unsuccessful parties, as we mentioned, can take a very cynical approach to this, trying to appeal simply to put off the inevitable day when the award's going to be enforced against them. There are some steps that the successful party can take to try to prevent that happening. But for those parties facing a challenge to an award that's in their favour, I just be realistic about how long it's going to take for that award to be dealt with. As I said, about 400 to 500 days is probably about right. And for parties appealing, understand that even if you're successful, you're generally going to get about 60 to 75 % of your legal costs.

Trisha: That's right. And based on what we have seen, through the data, and sort of your experience as well, what should a party that has just received an adverse award do?

Elizabeth: Well, the first step is to obtain a candid assessment with a cool head of whether a viable ground for appeal exists. aim is not ever to plead any ever-reconceivable argument. In particular, Section 67 is not an opportunity to rebuild a jurisdictional case using grounds or evidence that could have been presented to the tribunal. A focused challenge, if you are serious about getting the award revisited, is far more valuable than a kitchen sink approach, throwing everything you can at it.

Trisha: I think that's the perfect way to end today's discussion because that really is what we have found through our report. The overall picture is clear. London remains a safe and supportive seat, but any challenges to an award requires a focused assessment of the available grounds, the prospects of success, and the time and cost involved. Elizabeth, thank you for joining us and for sharing your insights into the England and Wales findings and for for contributing and being a big part of this report.

Elizabeth: Thank you. It's always a pleasure to discuss arbitration with you, Trisha.

Trisha: Likewise. And on that note, thank you also to our listeners for listening to Arbitral Insights. You can find the full Reed Smith International Arbitration Report on our website, including the complete analysis for England and Wales that we touched on today, as well as the other jurisdictions covered by the study. And we hope that you will enjoy our next episode.

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