Obtaining a favourable arbitration award often proves to be only half of the battle. Facing obstructive counterparties refusing to honour awards, often based in jurisdictions where enforcement is slow, difficult and uncertain, is a source of regular frustration to those pursuing claims in arbitration. That is why anyone involved in international trade should be familiar with the variety of measures available to enforce their awards.
In this client alert we discuss examples of recent enforcement cases we have pursued and which demonstrate the effectiveness of contempt and committal applications as key weapons in the arsenal of the arbitration award creditor.
Glencore v Vinatex – prison sentence against the director
After Vinatex, a Vietnamese entity, failed to pay the sums awarded to Glencore under an ICA arbitration award, Glencore successfully applied for an enforcement, disclosure and freezing order from the English High Court. The order was validly served on both Vinatex and its general director, Mr Hy, in Vietnam. However, they both breached the order by failing to provide Glencore with information regarding Vinatex’s worldwide assets and an affidavit from Mr Hy verifying that information.
On 23 May 2018, Mr Justice Knowles heard Glencore’s contempt application, accepting that Vinatex was in breach of the disclosure order. Furthermore, it accepted Glencore’s evidence that Mr Hy, as Vinatex’s general director, had deliberately and wilfully caused Vinatex to breach the information disclosure requirements. Accordingly, Mr Justice Knowles held both Vinatex and Mr Hy in contempt of court and sentenced Mr Hy to 12 months’ imprisonment.