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The short answer to whether an arbitration award is binding – is yes.
All arbitration awards are binding – but can be subject to later challenge. This is an internationally recognised principle, underpinned by various treaties such as the Geneva Convention and the New York Convention. For example, UNCITRAL rules state that “All awards shall be made in writing and shall be final and binding on the parties.”
Enforceability of an Arbitration award
The practical issue stems from the enforceability of the Award, and as touched upon above, the challenges that may be available to the party that disagrees with it. Generally, the arbitration Award is challenged in the national courts.
In England and Wales, this would mean that challenges made are made under the Arbitration Act 1996. There are 3 grounds of challenge or arbitration appeal. These are:
- A challenge under section 67 on the grounds that the tribunal did not have substantive jurisdiction
- A challenge under section 68 on the grounds that there was serious irregularity in the proceedings or the award
- An appeal under section 69 on a point of law
Of those three grounds, the parties may agree to dispense with only section 69; the other two grounds (s67 and s68) are capable of being contracted out of.
How hard is it to challenge an Arbitration award?
In reality, it is very difficult to successfully challenge or appeal an arbitral award. By way of example, In the Commercial Courts 2019 Report published by the judiciary show just how difficult.
- In 2015-2016, there were 34 s68 applications, of which 1 was successful. From 2016 to March 2018, there were a combined 78 s68 applications, of which none were successful.
- Similarly, in 2015-2016, there were 60 s69 applications, of which 4 were successful. From 2016 to 2017, there were no successful challenges (out of 46 s69 applications), and from 2017 to March 2018, out of the 56 s69 applications, only 1 was successful.
So practically speaking, arbitration awards, whilst open to challenge, it is rare for any such challenge to be successful. There is an incredibly high threshold, and so it is vital that the whole arbitration process is managed carefully, as there is rarely a second bite of the cherry.
Whatever your Arbitration enquiry – our team has the expertise to help, including dealing with challenges to Arbitration awards. FWJ are experienced in helping clients from all over the world resolving their disputes and dealing with Arbitration matters. Let our team help you today.