Unlawful Means Conspiracy

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.

The liquidation of developers, contractors and sub-contractors are a regular occurrence in both large and small scale construction projects, with the insolvent company often left with claims against other firms involved in the development. The right to adjudicate and then make use of the summary judgment route to enforce the adjudicator’s decision has long been the most powerful tool at the disposal of the creditor company.

A recent TCC decision highlights the dangers of withholding payment against contractors with a view to pushing them into insolvency. The court allowed the recovery of insolvency professional fees as well as a substantial sum reflecting a reduced settlement reached with a third party on a separate project. The court’s decision has ramifications for any party seeking to withhold large payments under a construction contract against a party who is likely to suffer serious cash-flow pressure as a result.

It is generally the case (though not always!) that courts are reluctant to enforce monetary award adjudication decisions in favour of companies in liquidation (CILs). This is because of the uncertainty surrounding the CIL’s ability to repay those sums should it later transpire it was not entitled to the award.

Claims remain frequent in the construction industry, and so do insolvencies. In the wake of main contractor Carillion’s entry into liquidation, and rumours of forthcoming interest rate rises, it is worth looking at what effect different types of insolvency have on the ability to prosecute claims.

The High Court held that "final determination" signifies the very last stage of any proceedings, without the chance to appeal. Sberbank were therefore still bound by their undertaking to take no further steps in an arbitration against the Company.

Case Alert - [2018] EWHC 209 (Comm)

Judge considers whether security for costs/payment into court should be made pending a challenge to an arbitral award

Taurus Petroleum v. SOMO [2017] UKSC 64

The Supreme Court has recently issued judgment in this matter concerning an attempt to enforce an arbitration award in London by obtaining a third party debt order over sums payable to the debtor under letters of credit issued by a London bank in respect of unrelated transactions.

Two recently published decisions in the TCC considered the enforceability of an Adjudicator's decision and insolvency issues

Typically, the TCC has sought to enforce an Adjudicator's decision and the avenues for the losing party to challenge the award is narrow. The case law regarding what may and may not give rise to a successful challenge is well known and outside the scope of this note.