Key takeaways
Finality in arbitration
Where the Arbitration Act 1996 applies, a tribunal’s power to amend its awards cannot be open-ended.
Statutory regime under Arbitration Act 1996
This must be complied with unless the parties have expressly agreed otherwise.
Bespoke arbitration agreements
Parties should draft these carefully to ensure they are enforceable.
Gluck -v- Endzweig and another [2026] EWCA Civ 145
The parties in this case had agreed that any disputes should be referred to the Beth Din Chosen Mishpot (Beth Din), the Jewish Rabbinical Court for civil and financial disputes. A clause in the arbitration agreement purported to give the arbitrators the power to amend their awards at any time, thereby giving the Beth Din complete freedom to do what they considered best, at any time.
However, the parties also intended to ensure that the arbitration agreement gave rise to enforceable arbitration awards pursuant to the Arbitration Act 1996 (1996 Act). As the Court of Appeal noted, there was an obvious tension between the need for finality in arbitrations required by the 1996 Act, and the desire to permit arbitrators to amend awards as and when they saw fit.
The Court of Appeal found the unlimited amendment clause forming part of the arbitration agreement to be incompatible with the arbitration regime under the 1996 Act. As a result, it was ultimately unenforceable.
The background facts
A dispute arose under a share purchase agreement (SPA), whereby the Claimant, Mr Gluck, sold a 50% shareholding in a company to Evertop Limited (Evertop), the Second Respondent. Mr Endzweig, the First Respondent, was the guarantor of the purchase price which was payable in four instalments.
The SPA incorporated an arbitration clause providing for any disputes to be referred to the Beth Din.
In 2019, the parties disagreed on whether reductions in the instalments payable should be made in accordance with schedule 7 of the SPA. Mr Gluck and Mr Endzweig signed an arbitration agreement providing for any disputes to be resolved by two Rabbis acting as arbitrators. The agreement also provided that
…And this deed will be valid according to the Arbitration Act which is valid according to the laws of the Government. … The above-mentioned Beis Din have the authority to issue interim judgements as they see fit, and to amend and add to and change the Judgement they have given, at any time. …. This Arbitration Agreement is valid for an unlimited time…
Two Rabbis were duly appointed as arbitrators. On 15 March 2024, a partial award (referred to as a Psak) (First Award) was made. The First Award confirmed that Evertop and Mr Endzweig (Respondents) were entitled to a price reduction under schedule 7 and directed that a further hearing be heard to calculate the rate of that reduction which was held in February 2024.
A further award was made on 28 May 2024 (Second Award) by which the Beth Din held that the Respondents should pay the reduced sum of £459,228.03 to Mr Gluck. The Respondents believed the Second Award contained calculation errors and notified the Beth Din accordingly without Mr Gluck being made aware of this. On 6 June 2024, the Beth Din informed the parties that the arbitrators required more time to review the figures.
On 20 June 2024, Mr Gluck contacted the Beth Din without copying in the Respondents to question why more time was needed and why the arbitrators had not ordered the release of the amounts owing to him per the Second Award. On 25 June 2024, Mr Gluck’s Rabbinical Attorney sought clarification of the reasoning behind the First and Second Awards but received no response.
On 2 October 2024, Mr Gluck wrote to the Respondents, seeking payment of the Second Award. On 9 October 2024, he was told on behalf of the Respondents that the Second Award was still being reviewed due to 'incorrect figure calculations'.
On 16 October 2024, Mr Gluck’s solicitors stated in an email to the Respondents that the Second Award was final and that their client was entitled to payment in full of the amount stated in the Second Award. The Respondents replied that the Second Award had not in fact been finalised.
Court applications
On 21 October 2024, Mr Gluck made an ex parte application to the Court for an order under s.66 of the 1996 Act to enforce the Second Award and for judgment to be entered in terms of the Second Award. The application was granted by the Court on 8 November 2024 (Pelling Order).
On 15 November 2024, the Beth Din stated in writing that their review was ongoing. The Second Award was, therefore, not yet final and they indicated that Mr Gluck was not entitled to recover any amount under that Second Award for the time being.
The Respondents applied to the Court to set aside the order for enforcement of the Second Award on the basis that it was not final and because Mr Glick had breached his duty of full and frank disclosure.
On 10 February 2025, the Beth Din issued an amended award (Third Award), in which they reduced the amount payable to Mr Gluck to £258,974.85.
On 21 February 2025, the Court set aside the enforcement of the Second Award (Keyser Order).
On 10 March 2025, Mr Gluck applied under s.68 of the 1996 Act to set aside the Third Award on the basis of serious irregularities.
S.57 of the 1996 Act
S.57 is 'headed correction of award or additional award.' It is a non-mandatory provision and provides at s.57(1) that the parties are free to agree on the tribunal’s powers to correct an award or make an additional award. If there is no such agreement, then the default rules under s.53(3) to (7) apply.
Specifically, the tribunal may on its own initiative correct an award (s.57(3)(a)) or make an additional award (s.57(3)(b)).
S.57(4) requires an application for the tribunal to exercise these powers to be made within 28 days of the date of the award 'or such longer period as the parties may agree.' S.57(5) states that any correction of an award should be made within 28 days from when the application was made. If the tribunal makes the correction on its own initiative, then it should do so 'within 28 days of the date of the award or, in either case, such longer period as the parties may agree.'
S.57(6) states that any additional award shall be made within 56 days of the date of the original award or such longer period as the parties may agree.
The first instance decision
On the application to set aside enforcement of the Second Award, the Court considered whether the parties' agreement that the Beth Din could amend their award 'at any time' was within the scope of s.57(1) of the 1996 Act, and whether the default regime created by ss. 57(3) to (7) applied. It was common ground that if the default rules applied, the original award was final and enforceable when the order giving Mr Gluck permission to enforce the award was made.
The Court held that the parties had conferred on the tribunal a power to amend its Award which was broader than the power envisaged by the default provisions of s.57 and which was not subject to any deadline. The parties were entitled to come to this broader agreement. It was not possible to imply the s.57 time-limits into the arbitration agreement because the 28 day default limit provided in s.57 was expressly inconsistent with the expression of 'at any time' in the arbitration agreement.
This did not mean that no award made by the Beth Din would ever be final or enforceable. If the arbitrators had not said that they were reviewing the Second Award, then it would have been final and enforceable under s.66 of the 1996 Act. If repeated requests to review an award were made, the Beth Din would have ample power to simply declare themselves functus officio. If the Beth Din initiated a review and then delayed excessively in producing a decision, a party could apply to remove the arbitrators under s.24 of the 1996 Act.
The Court of Appeal decision
The Court of Appeal stated that the principled approach of a court to an arbitration agreement should be to uphold and respect, where possible, party autonomy.
It referred to s.58(1) of the 1996 Act which provides that 'unless otherwise agreed by the parties, an award made by the tribunal pursuant to an arbitration agreement is final and binding …'. The phrase 'unless otherwise agreed by the parties' did not, however, entitle the parties to agree that an award should never become 'final and binding'. An arbitration agreement must contemplate that the tribunal will make a decision which is binding on the parties.
Therefore, the arbitration agreement could not, properly interpreted, mean that the arbitrators were free to change their awards at any time. That would result in there never being a point in time when the parties could apply to enforce the award, because it might be changed.
The Court of Appeal did not think the judge’s reliance on the Beth Din’s power to declare themselves functus officio was the answer. The unlimited amendment clause would mean that the arbitrators could amend and change the decision to declare themselves functus officio. The Beth Din could, pursuant to the terms of the unlimited amendment clause, decide to review an award that they had declared was final and binding.
Assuming that the unlimited amendment clause came within the definition of s.57(1) as an agreement 'on the powers of the tribunal to correct an award or make an additional award', the difficulty remained that there was no time at which the award became final. Furthermore, the default provisions in s.57 could not make the unlimited amendment clause enforceable, because the fundamental problem remained that any award made by the Beth Din could always be amended, added to, and changed by the Beth Din, whenever they chose to do so.
The Court of Appeal concluded that the power given to the Beth Din meant that there could not be an enforceable arbitration award, which was repugnant to and inconsistent with the arbitration agreement. The Respondents could only challenge the award by using the default powers in s.57 but those provisions had not been effectively used, and there was no amendment to the Second Award made by the Beth Din within the time limited by s.57.
However, the remainder of the arbitration agreement remained enforceable, the unlimited amendment clause being severable.
As a result, the Second Award was enforceable on its terms, and the judge had been wrong to set aside the Pelling Order for enforcement.
Comment
The decision should be noted by those drafting and entering into bespoke arbitration agreements. Party autonomy in arbitration is respected by the English Court, but the parties must nonetheless comply with the statutory arbitration regime imposed under the 1996 Act, and this should be borne in mind when drafting arbitration agreements.
