Key takeaways
Seat courts hold exclusive challenge rights
The Court of Appeal confirms that only courts at the arbitral seat can supervise and intervene in arbitration awards.
English courts can block foreign legal actions
Where England is the arbitral seat, courts may issue injunctions to prevent proceedings elsewhere that undermine the arbitration.
New York Convention does not override seat court authority
Parties must follow the right legal steps, enforcement can’t skip over the court that oversees the arbitration.
Court of Appeal reaffirms precedence of supervisory jurisdiction of courts of arbitral seat over arbitration proceedings
Star Hydro Power Ltd -v- National Transmission and Despatch Company Ltd [2025] EWCA Civ 928
The Court of Appeal has confirmed that it is permissible for a party to arbitration proceedings to bring a pre-emptive challenge to an arbitration award prior to any attempt by the winning party to have the award recognised and enforced.
However, such a challenge must be brought in the courts of the arbitral seat with supervisory jurisdiction over the arbitration proceedings. Any attempt to bring the challenge in a foreign court can constitute a breach of the agreement to arbitrate and the exclusive jurisdiction of the supervisory court in respect of such a challenge. In those circumstances, the English Court will grant an anti-suit injunction to restrain the foreign court proceedings unless there are strong reasons not to do so.
The background facts
The underlying dispute arose under a Power Purchase Agreement (PPA) by which Star Hydo Power Limited (SHPL), a special purpose vehicle incorporated in Pakistan, undertook to construct, develop and maintain a power plant in Pakistan.
The counterparty to the PPA was National Transmission and Despatch Company Limited (NTDC), a Pakistani state entity and the central electricity purchaser and operator in the country.
Pursuant to the PPA, NTDC agreed to purchase from SHPL electricity generated at the plant for a period of 30 years. The PPA contained detailed provisions regarding the tariff payable and adjustment of the tariff.
The PPA was stated to be governed by Pakistani law. Pursuant to Article 18(3)(a) of the PPA, any disputes between the parties were to be resolved in arbitration conducted according to LCIA Rules and in the English language. Article 18(3)(c) provided for the seat of the arbitration and, in material part, for either party to require the arbitration to be conducted in London.
The parties subsequently fell out over the applicable tariff. NTDC argued that, as a matter of Pakistani law, the determination of tariffs for electricity was the statutory responsibility of the National Electric Power Regulatory Authority (NEPRA), which had issued its decision on the applicable tariff in this case. SHPL contended, however, that the PPA entitled it to claim a higher tariff than that determined by NEPRA.
The arbitration proceedings
SHPL filed a Request for LCIA Arbitration seated in London, which NTDC accepted, notwithstanding that it subsequently argued that that the sole arbitrator appointed by the LCIA Court had no jurisdiction over the dispute and that SHPL’s claim was inadmissible because it was an impermissible attempt to circumvent the regulatory position.
In his award, the arbitrator stated that while NEPRA had statutory responsibility for determining the actual tariff to be paid as a matter of Pakistani law, that could be proven by SHPL to be contractually wrong, such that the difference would be payable to SHPL as a matter of contract.
In his award, the arbitrator found that (i) he had jurisdiction over the claims; (ii) SHPL’s claims were admissible; and (iii) NTDC owed SHPL significant outstanding amounts as the difference between what NEPRA had determined was payable and what was contractually payable. The award stated further that “all other claims and requests for relief” were dismissed and denied.
Lahore court proceedings
A few months after the award was issued, and prior to any enforcement or recognition proceedings on the part of SHPL, NTDC commenced proceedings in the Lahore High Court. Their application was ostensibly seeking partial recognition and enforcement of the award in that NTDC wanted the Lahore Court to uphold the arbitrator’s dismissal and denial of “all other claims and requests for relief” and also to endorse the arbitrator’s findings with regard to NEPRA’s statutory authority to determine the applicable tariff.
However, in reality, the application was a challenge to the arbitrator’s jurisdiction as well as a challenge to his findings with regard to the contractually payable tariff on the basis that NTDC argued that such findings would usurp the exclusive jurisdiction of NEPRA and thereby violate Pakistani law.
NTDC argued that the award was not enforceable pursuant to Article V of the New York Convention (NYC), which sets out the grounds on which a court of a Contracting State may refuse to recognise and enforce a NYC award.
The Lahore Court made an interim order suspending the operation of a demand notice sent by SHPL to NTDC in respect of certain sums calculated according to the contractual tariff determined by the arbitrator.
The Commercial Court proceedings
SHPL sought an anti-suit injunction (ASI) from the English Court in an attempt to restrain the Lahore Court proceedings.
The Commercial Court declined to grant the ASI. It found as follows:
There was a substantive right under the NYC for awards not to be recognised or enforced on the grounds set out in Article V. There was no reason in principle why that right could not be asserted pre-emptively in a particular jurisdiction e.g. by seeking a declaration of non-recognition or non-enforceability, even if the winning party had not yet sought to bring recognition or enforcement proceedings of its own. It was also in principle permissible to seek recognition or enforcement of part of an award.
That NTDC’s application was a root and branch attack on the award was simply the necessary consequence of permitting challenges to be made on the grounds set out in Article V.
As a matter of comity, the English Court should not determine what issues should and should not be left to the Pakistani courts. It was for the Pakistani courts to determine NTDC’s application on the merits.
SHPL appealed this decision to the Court of Appeal.
The Court of Appeal decision
The Court of Appeal has allowed the appeal and granted the ASI sought by SHPL.
Relying on the Court of Appeal decision in C -v- D [2007] EWCA Civ 1282, it reaffirmed that the parties’ agreement to the seat of an arbitration constituted an agreement as to the curial law of the arbitration agreement and was analogous to an exclusive jurisdiction clause in favour of the courts of the seat of the arbitration, being the courts with the supervisory jurisdiction over the arbitration proceedings.
Consequently, the courts of the seat of arbitration were the forum for remedies seeking to attack the award and that was the case even if the law of Pakistan was the governing law of the arbitration.
In this case, the English Court had exclusive jurisdiction in relation to proceedings to challenge the award and was entitled to consider whether the party bringing proceedings in a foreign jurisdiction did so in breach of the arbitration agreement. As a matter of principle, it was wrong for the English Court to rely on the foreign court to decline jurisdiction.
Furthermore, any challenges to an award had to be brought under ss.67 to 69 of the Arbitration Act 1996. The NYC was concerned only with recognition and enforcement of an award; it did not provide for pre-emptive challenges to an award. That would undermine the role of the supervisory court as the exclusive jurisdiction for such challenges. In this jurisdiction, Article V challenges can only be raised in answer to an application to recognise and/or enforce an award.
The Court of Appeal noted that NTDC’s challenge to the award in the Lahore proceedings was the same type of challenge it made to an LCIA award as was injuncted in Atlas Power & others -v- National Transmission and Despatch Company Ltd [2018] EWHC 1052 (Comm). In that case, NTDC similarly attempted to avoid the supervisory jurisdiction of the English Court by arguing that the courts of Pakistan had concurrent supervisory jurisdiction.
That argument having failed, as being contrary to the reasoning in C -v- D, NTDC sought in this case to justify the same impermissible conduct by purporting to frame its claim to invalidate the award in Lahore as being permissible under the NYC.
However, while the proceedings in Lahore were framed as an application for partial recognition and enforcement of the award, they were in fact a full-throated challenge to the award and its effect. C -v- D remained an insuperable obstacle to mounting a challenge to a London-seated award in Pakistan.
The Court concluded that the Lahore court proceedings were brought in breach of the agreement to arbitrate and the exclusive jurisdiction of the English Court in relation to such a challenge. In such circumstances, it was appropriate for the Court to grant an ASI to restrain those proceedings.
Comment
The Court of Appeal’s decision usefully clarifies that challenges to an award under the NYC are a shield against applications for the recognition and/or enforcement of an award, not a sword by which the award might be attacked pre-emptively.
The case also highlights that any attempt to disguise a clear challenge to an award as an application for partial recognition and enforcement of that award is unlikely to succeed.
