Key takeaways
Time to challenge arbitration award
This must be brought within 28 days of the award being published.
Basis of challenge to arbitration award
Challenges must be brought under ss.67 to 69 of Arbitration Act 1996.
Challenge under New York Convention
NYC can be relied on only to extent recognised by English law.
Integra Petrochemicals Europe AG -v- BASF SE [2025] EWHC 2288 (Comm)
The underlying dispute in this case related to whether the parties had concluded a binding contract, and a valid London arbitration agreement. The arbitrator found that they had. His award (the Award) subsequently became final and binding after the losing party failed in its attempts to challenge it in the English courts.
The English Court subsequently held that German court proceedings seeking a declaration that the Award should not be recognised in Germany were a collateral attack on the English court judgments and orders that had resulted in the Award becoming final and binding.
The decision highlights the relationship between ss.67 to 69 of the Arbitration Act 1996 (1996 Act), which deal with challenges to arbitration awards, and the limited grounds on which recognition and enforcement may be refused under Article V of the New York Convention (NYC).
The background facts
In September 2021, Integra Petrochemicals Europe AG (Integra) approached BASF SE (BASF) with a view to purchasing 36,000 metric tonnes of bio methanol for onward sale to a third party on back-to-back terms.
BASF maintained that those negotiations did not lead to a binding agreement. Integra disagreed, arguing that on a proper analysis of the parties’ emails and other communications, an agreement had been concluded and was contained in, or evidenced by, its standard trade confirmation sent to BASF on 12 November 2021. Integra further contended that the agreement provided for English law to govern the contract and for all disputes to be resolved by arbitration in London.
Arbitration proceedings
Integra commenced arbitration in London on that basis, maintaining that there was a binding contract by which BASF had agreed to supply 36,000 metric tonnes of bio methanol, but that in breach of contract it had supplied only 16,500-odd metric tonnes.
The arbitration was split into two phases, the first being concerning jurisdiction and the second liability and quantum.
In the jurisdiction phase, the arbitrator determined that
the parties had entered into a legally binding contract for the sale and purchase of 36,000 metric tonnes of bio methanol on the terms set out in Integra's standard trade confirmation of 12 November 2021;
the agreement was governed by English law; and
disputes were to be resolved by arbitration in London.
The arbitrator therefore concluded that he had jurisdiction to determine the dispute. The arbitration then continued with the second phase and both parties were actively participating in the arbitration process.
Challenge to the Award
In principle, BASF could have challenged the Award pursuant to ss.67 to 69 of the 1996 Act within the 28-day period permitted. The arbitrator notified the parties on 28 May 2024 that the Award had been published and would be released upon payment of his outstanding fees. BASF paid 50% of these fees on 29 May 2024. Integra had paid or made available the balance of 50% on 24 June 2024, at which point the Award was released.
On 24 June 2024, the day before the 28-day period expired, BASF sought a time extension but this was refused on the basis that it could itself have paid all the outstanding fees in order to obtain the Award. BASF later sought to bring a s.67 challenge and an after the event application for an extension of time. This application was also refused, and BASF was unsuccessful in its challenge to that decision.
The Award was, therefore, final and binding on the parties as to:
the formation of the contract between them;
that the contract was governed by English law;
that the contract included a London arbitration agreement; and
the arbitrator had jurisdiction to determine the dispute referred to him.
Having exhausted all avenues for challenging the Award in the English Court, BASF commenced German proceedings on 4 June 2025 seeking a declaration of non-recognition of the Award there. BASF relied on a decision of the German Federal Court of Justice of 9 March 2023 which entitled a losing party in a foreign arbitration to apply to the German courts for a pre-emptive declaratory judgment that a foreign arbitral award was not to be recognised. For the purposes of the English application, it was common ground that this was an accurate statement of German procedural law
BASF’s grounds for seeking the declaration were that the parties had not concluded an arbitration agreement and that it had been deprived of its legal remedy because the arbitrator had refused to release it. However, BASF did not inform the German Court of its unsuccessful applications to the English Court for a time extension, nor that it could have paid the outstanding fees itself and collected the Award.
English proceedings
Integra applied to the English Court, seeking to restrain BASF from continuing the German proceedings and/or an order requiring BASF to discontinue those proceedings. It argued, among other things, that the German proceedings had been brought in breach of the arbitration agreement.
BASF maintained that the order sought should be refused because it was simply asserting the rights available to it as a matter of German procedural law for the purpose of vindicating its rights under the NYC.
Integra submitted that the German proceedings were an impermissible challenge to the Award and a collateral attack on the English Court’s supervisory role. It argued that BASF was attempting to impugn the Award by a method not permitted under ss.67 to 69 of the 1996 Act. Integra further contended that, as a matter of English law, BASF was not entitled to rely upon the NYC unless and until Integra sought recognition or enforcement of the Award in Germany, which had not yet happened. To do otherwise would be to undermine the role of the English Court as the supervisory court in the primary jurisdiction.
BASF's case was that the English Court's supervisory role did not oust the role of the courts in secondary jurisdictions available pursuant to the NYC, and that the English Court had no jurisdiction to grant anti-suit injunctions that prevented legitimate proceedings commenced in other jurisdictions in accordance with the NYC.
Integra’s response was that, as a matter of English law, the German proceedings were not legitimate proceedings commenced in accordance with the NYC, since no recognition or enforcement proceedings had been commenced in Germany by Integra.
The Commercial Court decision
As a matter of English law, the starting point was that any challenge to the Award had to be made as permitted by the 1996 Act. In general, the English Court would grant an anti-suit injunction to enforce its jurisdiction as the supervisory court for English-seated arbitrations.
Exceptionally, a party to an arbitration seated in England and Wales may rely on the NYC in a secondary jurisdiction but only to the extent recognised by English law. As a matter of English law, the NYC was solely concerned with recognition and enforcement in a secondary jurisdiction (which was a Contracting State) of awards made in the territory of another Contracting State, being the primary jurisdiction.
Crucially, challenges to an award under the NYC are a shield not a sword: they may be used to resist recognition or enforcement when an award is invoked but not to mount a pre-emptive free-standing challenge. Free-standing challenges to an award could only be made under ss.67 to 69 of the 1996 Act.
To permit a jurisdictional challenge ostensibly under Article V of the NYC (which specified very limited circumstances in which recognition and enforcement of a NYC award could be refused) in another court in some other jurisdiction, which was neither the seat of the arbitration or the court of a state in which enforcement or recognition was being sought, would defeat both the purposes of seating the arbitration in England and the machinery for recognition and enforcement contained in the NYC. It would permit challenges to be made in any court jurisdictionally available to the challenging party anywhere in the world as long as the proceedings could be cloaked with a claim to be pre-emptively resisting recognition or enforcement of an award that had not been, and might never be, sought in that jurisdiction.
The fact that German procedural law permitted pre-emptive challenges to an award before any recognition or enforcement proceedings had been commenced in Germany did not alter the position under the NYC.
The English Court was entitled to exercise its supervisory powers over a party over whom it had ‘in personam’ jurisdiction. As a matter of English law, the only options available to a party in BASF's position were either to challenge the Award under ss.67 to 69 of the 1996 Act or to resist any attempt by Integra to have the Award recognised or enforced.
In conclusion, the proceedings commenced by BASF in Germany were an impermissible attempt to challenge the Award in breach of the arbitration agreement between the parties. Integra was entitled to the anti-suit injunction that it sought.
Comment
The case highlights the importance of ensuring that any challenge to an arbitration award is brought within the 28-day period permitted under s.70(3) of the 1996 Act. Where release of an award depends on payment of the arbitrator’s fees, these fees should be addressed without delay and, if necessary, recovery can be pursued later. Otherwise, the opportunity to appeal the award may be lost.
More fundamentally, the decision reinforces the supervisory role of the English Court over English-seated arbitrations and confirms that Article V of the NYC is available only as a defence to recognition or enforcement proceedings, not as a free-standing means of attacking an award before such proceedings exist. As a practical matter, the dispute also illustrates the value of recording commercial agreements clearly and in writing in order to minimise later disputes over contract formation.
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