Key takeaways
Tribunal’s refusal of interim relief
May not constitute award capable of challenge under s.68 Arbitration Act 1996.
Challenge for serious irregularity under s.68
Does not extend to challenging tribunal's reasoning or alleged errors of judgment.
Procedural agreements during arbitration
Should be formally recorded to ensure they are binding.
JKD & Anor v IKC [2026] EWHC 2031 (Comm) (31 July 2026)
S.68 of the Arbitration Act 1996 (1996 Act) gives a party to arbitral proceedings a limited mechanism for challenging arbitration awards where a serious irregularity has affected the tribunal, the proceedings or the award and caused substantial injustice.
Designed as a safeguard rather than an appeal route, the courts have repeatedly described s.68 as a 'longstop' remedy, available only in exceptional circumstances and intended to provide relief in extreme cases where the tribunal has gone so wrong in its conduct of the arbitration that justice calls out for it to be corrected.
In this case, the Court was asked to consider whether a tribunal's refusal to grant interim relief could be challenged under s.68 of the 1996 Act and, more fundamentally, whether the arbitral tribunal's decision constituted an ‘award’ capable of challenge in the first place.
The background facts
The underlying dispute arose out of the construction of a power plant in an anonymised country overseas by the claimants (anonymised as ‘JHA’ in the judgment) procured by way of an EPC arrangement.
The brief facts of the matter are set out below:
As part of its contractual obligations, JHA procured the issue by Santander of various on-demand bonds in favour of the defendant (anonymised as ‘IKC’ in the judgment).
Following storm damage to the project in 2024, JHA purported to terminate the EPC contract in April 2025, relying on the contract's force majeure provisions and demanding the return of the bonds.
IKC disputed the validity of the termination and subsequently made calls under the bonds.
JHA commenced arbitration proceedings against IKC pursuant to an arbitration clause in the EPC contract which provided for disputes to be referred to arbitration in London under ICC Rules, with the validity of the termination and the calls on the bonds forming the central issues in dispute.
During the arbitration, JHA applied to the arbitral tribunal for interim measures requiring IKC to withdraw its call on the bonds and refrain from further calls pending determination of the substantive dispute.
The tribunal refused the application and issued its decision in the form of Procedural Order No. 4 (PO4).
JHA subsequently made an application to the Court challenging the tribunal’s decision on the basis that PO4 was an award as opposed to a procedural order, arguing that it should be set aside and remitted to the tribunal on the grounds it amounted to an excess of power and/or a failure to conduct the arbitral proceedings in accordance with the procedure agreed between the parties.
These irregularities were said by JHA to arise from the arbitral tribunal’s failure to give effect to an alleged agreement between the parties as to the merits threshold to be applied to applications for interim measures and instead adopting a different, more stringent test.
Issues for determination
The key issues for the Court to determine were as follows:
Was the tribunal's decision an ‘award’ capable of challenge under s.68 of the 1996 Act?
Had the parties agreed that applications for interim measures would be assessed using a specific merits test?
If so, did the tribunal exceed its powers and/or depart from that agreement in a way that amounted to a serious irregularity under s.68 of the 1996 Act?
Had any substantial injustice been caused?
Had JHA waived their right to object?
The Commercial Court decision
The Court dismissed JHA's challenge finding that PO4 was not an award, but a procedural order dealing with an application for interim relief. Crucially, the Court held that PO4 did not finally determine whether IKC had a right to call in the bonds or whether JHA’s termination was valid. Accordingly, as s.68 only applies to arbitral awards, JHA’s application failed ’at the first hurdle’.
Notwithstanding this finding, the Court nevertheless went on to consider the remaining issues and rejected JHA's arguments in any event.
In summary, the Court found that:
on an objective analysis, there was no evidence of any formal agreement between the parties prescribing the test to be applied by the tribunal when dealing with applications for interim relief
even if such an agreement existed, the tribunal had power to grant or refuse interim measures in the exercise of its discretion
if the tribunal was wrong about the correct test to be applied, applying an enhanced test to determine the interim application would not amount to an excess of power; at best, this would be an erroneous exercise of a power clearly possessed by the tribunal, which could not be challenged under the ‘strict and narrow confines’ of s.68 of the 1996 Act.
While the Court considered that JHA would likely have been able to establish substantial injustice, that point did not arise because the challenge failed on the threshold issues. The Court, therefore, dismissed the application in its entirety.
Comment
This decision serves as a further reminder of the high threshold for parties seeking to successfully invoke s.68 of the 1996 Act, which is concerned with serious irregularities, not whether a tribunal has reached the ‘correct’ decision. Parties considering whether a s.68 application is appropriate are therefore reminded that they are extremely likely to fail where the challenge is, in substance, directed at the tribunal's reasoning rather than the conduct of the arbitration itself.
The judgment is also notable for its treatment of the alleged agreement between the parties as to the appropriate test to be applied for interim measures. The Court rejected the suggestion that positions adopted in the context of an earlier interim relief application could, without more, amount to a binding agreement governing future applications. For arbitration users, the practical lesson is clear: if parties intend to agree a particular procedural framework or legal test, that agreement should be recorded clearly and expressly.
In the context of energy and infrastructure projects, where applications for interim relief frequently arise in connection with performance bonds, guarantees and other forms of project security, the decision highlights the importance of carefully considering the most appropriate forum for resolving such disputes at the contract drafting stage. Given the limited supervisory jurisdiction of the courts over arbitral decisions, parties should give thought to whether arbitration provides sufficient protection where urgent interim relief may be required.
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This article was co-authored by Trainee Solicitor, Paula Mas Alvarez.
