In a noteworthy ruling, the English Commercial Court has denied recognition and enforcement of a California-seated arbitration award, opining that the enforcement would violate UK public policy. The Court stated this would be in direct conflict with principles outlined in the Consumer Rights Act 2015 (CRA 2015) and the Financial Services and Markets Act 2000 (FSMA). The case in question is Payward Inc, Payward Ventures Inc, and Payward Ltd v Chechetkin [2023] EWHC 1780 (Comm).
The denial of the enforcement of the award could potentially herald consequential implications for future international arbitration agreements. It underscores the fact that such awards, even when solidly backed by rulings from reputable foreign courts, may face obstacles in enforcement in different jurisdictions based on variances in public policy. Full details reported here.
Both the Consumer Rights Act 2015 and the Financial Services and Markets Act 2000 are crucial legislative measures in the UK, with the former seeking to simplify and strengthen consumer rights, while the latter is aimed at enhancing the integrity and efficiency of financial markets. The fact that they were invoked to refuse the enforcement of the arbitration award signifies that courts, while recognizing international arbitration decisions, will also ensure local laws are not compromised.
While this is a noteworthy case to legal professionals, especially those working on international arbitration agreements, it’s important to remember that the formalities, enforceability, and governance of awards are all subject to local legal systems’ public policy and legislation.
The ultimate impact of this development is yet to be fully understood but it does demonstrate a new layer of complexity in the enforcement of international arbitration awards. Legal professionals with clients involved in international arbitration must be cognizant of public policies in jurisdictions where they may seek enforcement of awards.