Background
JKD and GMT, referred to jointly in the judgment as JHA, contracted to construct a power plant for IKC. Following a storm that allegedly delayed the works, JHA purported to terminate the EPC contract for prolonged force majeure and demanded the return of on-demand advance-payment and performance bonds. IKC disputed the termination and called on the bonds.
JHA commenced an ICC arbitration seated in London and sought interim measures restraining IKC from pursuing payment under the performance bond. The tribunal refused that application in Procedural Order No. 4, applying an enhanced merits threshold rather than the prima facie standard advocated by JHA. JHA challenged the decision under sections 68(2)(b) and 68(2)(c) of the Arbitration Act 1996, alleging that the tribunal exceeded its powers and departed from an agreed procedure.
The Court’s Holding
Mrs Justice Dias dismissed the application. Procedural Order No. 4 was not an award and therefore could not be challenged under section 68. Although it finally disposed of the interim application, it did not determine the parties’ substantive contractual rights, leave the tribunal functus officio, or prevent a later application if circumstances changed. Its commercial consequences did not convert the tribunal’s discretionary interim ruling into an award.
The court further held that the parties had not agreed that every interim-measures application would be governed by a prima facie merits threshold drawn from international standards discussed in Gary Born’s treatise. Their positions during an earlier application did not create a contractually binding rule for future applications. Even if such an agreement had existed, choosing the applicable merits threshold would have been an exercise—possibly an erroneous one—of the tribunal’s existing power, not an excess of power under section 68(2)(b). Nor was the merits test an agreed procedural matter within section 68(2)(c). The court nevertheless found that JHA could have demonstrated substantial injustice had a qualifying irregularity occurred.
Key Takeaways
- A tribunal’s final disposition of an interim application is not necessarily an award; the court examines whether the ruling finally determines substantive rights, as well as its form, context, and intended effect.
- Common ground or unopposed submissions concerning the test for one arbitral application do not, without a clear agreement, bind the tribunal when deciding later applications.
- Section 68 cannot be used to recast an alleged error of law or an erroneous exercise of an existing arbitral power as an excess of power or a procedural irregularity.
Why It Matters
The judgment reinforces the narrow scope of judicial supervision under section 68 and the distinction between an arbitral award and a discretionary procedural order concerning interim relief. A ruling may have serious commercial consequences without finally determining substantive rights.
Parties seeking to constrain a tribunal’s discretion over interim measures must make any agreement clear and specific. Advocacy positions adopted during an earlier application will not readily be treated as a binding procedural framework for the remainder of the arbitration.