High Court Refuses to Enforce Foreign Arbitral Award

6 September, 2017

In a judgment handed down in the High Court on 27th July 2017, Mr Justice Burton dismissed an application to enforce a Russian arbitral award that was set aside by the Russian courts, in Nikolay Viktorovich Maximov v. Open Joint Stock Company [2017] EWHC 1911 (Comm).

The award arose out of a dispute between the defendant, one of Russia’s largest steel companies, and the claimant, a prominent Russian businessman, concerning the calculation of the purchase price of shares in Open Joint Stock Company Maxi-Group pursuant to a share purchase agreement.

The award was set aside by the Moscow Arbitrazh Court, a decision that was upheld on appeal. The claimant nevertheless sought to enforce the annulled award abroad, in France, the Netherlands and England. The French court concluded that the award was enforceable. The Dutch court refused to enforce the award.

In the English proceedings, the claimant maintained that the decisions of the Russian courts setting aside the award were perverse, and invited the Court to infer that those decisions were therefore procured by bias and should not be recognised by the English Court.

In dismissing the application to enforce the award, the Court held that it was not enough to show that the Russian courts’ decisions were manifestly wrong, or even perverse. The Court would have to be able to infer that the Russian courts were biased against the claimant. In the absence of other evidence of bias, this would require the decision to have been so extreme and incorrect that no court acting in good faith could have arrived at it other than by bias. The Court held that on the facts of the case, the claimant had failed to discharge this heavy burden.

The decision emphasises the difficulties a party will face in seeking to enforce an award in England if it has been annulled by the court of the seat.

Ciaran Keller acted for the defendant, instructed by Kevin Lloyd at Debevoise & Plimpton LLP.