Award - Enforcement - Parties disputing responsibility for collision during voyage charter

West Tankers Inc v Allianz Spa and another: CA (Civ Div) (Lord Justices Carnwath, Lloyd and Toulson): 24 January 2012

The instant proceedings arose out of a dispute between the defendant insurers of the charterers of a vessel (the insurers) and the claimant owners (the owners) about responsibility for a collision during the voyage charter. The collision was with a pier owned by the charterers. The insurers were subrogated to any claims of the charterers against the owners.

The arbitrators appointed under the charterparty found that the owners had contractual immunity, under the terms of the charterparty, from responsibility to the charterers for the damage, and made an award declaring that the owners were under no liability to the insurers in respect of the collision. While the arbitration was proceeding, the insurers had brought a claim against the owners in Italy. An anti-suit injunction preventing the insurers from taking any steps to prosecute their claims except by way of London arbitration was set aside and the insurers expressed their intention to proceed with their action against the owners.

In those circumstances, the owners wished for the arbitrators’ award to be made a judgment of the court in order to provide an additional weapon in the Italian proceedings and/or a shield against enforcement if those proceedings were to result in a judgment opposite to that arrived at by the arbitrators. In November 2010, on a without notice application by the owners, the judge ordered that the owners should be permitted, pursuant to section 66(1) of the Arbitration Act 1996, to enforce the declaratory award in their favour and, pursuant to section 66(2) of that act, judgment was entered against the insurers in the terms of that award. An application by the insurers to set aside the order was dismissed. In dismissing the application, the judge concluded that where ‘the victorious party’s objective in obtaining an order under section 66(1) and (2) [of the act] is to establish the primacy of a declaratory award over an inconsistent judgment, the court will have jurisdiction to make a section 66 order because to do so will be to make a positive contribution to the securing of the material benefit of the award’. The insurers appealed.

The issue that fell to be determined was whether there was power under section 66 of the act to order judgment to be entered in the terms of an arbitral award in a case where the award was declaratory in form and more particularly, where it took the form of a negative declaration, namely, a declaration that the successful party had no legal liability to the other party in respect of the subject matter of the arbitration. The appeal would be dismissed.

In an appropriate case the court might give leave for an arbitral award to be enforced in the same manner as might be achieved by an action on the award and so give leave for judgment to be entered in the terms of the award. The court had to make a judicial determination whether it was appropriate to enter a judgment in the terms of the award (see [37]-[38] of the judgment).

At common law, a party to an arbitration who had obtained a declaratory award in his favour could bring an action on the award, and the court, if it thought appropriate, could make a declaration in the same terms. The purpose of section 66 of the act was to provide a simpler alternative route to bringing an action on the award and the court, although the latter possibility was expressly preserved by section 66(4) of the act (see [37] of the judgment).Decision of Field J [2011] All ER (D) 51 (Apr) affirmed.

Stephen Males QC and Sara Masters (instructed by MFB Solicitors) for the insurers; David Bailey QC and Marcus Mander (instructed by Ince & Co) for the owners.