The reluctant party – failure to participate in final arbitration hearing because of inability to find QC

By Vijay Bange

Adjudicators and Arbitrators are occasionally faced with a situation where one of the parties refuses to engage in the process. In such circumstances tribunals are left in a difficult position to ensure fairness and have regard to due process, whilst also giving careful consideration as to whether it is just and appropriate to continue the process. Ultimately, however, the reluctance of one party to engage should not deprive the other of their legal and contractual rights.

A peculiar position came before Mr. Justice Andrew Baker, in Shell Energy Europe Limited and Meta Energia SpA [2020] EWHC 1799. This case concerned the Defendant’s application to set aside a previous order made by Teare J, made under s. 66 of the Arbitration Act 1996, granting the Claimant leave to enforce an award of arbitration dated 4 December 2019. The award in favour of the Claimant was for EUR 19,712,077.20. The seat of the arbitration was London, and it was under the LCIA Rules. The Defendant participated with the arbitration fully until the final stages; however, on 19 September 2019, with a two-day final  hearing set for 25-26 September 2019, the Defendant dismissed its solicitors and counsel, on the basis (according to the CEO) that it was not satisfied with the way the legal team had pursued or presented the defence. The next day, the Defendant retained new solicitors, and the arbitrators granted an adjournment of the final hearing to 8-9 October 2019.

The new solicitors were instructed to attend the final hearing but only to make a brief submission that the Defendant was unable to present its case before withdrawing. The reason given was the Defendant was unable to find counsel with adequate availability to prepare for and attend the final hearing.  The Defendant had taken the position that it would not participate on the merits if it could not be represented by a QC.

The Arbitrators gave careful consideration and decided it was appropriate to continue. The Claimant’s team sought to bring to the attention of the tribunal all points of substance raised by the Defendant, based upon its previous written submissions.

No challenge was made to the award under s.68 of the Arbitration Act 1996 (this being the usual route to pursue allegations of lack of due process or other procedural unfairness). Instead, the Defendant sought to rely on Article V(1)(b) of the New York Convention, alleging that it was unable to present its case in the arbitration.

The Court was not convinced that the instruction of a suitable QC was either necessary or impossible. The Court observed that insofar as the Defendant considered that it required co-counsel, the Defendant’s solicitors had available to them “a City of London full of highly skilled and experienced international arbitration practitioners, not just the Bar, within which to seek out co-counsel”. Consequently, the Court concluded that there was no sensible basis that it could identify for the Defendant’s allegation that it was unable to present its case in the arbitration.

In the context of this case, the Court’s conclusion was perhaps inevitable. However, it reinforces the strong resolve that tribunals and courts have shown recently to carry on with proceedings notwithstanding practical inconveniences. In the recent lockdown period, arbitration tribunals and many Courts have shown willingness to continue, with trials and hearings conducted remotely. Furthermore, when met with circumstances where a party decides not to participate, this case serves as a reminder that after giving regard to due process and fairness, and after considering whether it is just and appropriate to continue, tribunals will not be deterred in pressing on to deliberate an outcome save in genuinely exceptional circumstances.

It is perhaps telling that in this case the Defendant was given adequate chance to prepare by the first adjournment, and could have requested, but chose not to request, a further adjournment if it had genuinely been struggling to prepare its case.