Gerald Metals S.A. v Timis & Ors

2016 EWHC 2327 (Ch)

Section 44 of the 1996 Arbitration Act gives the court powers to make orders in support of arbitral proceedings including the granting of an interim injunction. However, subsection 3 provides that the court can act only if or to the extent that the arbitral tribunal has no power or is unable for the time being to act effectively.

Here Gerald Metals (“GM”) had applied to the LCIA for the appointment of an emergency arbitrator, with a view to seeking emergency relief, including an order to prevent the disposal of trust assets. The response to that application included the giving of certain undertakings. After these had been given, the LCIA rejected GM’s application. GM duly applied to the court under section 44.

Under Article 9 of the LCIA rules, in a case of exceptional urgency, any party may apply to the LCIA court for the expedited formation of an arbitral tribunal or, in the case of emergency, any party may apply to the LCIA court for the immediate appointment of a temporary sole arbitrator to conduct emergency proceedings pending that formation. GM submitted that there was a gap in the LCIA rules in respect of cases which are not of such exceptional urgency as to justify the expedited formation of the tribunal but which nevertheless are cases of urgency within the meaning of section 44(3) of the Arbitration Act.

Mr Justice Leggett considered that it would be “uncommercial and unreasonable” to interpret the LCIA rules as creating such a gap. The obvious purpose of Article 9 was to reduce the need to seek the help of the court in cases of urgency by enabling an arbitral tribunal to act quickly in an appropriate case. In other words, the test of exceptional urgency must be whether effective relief could not otherwise be granted within the relevant timescale, namely the time which it would otherwise take to form an arbitral tribunal.

The Judge also noted that when assessing the urgency of the matter the LCIA must have had in mind the undertakings given in response to GM’s application. Thus, the only inference that could be drawn from the refusal of GM’s application was that the LCIA was not persuaded that the application was so urgent that it needed to be decided before the arbitral tribunal was set up.

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