An express power of summary disposal – a panacea for arbitration’s ills?
Jennifer Haywood
Barrister, Serle Court, London
The Arbitration Bill prepared by the Law Commission will, if enacted, add to the Arbitration Act 1996 (‘the Act’) an express power to dispose of a claim, issue or defence summarily. The Law Commission’s view is that arbitrators already have an implicit power of summary disposal, but an express power might reassure arbitrators and foreign courts as to the propriety of a summary disposal procedure, and therefore encourage its use. Most consultees have agreed with the proposal, emphasising the importance of improving the efficiency of arbitration and, in particular, dealing with unmeritorious defences.
The Law Commission’s proposed threshold is ‘no real prospect of success’, partly on the basis that this test has been developed in English law in the context of litigation (Civil Procedure Rules Part 24 (‘CPR Part 24’)). How do the courts apply that test, and is it likely to encourage arbitrators to deal with matters summarily more often?
The most often cited summary of the core principles is found in a decision from 2009, Easyair v Opal telecom Ltd [2009] EWHC 339 (Ch). Paraphrasing the key passage at [15]:
- The court must consider whether the respondent to the application has a realistic’ rather than ‘fanciful’ prospect of success on the claim, defence or issue, that is, it must be more than merely arguable.
- The court does not have to take everything at face value, but it must not conduct a ‘mini-trial’.
- The court must take into account not only the evidence before it but also the evidence that can reasonably be expected to be available at trial.
In practice, this means that the procedure is commonly used for points of law or contractual interpretation, but where there is a dispute of fact, judges are cautious about deciding claims or issues on a summary basis rather than allowing the matter to proceed to trial. Further, as the Court of Appeal stated in Easyair, ‘The court should hesitate about making a final decision without a trial, even where is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation in the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case’. The claimants in the long-running and ultimately hopeless claim against the Bank of England arising out of the collapse of the Bank of Credit and Commerce International avoided summary judgment on the basis that something might come out of disclosure (Three Rivers DC v Bank of England [2001] UKHL 16).
However, the court can evaluate the evidence and there have been more robust decisions recently. For example, in Foglia v Family Officer Ltd [2021] EWHC 650 (Comm), Cockerill J granted summary judgment on claims for knowing receipt, dishonest assistance and unjust enrichment. The defendant had no credible explanation for some pieces of evidence, and such explanation as he did provide was inconsistent with the contemporaneous documents, so the judge felt able to determine the matter on a summary basis. As Cockerill J said, in another case, King v Stiefel [2021] EWHC 1045 (Comm), ‘when faced with a summary judgment application it is not enough to say, with Mr Micawber, that something may turn up’.
Similarly, in Verdi Law Group PC v BNP Paribas SA and others [2023] EWHC 1860 (KB), the judge was satisfied that he could determine, without a full trial, that the documents upon which the claimant relied were forgeries. As in the Foglia case, the respondent to the application had been unable to provide any explanation for certain evidential points. The claim against BNP Paribas was summarily dismissed.
Both judges in these cases (and others) were prepared to grasp the nettle, but will arbitrators suffering due process paranoia be as confident to do so in the face of Easyair? Will parties be confident enough that an application for summary disposal will expedite rather than prolong the proceedings, and that their award will not face a challenge to enforcement, particularly in courts which do not themselves have a summary disposal procedure? As the Law Commission has noted, arbitrators already have an implicit power of summary dismissal. They have a wide range of powers in section 34 of the Act, and they are obliged by section 33 of the Act to adopt procedures suitable to the circumstances of the particular case, avoiding unnecessary delay or expense. Could introducing an express power of summary disposal and tying it to the CPR Part 24 test make tribunals even more nervous about how they balance their duty to avoid unnecessary delay or expense with their duty to give each party a reasonable opportunity of putting their case?
Tribunals’ concerns may be better assuaged by parties expressly opting into a summary disposal or streamlined procedure. Parties may select arbitral rules which emphasise the extent of the tribunal’s discretion as to the adoption of fair, efficient and expeditious procedures and/or expressly provide for summary disposal; alternatively, they might stipulate in their arbitration agreement that the tribunal shall have a wide discretion as to the adoption of suitable procedures including but not limited to summary disposal.
Another option for dealing with unmeritorious defences is to expressly empower a tribunal to order a respondent to provide security, as in, for example Article 25.1(i) of the LCIA Arbitration Rules 2020 and Article 27(k) of the SIAC Rules 2016. Such an order is often made on an application under CPR Part 24, as an alternative to summary judgment: CPR Part 24.6 states that when a court determines a summary judgment application, it may make the order subject to conditions in accordance with CPR Part 3. CPR Part 3 expressly provides that a court may make an order subject to conditions including a condition to pay a sum of money into court. Having to provide security can be a very significant disincentive to continuing with an unmeritorious defence.
It is clear from the support for an express power of summary disposal that there is an appetite for tribunals tackling unmeritorious claims and defences and stopping proceedings dragging on pointlessly. The introduction of an express power may make some tribunals more confident, but ultimately, tribunals need to keep in mind their obligation to manage arbitrations expeditiously and efficiently and be courageous in adopting suitable procedures to make arbitrations truly fair.