The suspension of arbitral awards on enforcement and the continuing influence of the territoriality theory

This note considers the recent English High Court decision in Leidos Inc v The Hellenic Republic. Although the principal issue in the case concerned the allocation of the costs of the proceedings relating to the enforcement of an arbitral award, the arguments of the parties encompassed the novel issue as to the interpretation under s103(2)(f) of the Arbitration Act 1996 (“the 1996 Act”) of the word “suspended” or “suspension” of an arbitral award by the court at the seat of arbitration. s103(2) sets out the grounds upon which recognition and enforcement of an arbitral award may be refused and one of those grounds under s103(2)(f) is where the award has been “suspended by a competent authority of the country in which…it was made.” That provision incorporates and reflects the wording of Article V(1)(e) of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (commonly known as the New York Convention) which prescribes mandatory, uniform international rules for the recognition and enforcement of foreign arbitration agreements and awards in contracting states. It will be argued that the approach taken by Mr Justice Jacobs in Leidos in construing the term “suspended” as denoting a temporary phenomenon and having the effect of preventing enforcement of the award is a manifestly correct one that can be justified on sensible practical and policy grounds that ultimately reinforce and promote certainty and consistency in arbitration law and procedure. The decision also provides an exemplary illustration of the continuing influence of the territoriality theory on English judicial approaches to international commercial arbitration and the consequential impact this has on the development of arbitration jurisprudence which underpins the 1996 Act.