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The
Court considered the circumstances in which execution of an arbitration
award might be stayed pending the outcome of court proceedings. The
case concerned a property dispute in the Chancery Division, but it is
a not uncommon issue in the insurance market and the guidance it gives
is useful.
Hillcourt were Teliasonera's ("Telia") landlord. In February
2004, they obtained an arbitration award against Telia under the agreement
for a lease for Telia's failure to carry out refurbishment works. Hillcourt
began proceedings to enforce their award, under s66 of the Arbitration
Act, in August 2004.
In the summer of 2005, information came to light that suggested that
the estate agents Telia had employed to locate premises in London had,
during their retainer and unknown to the Swedish company, separately
arranged for Hillcourt to purchase the freehold of the property the
agents were marketing to Telia, leading to a subsequent increase in
the rent and the receipt by the agents of a substantial fee from Hillcourt,
supposedly by way of commission. There was a patent possibility that
the agents had a conflict of interest during their retainer.
As a result, Telia sought to rescind the lease, commenced proceedings
to set aside the award under s68 of the Arbitration Act and sought an
interim injuction to restrain execution of the award pending the outcome
of the court proceedings.
Evans-Lombe J took the view that if Telia were successful they would
have substantial cross-claims against Hillcourt. However, as he had
doubts whether in fact there was jurisdiction to injunct a party holding
a judgment from enforcing it, he ordered that the execution of the arbitration
award should be stayed. On the basis that Hillcourt might suffer damages
in the interim, he required the Swedish company to give a cross-undertaking
in damages, similar to that which would be required were he to be imposing
an interlocutory injunction.
The principles he used to decide whether a stay should be applied were
in fact similar to those that would have governed the making of an interim
injunction. They are set out in the well known case of American Cyanamid
v Ethicon Limited [1975] Appeal Court 396, and dictate that the
balance of convenience must fall in favour of the applicant and if the
Claimant were to be successful, he would be adequately compensated in
damages.
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