To maintain London's position as a leading centre for international arbitration, it is critical that the English courts maintain the balance between supporting and supplanting the arbitral process. The judgment of Justice Tomlinson in B v A [2010] is a landmark in that process and a triumph for the finality of English arbitral awards.

The dispute, which arose out of an agreement governed by Spanish law, was referred to International Chamber of Commerce (ICC) arbitration before three arbitrators in London. An award was made by a majority of the tribunal in favour of party A. One of the arbitrators issued a dissenting opinion which criticised the award, alleging that the majority had ignored Spanish law and had decided the dispute ex aequo et bono.

Party B challenged the award under sections 67 (jurisdiction) and 68 (serious irregularity) of the Arbitration Act 1996, alleging that the majority arbitrators had failed to apply Spanish law (the law chosen by the parties) contrary to section 46(1)(a) of the Act. (No appeal on a question of law could be brought under section 69 of the Act as appeals are excluded by the ICC rules and, in any event, section 69 applies only to questions of English law.)

Faced with the prospect of a full re-hearing to resolve the issues, the court agreed to hear a preliminary issue as to whether the challenges to the award had any realistic prospect of success. Justice Tomlinson decided the preliminary issue in favour of party A, thereby upholding the award and saving a great deal of time and costs being incurred on a hopeless challenge.

The section 67 challenge was rejected on the basis that "an error in the application of the chosen law does not involve a lack of substantive jurisdiction as it is defined in the Act".

As regards the section 68 challenge, Justice Tomlinson held that, even if proved, a serious error in a tribunal's application of the chosen law would not, of itself, breach section 46 of the Act and that: "… for a challenge of this sort to have any prospect of success, a conscious disregard of the provisions of the chosen law is a necessary but not a sufficient requirement". Unless there had been a "conscious disregard" of the chosen law, there could be no excess of power amounting to a serious irregularity for the purposes of section 68(2)(b).

Justice Tomlinson noted that the dissenting opinion was not formally part of the award; it was really the dissenting arbitrator's commentary on the award, and so of no evidential value. As no allegation of impropriety on the part of the majority arbitrators was advanced, the section 68 challenge was hopeless.

This judgment gives parties comfort that the English courts will be robust in dealing with challenges to awards. They will use preliminary issues to eliminate challenges where the material relied upon "does not disclose a case with a realistic prospect of success" and will not be tempted to second guess arbitrators' determinations of foreign law unless it is shown that they had consciously disregarded it (which would be very difficult to establish). If it were otherwise, the floodgates would have been open for many losing parties to frustrate enforcement by bringing challenges whenever the dispute involved a foreign governing law.

They could have alleged that their arbitrators had got the law wrong and the courts would have had to examine expert evidence as to what the foreign law really meant. This would have been in stark contrast to the position for appeals on questions of English law, which require either the consent of the winning party or leave of the court to advance, and are usually excluded altogether.

Philip Clifford is a partner and Oliver Browne a senior associate in Latham & Watkins' international dispute resolution practice.