Section 44 of the Arbitration Act 1996 Reframed: Court Orders Against Third Parties (Part II) – Strategic and Evidential Considerations

Corporate Clients Insights, Corporate Disputes

Strategic Deployment: When to Seek Third-Party Orders

The availability of third-party orders does not mean courts will grant them automatically and it remains relevant for practitioners to develop a strategic framework for when to seek these orders.

The “Appropriateness” Threshold

Section 44(5) provides that the court shall act “only if or to the extent that the arbitral tribunal, and any arbitral or other institution or person vested by the parties with power in that regard, has no power or is unable for the time being to act effectively.”

This means parties must demonstrate:

1. Tribunal inability: The arbitral tribunal lacks power to make orders against the third party. This will typically be the case, as tribunals derive authority from the arbitration agreement to which third parties are not bound.
2. Necessity: The order is necessary for the proper conduct of the arbitration—mere convenience is insufficient.
3. Connection to arbitral proceedings: The third-party order must genuinely support the pending or contemplated arbitration, not constitute a fishing expedition.

The effect of this is that with respect to orders made once the arbitral tribunal has already been constituted, the reform is mainly aimed at ensuring that courts can enforce emergency arbitrator decisions and issue orders against third parties, such as preserving evidence or securing witness testimony.”

By contrast, in urgent cases where the tribunal has not yet been constituted, court intervention is likely to be the first port of call.

Evidential Requirements: Building the Application

Successful applications for third-party orders require careful evidential preparation:

Evidence must establish:

• The existence of valid arbitration proceedings (commenced or about to be commenced)
• The relevance of the third party to the dispute
• The specific evidence, property, or relief sought from the third party
• Why the third party’s cooperation is necessary
• That the tribunal cannot effectively compel the third party itself
• The balance of convenience favors granting the order

Documentary exhibits should include:

• The arbitration agreement
• Notice of arbitration or terms of reference
• Correspondence with the third party (if any) requesting voluntary cooperation
• Evidence demonstrating the third party’s possession of relevant evidence or property
• Draft order sought with precise terms

Further specific requirements apply to particular types of orders, such as freezing injunctions.