No pre-emptive strikes: English Court of Appeal confirms that the New York Convention is a shield not a sword

Factual background

National Transmission and Despatch Company (NTDC) is a Pakistani state-owned entity responsible for operating the national electricity grid. In 2012, NTDC entered into a power purchase agreement (Agreement) with Star Hydro Power (SHP), a special purpose vehicle incorporated in Pakistan and ultimately owned by South Korean companies.

Under the Agreement, SHP undertook to construct, operate, and maintain a power plant in Pakistan. In exchange, NTDC agreed to purchase the electricity generated by the plant at tariff rates specified in the Agreement. The Agreement provided for arbitration under the LCIA Rules, seated either in Lahore or London depending on the amount in dispute.

A dispute arose when NTDC contended that, notwithstanding the contractual terms, Pakistani law required tariffs to be determined by the national energy regulator, NEPRA, which would result in lower payments than those arising under the Agreement.

In May 2024, the sole arbitrator issued an award in favour of SHP (Award). While acknowledging NEPRA's exclusive jurisdiction under Pakistani law, the arbitrator held that NTDC had contractually agreed to pay the higher tariff rates payable under the Agreement and was therefore liable to pay SHP the difference between the tariff rates set by NEPRA (which had been paid) and the contractual rate.

In August 2024, NTDC commenced proceedings before the Lahore High Court, seeking:

1. Partial recognition and enforcement of select paragraphs in the Award (including a paragraph recognising NEPRA's jurisdiction to set tariff rates and a catch-all paragraph in the dispositive section dismissing "all other claims and requests for relief"); and
2. A declaration that the remainder of the Award, including the order to pay damages, was unenforceable.

NTDC argued that the arbitrator had accepted NEPRA's exclusive jurisdiction over tariff-setting and therefore did not have jurisdiction to determine the dispute. It contended that the award was unenforceable under the Convention on the grounds of public policy and non-arbitrability under Pakistani law.

In response, SHP applied to the English courts for an anti-suit injunction to restrain NTDC from pursuing the Pakistani proceedings. At first instance, the application was dismissed. Dias J held that the English courts had no "policing role" in relation to NTDC's application in Pakistan and that the Convention did not prohibit a party from initiating pre-emptive recognition or enforcement proceedings. In her view, NTDC's application was a legitimate invocation of the Convention, not a "root and branch" attack on the award. Dias J concluded that NTDC was entitled to seek a pre-emptive declaration of non-enforceability of the Award in Pakistan. SHP appealed to the English Court of Appeal.

The English Court of Appeal decision

In a judgment dated 24 July 2025, the Court of Appeal overturned the first instance decision of Dias J and granted the anti-suit injunction sought by SHP.

Lord Justice Phillips began by reaffirming the principle established in C v D [2007] EWCA Civ 1282 that the parties' choice of the seat of arbitration constitutes an agreement to submit to the curial law of that jurisdiction. This choice is analogous to an exclusive jurisdiction clause, conferring supervisory authority on the courts of the seat - in this case, England and Wales – in relation to proceedings to challenge an award.

Where English law is the curial law, the parties are taken to have incorporated the framework of the English Arbitration Act 1996: this means that any challenge to an award must be brought under the limited grounds permitted by that Act. The Court rejected the notion that English courts have no "policing" role when a party seeks to challenge an award abroad under the guise of "enforcement" under the Convention. Such a "policing" role is compatible with the principle of comity, as anti-suit injunctions are aimed at restraining the party in breach of the arbitration agreement, rather than interfering with the foreign court. The Court held that the existence of a right to challenge an award under the governing law of the arbitration (here, Pakistani law) was irrelevant in the face of the parties' agreement to London as the seat.

The Court of Appeal also reiterated the principle that where court proceedings are brought in breach of an agreement to arbitrate, an anti-suit injunction will generally be granted, unless there are strong reasons not to do so. This principle applies with particular force where an award has already been issued and the foreign proceedings amount to an attempt to invalidate the award in breach of the arbitration agreement.

Phillips LJ clarified the correct interpretation of the Convention: challenges under Article V operate as a shield - a defence to recognition and enforcement - not as a sword to attack an award pre-emptively. This interpretation is reflected in how the Convention is implemented in England and Wales through the Arbitration Act 1996. If the Convention allowed for pre-emptive challenges, it would undermine the role of the supervisory court as the exclusive jurisdiction for such challenges. Conversely, English courts would not entertain a challenge to a foreign Convention award unless it arises in objection to an application for recognition or enforcement.

The Court concluded that although NTDC's claim in the Pakistan proceedings was "partially framed as an application for recognition and enforcement", it was in reality "undoubtedly a full-throated challenge to the Award and its effect."

NTDC's proceedings in Pakistan were, therefore, incompatible with the Convention's structure and the parties' agreement to a London-seated arbitration. The Court of Appeal accordingly granted the anti-suit injunction, restraining NTDC from continuing the Pakistani court proceedings.

Effects for parties arbitrating disputes

The decision in Star Hydro Power reaffirms the exclusive supervisory role of the English courts over arbitrations seated in England, consistent with established case law such as C v D and Atlas Power v NTDC [2018] EWHC 1052 (Comm) (which, interestingly, concerned a similar attempt by NTDC to bring proceedings before Pakistani courts challenging an award resulting from a London-seated arbitration). Awards rendered in such arbitrations may only be challenged in the English courts. The decision also underscores the willingness of the English courts to grant anti-suit injunctions to restrain foreign court proceedings commenced in breach of an arbitration agreement, particularly where the foreign proceedings amount to an attempt to invalidate an arbitration award.

Practically speaking, this means that a losing party in an arbitration seated in London has two limited and clearly defined options to "challenge" an award. It may:

1. Proactively challenge the award before the English courts, being those of the arbitral seat, under sections 67 and 68, and section 69 if applicable, of the Arbitration Act 1996, if grounds exist to do so; and/or
2. Resist enforcement in the jurisdiction in which the winning party seeks to enforce the award by raising objections under one of the limited grounds set out in Article V of the Convention, but only in the context of those enforcement proceedings, not as a pre-emptive strike.

Despite the clarity of the Court of Appeal's ruling and its consistency with established case law and the wording of the Convention, the Court of Appeal decision may not be the last we hear of this case: NTDC's application to the Supreme Court for permission to appeal the Court of Appeal's decision is pending. 

Authored by Annabel Maltby and Auriane Negret.