“Article V as Shield, Not Sword” – The Court of Appeal Bars Pre-emptive New-York-Convention Challenges
Star Hydro Power Ltd v National Transmission & Despatch Company Ltd
([2025] EWCA Civ 928)

1. Introduction

The Court of Appeal’s decision in Star Hydro Power Ltd v National Transmission and Despatch Company Ltd marks a significant development in international arbitration law. At its core, the dispute revolves around:

• The Parties: Star Hydro Power Ltd (“SHPL”), a South-Korean-owned special-purpose vehicle that built and operates a 147 MW hydro-electric plant in Azad Jammu & Kashmir; and National Transmission & Despatch Company Ltd (“NTDCL”), a Pakistani state-owned grid and bulk-power purchaser.
• The Contract: A 2012 Power Purchase Agreement (“PPA”) governed by Pakistani law but providing for LCIA arbitration seated in London where the claim exceeds US $5 million.
• The Dispute: Whether SHPL was contractually entitled to a higher tariff than that set by Pakistan’s regulator (NEPRA), culminating in a 7 May 2024 LCIA award ordering NTDCL to pay the “delta” between the contractual tariff and the regulator’s tariff.
• Procedural Twist: NTDCL, instead of challenging the award in the courts of the seat (England & Wales), commenced Lahore proceedings seeking (i) selective “recognition” of a single paragraph of the award, and (ii) declarations that the remainder was a nullity – all before SHPL sought enforcement.
• Issue on Appeal: Could NTDCL rely on the New York Convention to launch a pre-emptive attack on the award in Pakistan, and if not, was SHPL entitled to an anti-suit injunction?

2. Summary of the Judgment

The Court of Appeal (Lord Justice Butcher delivering the leading judgment, with Lady Justice Andrews and Lord Justice Peter Jackson concurring) allowed SHPL’s appeal and:

• Granted a final anti-suit injunction restraining NTDCL from pursuing the Lahore proceedings.
• Held that:
  • Article V of the New York Convention is exclusively defensive; it cannot be deployed proactively to invalidate an award before recognition/enforcement is sought.
  • By selecting London as the seat, the parties agreed that the courts of England & Wales enjoy exclusive supervisory jurisdiction over challenges to the award (re-affirming C v D).
  • The Lahore proceedings, although packaged as “partial recognition”, were in substance a forbidden collateral attack on the award and thus in breach of the arbitration agreement.
  • Comity does not prevent the English court from restraining a party subject to its jurisdiction from such a breach.

3. Detailed Analysis

3.1 Precedents Cited and Their Role

• C v D [2007] EWCA Civ 1282 – Cornerstone authority that the choice of seat is analogous to an exclusive jurisdiction clause for any attack on the award. The Court of Appeal treated Star Hydro as a straightforward application of this principle.
• Atlas Power v NTDCL [2018] EWHC 1052 – Earlier attempt by the same respondent to sidestep London supervisory jurisdiction; used by the court to show a pattern and to reinforce that Pakistani courts cannot be a concurrent forum.
• The Angelic Grace [1995] 1 Lloyd’s Rep 87 and UniCredit v RusChemAlliance [2024] UKSC 30 – Confirm the ready availability of anti-suit relief to enforce arbitration clauses.
• Dallah v Pakistan [2011] 1 AC 763 – Cited for the dual options open to a party objecting to jurisdiction (challenge at seat or resist enforcement) and to illustrate that Article V defences are a defensive remedy.
• IPCO v NNPC [2008] EWCA Civ 1157 – Relied on to show that “partial enforcement” is permissible, thereby undercutting NTDCL’s claim that selective recognition of paragraph 377 was somehow orthodox.

3.2 The Court’s Legal Reasoning

1. Supervisory Jurisdiction is Exclusive (C v D Principle)
   By agreeing to a London seat the parties not only chose English procedural law but also allocated exclusive competence for any challenge to the award to the English courts, via ss 67-69 of the Arbitration Act 1996.
2. Nature and Purpose of the New York Convention
   Applying Articles 31-32 of the Vienna Convention, the court held that the Convention merely obliges secondary states to recognise/enforce or, exceptionally, refuse enforcement on limited grounds. It does not create an affirmative cause of action to declare an award unenforceable in advance.
3. Article V is a Shield
   Because Article V grounds only arise “at the request of the party against whom [the award] is invoked”, they are purely defensive. Permitting pre-emptive suits would weaponise Article V as a “sword,” undermining the seat’s supervisory function.
4. Characterisation of the Lahore Proceedings
   Analysing the pleadings, the court concluded that NTDCL sought:
   “a full-throated challenge to the Award… transparently false”
   The Lahore suit therefore breached both the arbitration clause and the agreed supervisory exclusivity.
5. Comity and Discretionary Relief
   Granting an injunction operates in personam; it does not command the Pakistani court. Given the breach was blatant and damages inadequate, no “strong reasons” existed to refuse relief.

3.3 Likely Impact of the Decision

• International Arbitration Practice – Parties can no longer safely initiate “defensive” declaratory actions abroad on Article V grounds before enforcement is sought. Practitioners must now advise that any attack on a London-seated award must be launched in England & Wales or not at all.
• Anti-Suit Jurisprudence – The judgment reinforces the English courts’ willingness to protect the integrity of their supervisory role and extends the aggressive stance taken in UniCredit.
• States & State-Entities – For entities like NTDCL, the decision draws a clear line: policy arguments or domestic-regulatory considerations cannot justify collateral challenges in home courts once a foreign seat is chosen.
• Drafting Consequences – Expect more explicit seat clauses and possibly express waivers of “pre-emptive Article V proceedings” in future contracts.
• Comparative Influence – Other common-law jurisdictions may cite Star Hydro as persuasive authority to curtail similar tactics (e.g., Singapore, Hong Kong, Australia).

4. Complex Concepts Simplified

• Seat vs. Venue: The “seat” is the legal home of the arbitration; it determines which courts supervise the process. The “venue” is merely the physical location of hearings.
• Anti-Suit Injunction: A court order preventing a party from starting or continuing litigation in another jurisdiction when doing so breaches an agreement (e.g., to arbitrate).
• New York Convention (1958): A treaty compelling courts in 172+ states to enforce foreign arbitration awards, subject to narrow exceptions in Article V.
• Article V – Shield Only: The treaty allows a defending party to resist enforcement; it does not allow that party to sue first to have the award declared unenforceable.
• Supervisory Court: The court of the seat; it alone can set aside or vary the award under that seat’s arbitration law (here, ss 67-69 Arbitration Act 1996).
• Partial Enforcement: Courts may enforce the parts of an award that are uncontroversial or severable, leaving contentious segments aside (IPCO principle).

5. Conclusion

The Court of Appeal has delivered a robust message: parties cannot weaponise the New York Convention to mount pre-emptive collateral attacks on an arbitral award. Article V defences remain a shield to be raised only when enforcement is sought; they are not a licence for forum-shopping or strategic litigation. By reaffirming the exclusivity of the supervisory court and granting an anti-suit injunction, the court has fortified the certainty and finality that underpin international arbitration. Practitioners must now regard Star Hydro Power as authoritative confirmation that, at least for London-seated arbitrations, “there is one—and only one—proper forum for challenging the award.”