Litigation Recent Decisions 3/3/98

Decisions are taken from Lawtel's Case Law database. LTL: Lawtel report; TLR: Times Law Reports; ILR: Independent Law Report.

Enforceability of arbitration award in case of illegality

Soleimany v Soleimany (1998)

Court: CA (Morritt LJ, Waller LJ, Sir Christopher Staughton) 19/2/9Summary: An arbitration award, which purported to enforce an illegal contract, was not enforceable in England and Wales.

This case arose out of a dispute where the son, Abner Soleimany, claimed that he had not received from his father, Sion Soleimany, what he claimed was due to him from the proceeds of sale of the carpets which he alleged he had arranged to export from Iran. The dispute went to arbitration before the Beth Din (Court of Chief Rabbi) where the system of law to be applied was Jewish law. There was no dispute before the Beth Din that the carpets with which the claim was concerned were smuggled out of Iran in breach of Iranian revenue controls and export controls and the award by the Beth Din expressly recognised that illegality, while still making an award in favour of the son on the basis that both parties were entitled to a share of the profits by virtue of their contribution regardless of ownership of the carpets. The Dayan assessed his share and hence quantum and awarded Abner £576,574 and costs. Abner applied ex parte under s26 of the Arbitration Act 1950 to register the award as a judgment. Leave

to enter judgment was granted, but giving Sion liberty to apply within 14 days to set the order aside which he did, on the basis that the Beth Din should have considered whether the illegality rendered the claim void or unenforcable and in any case it would be contrary to public policy for an award founded on an illegal agreement or transaction to be enforced as a judgment of the High Court pursuant to s26 of the 1950 Act. After some interlocutory proceedings, the principal issue on appeal was the relevance of illegality to the question of enforcement.