The English High Court in Michael Wilson & Partners Ltd v Sinclair and others [2012] EWHC 2560 (Comm) confirmed that factual disputes decided in concluded arbitral proceedings should not be re-litigated. The subsequent litigation proceedings can be struck out as an abuse of court process as re-litigating it acts as a collateral attack on the concluded arbitral proceedings.

In this case, essentially the claim by A against B was struck out as an abuse of process even though B was not a party to the arbitration between A and C. B had merely appeared as a witness in the arbitration between A and C.

Justice Teare held the following:

59. In the present case there is no doubt that the factual allegations being made as to the conduct of Mr. Emmott in this action mirror exactly the failed allegations in the arbitration. The difference between the arbitration and the litigation is that the claim in the arbitration was against Mr. Emmott alleging that he had acted in breach of fiduciary duty whereas the claim in the litigation is against Mr. Sinclair alleging that he dishonestly assisted in that breach of duty. However, the underlying factual allegations concerning Mr. Emmott are the same. There is therefore a collateral challenge to the findings of the arbitration tribunal. But that can be said to be justified because Mr. Sinclair was not a party to the arbitration and had refused to be party to it. The Max action is therefore the only means by which MWP can bring its claim against Mr. Sinclair. It cannot, it is said, be an abuse of the process for MWP to seek to use its process in those circumstances.

60. If those had been the only material circumstances I would not have been persuaded that the proceedings in this court were being abused. However, there are, it seems to me, special circumstances in this case which must, in my judgment, be taken into account. First, Mr. Sinclair was a witness in the arbitration and was cross-examined. Second, Mr. Sinclair, no doubt because of his interest in the outcome of the arbitration, funded Mr. Emmott’s defence in the arbitration. Third, the arbitration tribunal concluded that the Max shares were held to the order of Mr. Sinclair. Fourth, the arbitration tribunal intended and expected that the effect of its award would be that EPIL would transfer the Max shares to Mr. Sinclair. To that end it authorised disclosure of the relevant section of its award to Mr. Sinclair, the EPIL Trustees and the Bahamian Court. That explains how Mr. Sinclair, a non-party to the arbitration, has a copy of the award and reasons which would ordinarily be private and confidential to the parties.

I believe this is the first occasion on which an English court has applied the abuse of process doctrine to a collateral challenge to an arbitration award.