Collateral Attacks under the Arbitration Act: lessons learnt from Deinon v. Reen

By Jonathan Clarke, Associate

Deinon Insurance Brokers LLC v Reen [2025] EWHC 1263 (Comm)

With the Arbitration Act 2025 coming fully into force on 1 August 2025 (the “2025 Act”), this is an opportune moment to take a closer look at a recent arbitral decision under its predecessor, the Arbitration Act 1996 (the “1996 Act”), and consider what lessons can be learnt from this case as we move into a new legislative landscape.

Introduction

Since the summer of 2023, Mr Colin Reen ("Mr Reen") and KM Dastur Holdings Limited ("KMDH") had brought a number of unsuccessful challenges to four arbitral awards under sections 68 and 69 of the 1996 Act. Each such challenge was dismissed.

Following the exhaustion of this route, Mr Reen and KMDH tried to seek a stay of enforcement pending conclusion of ongoing proceedings in Dubai. The Court rejected this stay application and rejected the attempts to resist enforcement of six orders in favour of Deinon Insurance Brokers LLC ("Deinon") pursuant to section 66(2) of the 1996 Act made in the Commercial Court in respect of the four underlying arbitral awards.

Justice Saini noted that a stay would not be granted if the outcome would be to allow a debtor to seek a stay by engineering events that would amount in substance to a collateral attack on the arbitral awards.

Facts

There were two English-seated arbitration proceedings between Deinon and Mr Reen, and between Deinon and KMDH as a result of a dispute about the repayment of certain underlying loan agreements. Mr Reen and KMDH contested the enforceability of these loan agreements but were ultimately found liable to Deinon. In total, there were four arbitration awards in Deinon’s favour.

Following unsuccessful attempts to challenge these awards, Deinon applied to the English Court, pursuant to s.66 Arbitration Act 1996 (AA 1996), to register and enforce the arbitration awards as though they were judgments of the English Court. The Court issued six enforcement orders and money judgments were entered in Deinon’s favour in the terms of the awards.

Mr Reen and KMDH then sought a stay of enforcement. Their basis for the stay application was that unless a stay was granted there was a real risk of prejudice. The applicants claimed that Deinon was currently under the control of Mr Mahmood Khairaz ("Mr Khairaz") who wrongly claimed to be Deinon's beneficial owner, and procured it to bring the proceedings which led to the Awards and Orders. The Applicants said that Mr Khairaz's status as Deinon's beneficial owner (and therefore his ability to exert control over Deinon's conduct and affairs) was being challenged by Mr Eric Dastur ("Mr Dastur") in ongoing proceedings in Dubai.

It was said that if Mr Dastur is found by the Dubai court to be the true beneficial owner of Deinon, then the Orders would not be enforced against the applicants. However, it was claimed that if monies are paid to Deinon before the Dubai proceedings were resolved, there was a risk that those monies: (a) may be appropriated and dissipated by Mr Khairaz; and (b) would not therefore be available to be returned to the Applicants.

Decision:

The Court determined that the discretionary power to stay execution stems from CPR 83.7 and can only play in special and limited circumstances. Justice Saini ultimately refused to exercise this power and reasoned that:

• The court should be astute to prevent both direct and indirect attacks on arbitration awards. In particular, it would be contrary to principle to allow the power to grant a stay to mount an indirect attack on a final and binding arbitral award, or to seek to frustrate or delay its enforcement.
• The relief sought in the Dubai Proceedings was an attempt to revive the so called "trust argument" which was raised and dismissed and/or abandoned in the underlying KMDH arbitration and expressly rejected by Sir Nigel Teare in his Partial Award.
• Further, the same arguments concerning the ownership of Deinon were also expressly raised and abandoned in the London Circuit Commercial Court action. It is therefore arguably vexatious to repeat in the Dubai Proceedings that which has been fought and lost or fought and/or abandoned and/or expressly disavowed in the underlying arbitration and/or in other English court proceedings.

For these reasons, Justice Saini stated that the “above is sufficient to satisfy me that there is no legitimate basis for granting a stay. In short, there are no special circumstances which would even begin to persuade me that a stay should be ordered as a matter of discretion”.

Lesson Learnt

Although the legal principle of a collateral attack is not mentioned in the 1996 Act, nor in the updated 2025 Act, this case reiterates the established line of case law that flows from the decision in C v D [2007] EWHC 1541, which confirms that attempts to nullify the result of an arbitration via foreign proceedings should be rejected as oppressive conduct amounting to a collateral attack.

The English Courts have consistently taken a narrow remit on challenges to arbitral awards. For example, the 2023-2024 Commercial Court Report, shows that the number of Section 68 challenges under the 1996 Act rose 34%, but out of 37 applications, none succeeded. The position was similar for jurisdiction challenges under Section 67 of the 1996 Act and appeals on a point of law under Section 69. While the number of applications rose 242% for Section 67 challenges and 40% for Section 69 appeals, there was only one successful challenge under Section 67 and one successful appeal pursuant to Section 69.

Looking forwards, this trend is only like to continue (and perhaps become even more pronounced) under the 2025 Act. This is because the 2025 Act is introducing a new procedure for Section 67 challenges whereby the Court will adopt a narrower scope for this type of challenge and not consider any new grounds of objection or any new evidence (subject to a reasonable diligence test), nor will the Court allow evidence already heard by the original arbitral tribunal to be relitigated as part of a challenge.

Thus, the 2025 Act is re-emphasising the importance of finality of arbitral awards. Cases such as Deinon v. Reen are likely to be entertained even less by the English Courts in the future.

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