Final Means Final: Court Of Appeal Strikes Down Perpetual Amendment Clause

The English Court of Appeal considered whether an arbitration clause permitting the tribunal to amend its award "at any time" was compatible with the Arbitration Act 1996 (the AA). The court held that arbitration clauses cannot permit indefinite amendments to awards. Any agreement allowing unlimited changes undermines the very purpose of arbitration: producing final and enforceable awards.

The background

A dispute arose from a share purchase agreement (the SPA), whereby Mr Gluck sold a 50% shareholding in a company to Evertop, with Mr Endzweig acting as guarantor. The arrangements were such that Mr Endzweig was effectively the buyer. The dispute centred around whether reductions should be made to the purchase price under a provision in the SPA which allowed for such a reduction if profits fell below a certain level (the Price Reduction Clause).