Star Hydro powers path for enforcement of arbitral awards in cross-border energy project disputes

Energy projects are the culmination of rigorous planning and cross-disciplinary decision-making. But when delivery does not go to plan, or the asset does not work as intended, those decisions risk being thrust into the spotlight via dispute resolution procedures, including an arbitration agreement. While some view arbitration clauses as a boilerplate not requiring of bespoke consideration, such views should be reconsidered. Recent cross-border litigation demonstrates that the allocation of the arbitral seat deserves close consideration. It can be a crucial tool in resolving cross-border disputes, increasingly common on large scale energy projects.

The recent decision of the Court of Appeal of England and Wales in Star Hydro Power Limited v National Transmission and Despatch Company Limited [2025] EWCA Civ 928 makes this very clear in the context of an award-creditor seeking an anti-suit injunction.

In essence, this matter involved a UK court granting an anti-suit injunction that prevented a party from selectively applying an arbitral award in its home jurisdiction. Permission to appeal has been granted by the United Kingdom Supreme Court and the matter is currently awaiting a hearing date (UKSC/2025/0150).

For now, by demonstrating a willingness to classify foreign court proceedings by reference to substance rather than form, the decision enhances confidence in the ability for parties to limit exposure to parallel foreign court proceedings in the course of recognising and enforcing arbitral awards. It also highlights that the selection of the seat of arbitration is a consequential risk allocation tool on major cross-border energy projects and should be a chosen carefully.

The Court’s analysis also provides valuable guidance on the approach likely to be taken by Australian courts faced with similar issues, given the similarities between the Arbitration Act 1996 (UK) and the International Arbitration Act 1974 (Cth).

The background to the Star Hydro dispute

In 2012, the National Transmission and Despatch Company Limited (NTDCL) and Star Hydro Power Ltd (SHPL) entered into a Power Purchasing Agreement (PPA) in which SHPL agreed to construct and then operate and maintain a hydroelectric plant in Pakistan for 30 years. The PPA specified the tariff per kWh for the plant's electricity supply, based on a projected total cost of the project at its operation date, and included a mechanism for adjustments during the 30-year concession. However, it was common ground that the National Electric Power Regulation Authority of Pakistan (NEPRA) had statutory responsibility for setting tariffs under Pakistani law.

In 2020, NEPRA issued a determination based on the PPA mechanism, which reduced the project cost and adjusted the tariff. SHPL asserted it was entitled to a higher tariff under the PPA and commenced arbitration in accordance with the PPA, which, based on the value of the dispute, provided for arbitration seated in London under the London Court of International Arbitration (LCIA) Rules. NTDCL made jurisdictional challenges based on the role of NEPRA. The Final Award was in favour of SHPL. The Tribunal held that, as a matter of contractual interpretation, it was not "prevented by public policy from opining on whether this published tariff arose from a correct interpretation of the [PPA] or not", and went on to find that the tariff determined by NEPRA was contractually incorrect and the difference in project cost was payable by NTDCL to SHPL. The Award otherwise dismissed "all other claims and requests for relief".

NTDCL sought partial enforcement of the Award, to the extent it dismissed all other claims, in Pakistan, which SHPL treated as an attempt to challenge the Award. SHPL sought an anti-suit injunction in the English Courts, which was unsuccessful at first instance but granted on appeal.

Conclusions from the appeal

On appeal, the court granted an anti-suit injunction under the New York Convention (in force through the UK Act) to prevent the attempt by NTDCL to effectively nullify the Award by seeking to recognise and enforce, in Pakistan, a single subparagraph of the Award which dismissed and denied all other claims and requests for relief. It was held that, as a matter of substance over form, the attempted selective enforcement of the award in foreign court proceedings was tantamount to undermining the arbitral award.

The court made the following key findings:

• the seat of an arbitration confers exclusive supervisory jurisdiction of the national courts of the seat;

• the New York Convention is a shield, not a sword; it provides limited avenues for award-debtors to resist enforcement but not to make pre-emptive applications outside of the seat;

• partial enforcement of an award is permissible but not when used as a stalking horse for an award challenge;

• proceedings commenced outside the seat in breach of these principles will be treated as inherently vexatious; and

• granting anti-suit relief will, in most circumstances, be treated as a duty of national courts in upholding the arbitration bargain, not a discretionary indulgence.

What this means for energy projects in Australia with international counterparties

The decision in Star Hydro is more than a London arbitration skirmish; it is a strategic reminder for global energy market players that the seat of arbitration is king.

Australian jurisprudence is already aligned with this philosophy, having acceded to the New York Convention in 1975 with force under the Australian Act. In TCL Air Conditioner v Judges of the Federal Court (2013) 251 CLR 533, the High Court confirmed that merits review of an award is off-limits and the grounds for resisting enforcement of a foreign award in Australia are confined to the exhaustive list in Article V of the New York Convention.

More recently, in CBI Constructors v Chevron Australia [2024] HCA 28, the Court reinforced that the choice of Perth as the seat vested primary supervisory authority in the Western Australian courts and that collateral attacks elsewhere would be restrained. Star Hydro is therefore likely to be treated as persuasive comparative authority by Australian courts as it reflects these well-settled positions, while also demonstrating how effective the courts of other leading pro-arbitration jurisdictions are at protecting the integrity of an arbitration.

It follows that Australian energy market participants can confidently choose Australian seats for arbitration in the knowledge that, subsequent to the benefits of selecting a proximate seat to the project, the Australian courts are likely to uphold and afford protective relief to foreign challenges to an award. In an era of increasingly complex, capital-intensive energy projects, contractual certainty around dispute forums should be non-negotiable, and Star Hydro is the latest judicial endorsement of the need for such certainty.