ARBITRATION — Award — Enforcement — Claim to enforce New York Convention award — Order for enforcement made summarily without notice to defendant — Defendant applying to set order aside — Defendant seeking security for costs of application against claimant — Whether jurisdiction to order security — Whether discretion to be exercised — Arbitration Act 1996, s 101

Gater Assets Ltd v Nak Naftogaz Ukrainiy [2007] EWCA Civ 988

CA: Buxton, Rix and Moses LJJ: 17 October 2007

An award debtor, who sought to set aside a summary High Court order for the enforcement in England of an arbitration award made under the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958), was wrongly granted an order for security for costs against the award creditor.

The Court of Appeal (Buxton LJ dissenting) so held when allowing an appeal by the claimant, Gater Assets Ltd, from the order of Field J [2007] 2 All ER (Comm) 208, dated 22 March 2007, that it should provide security for costs in respect of an application by the defendant, Nak Naftogaz Ukrainiy (the National Joint Stock Company Naftogaz of Ukraine), to set aside an order, made pursuant to s 101 of the Arbitration Act 1996, for the enforcement of the claimant’s foreign arbitration award.

RIX LJ said that assuming, without deciding, that there was jurisdiction to order security for costs against the claimant, there were reasons of principle which meant that such jurisdiction ought not to have been exercised against the claimant in support of the defendant’s application to set aside the enforcement order of a New York Convention award against it. Among other reasons, to impose a security for costs regime upon an award creditor who sought enforcement under s 101 would be to impose substantially more onerous conditions than were imposed in the case of the enforcement of domestic awards in breach of art III of the Convention. It would not be just in all the circumstances for such an order for security for costs to be made.

MOSES LJ, agreeing in the result, said that the court had no jurisdiction to make an order for security for costs in the circumstances of the case, that is where a judge had made a without notice order for enforcement which did not require the arbitration form to be served on the defendant pursuant to CPR r 62.18(3).

BUXTON LJ delivered a dissenting judgment.

Appearances: Colin Edelman QC and Charles Dougherty (Clyde & Co) for the claimant; John Higham QC (White & Case) for the defendant.

Reported by: Isobel Collins, barrister