GATER ASSETS LTD V NAK NAFTOGAZ UKRAINIY

[2007] EWCA Civ 988, Court of Appeal, Lord Justice Buxton, Lord Justice Rix and Lord Justice Moses, 17 October 2007

Arbitration –Enforcement of award – Award made in Russia – Application to enforce award in England – Enforcement challenged on public policy grounds by award debtor – Whether award creditor could be required to give security for costs – Arbitration Act 1996, sections 66 and 99 to 104 – CPR Parts 25 and 68

Monde Re, exercising subrogation rights as a reinsurer, obtained an arbitration award in Russia against Naftogaz with respect to breach of a gas supply agreement between Naftogaz and the assured, Gazprom. The award was then assigned to Gater, which sought to enforce the award in England under the New York Convention as implemented in the Arbitration Act 1996. A without notice enforcement order was granted. Naftogaz applied to have the order overturned on various public policy grounds, and also applied for an order for security for its costs against Gater. The Court of Appeal, reversing Field J, held that an order for security for costs should not be made. (1) Moses LJ, Buxton LJ dissenting, held that there was no jurisdiction to make an order for security for costs against a person who applied to the English court for the enforcement of a New York Convention award. This was because the true claimant was not Gater but Gazprom, as Gazprom was in effect seeking to challenge the award. Rix LJ did not decide the jurisdictional issue but was clearly sympathetic to the view of Moses LJ. (2) Rix LJ held, on the assumption that jurisdiction existed, that it was inappropriate to exercise discretion to make an order for security for costs against Gater, as it could not have been contemplated by those responsible for the New York Convention that an applicant seeking to enforce an award would be required to provide security for costs. Buxton LJ dissented and Moses LJ did not need to deal with the point given his ruling on jurisdiction.