Judge decides whether defendant resisting enforcement of an ICC award should be ordered to put up security
Clyde & Co acted for the defendant in this case.
The claimant was granted leave to enforce an ICC arbitration award in England. The defendant applied to set aside that order. Flaux J ordered that that application be adjourned pending the final determination of the defendant's challenge to the award before the French courts. He also ordered the provision of security by the defendant. The defendant did not put up that security and the claimant subsequently sought the dismissal of the defendant's set aside application, because of its failure to comply with the order for security and the failure of its challenge to the award in the French courts. The defendant argued that Flaux J had been wrong to order security in the first place. It relied on the recent Supreme Court decision of IPCO v Nigerian National Petroleum Corpn.
Baker J acknowledged that the issue of whether Flaux J had been wrong to order security had to be decided by the Court of Appeal. He instead focused on what sanction, if any, should be imposed because of the defendant's non-compliance. The claimant argued that the order should be treated like any other court order and that the court should consider granting an unless order. That argument was rejected by the judge, who held that: "In the specific context of a challenge to the enforcement of a New York Convention award, an order requiring the party challenging the award to provide security for it is permissible (if at all) only where the enforcing court has judged that a challenge in the courts of the seat is to delay the enforcing court's determination of the challenge but that should in fairness be on the basis that security be provided. However, where that adjournment is not sought by the party resisting enforcement, there is no sense in which the security ordered can properly be regarded as the "price of relief sought as a matter of discretion or concession", as Lord Mance put it in IPCO v NNPC".
Accordingly, as the defendant here had resisted adjournment of the English proceedings, it would be wrong to impose "unless" terms on the order for security. Instead, the judge ordered that the adjournment should be terminated, the order for security discharged, and the set aside application should be heard as soon as possible.