Gater Assets Ltd v NAK Naftogaz Ukrainiy

When an arbitral award is entered as an English judgment under section 101(3) of the Arbitration Act 1996, the resulting judgment debt attracts interest under section 17 of the Judgments Act 1838, unless the court orders otherwise. The award’s failure to provide post-award interest does not prevent interest accruing after judgment. Section 49 of the 1996 Act, which concerns the tribunal’s powers in domestic arbitrations, does not alter the position for a judgment entered in respect of a New York Convention award. A discretion to disallow interest or substitute another rate should be exercised only on proper grounds and may be refused where the issue was raised too late. Interest ran at 8 per cent from the date judgment was entered.

The claimant had acquired the benefit of a Russian arbitration award in favour of Monégasque de Réassurances s.a.m. The award required payment of substantial sums but made no provision for post-award interest.

On 23 May 2006 Colman J granted leave under section 101 of the Arbitration Act 1996 to enforce the award and entered judgment in its terms. Following enforcement steps, the defendant disputed liability for interest under section 17 of the Judgments Act 1838. Master Miller referred to the Commercial Court the question whether interest was payable on Colman J’s judgment and, if so, from what date.

1. Interest payable on the judgment. Interest under section 17 of the Judgments Act 1838 was payable on the judgment entered under section 101(3) of the Arbitration Act 1996. Section 17 applies to every judgment debt, and CPR 40.8 provides that interest ordinarily runs from the date judgment is given.
2. Effect of entering judgment. Once judgment was entered, there was an English judgment having the same effect as other English judgments. English procedural rules, including the rules on judgment interest, therefore applied. The requirement that judgment be entered in terms of the award did not prevent interest accruing after judgment. The obligation under the award arose from the parties’ agreement, whereas the obligation under the judgment arose from the court’s power.
3. Domestic arbitration provisions distinguished. The change made by section 49 of the 1996 Act concerned domestic arbitrations. It did not indicate an intention to change the position for New York Convention awards. Walker v Rowe [2000] 1 Lloyd’s Rep. 116 concerned the period after the award but before judgment and did not govern the present case. The reasoning in Pirtek v Deanswood [2005] 2 Lloyds R. 728 supported the conclusion that earlier entry of judgment would have caused judgment interest to run.
4. Discretion and rate. The court declined to disallow interest under CPR 40.8(1)(b) or substitute a lower rate under section 44A of the Administration of Justice Act 1970. The defendant’s arguments were raised too late and did not justify departure from the general rule. The defendant should not benefit from delay or from its unsuccessful challenge to enforcement.
5. The referred question was answered by holding that interest was payable at 8 per cent from 23 May 2006.

The judgment arose from a reference by Master Miller after enforcement orders were made final subject to the interest issue. No appeal from the present decision is stated in the judgment.