MDIL (UK) Ltd v Mittal Steel Skopje (CRM) AD

Security for costs may be ordered where an award creditor seeks security for costs incurred in resisting an appeal against an arbitral award, particularly after the award has been made enforceable as a judgment. Relevant considerations include the advanced procedural stage, the very low prospects of the proposed appeal and the respondent’s ability to obtain financial support. Where an award creditor undertakes to defer enforcement if the award is secured, requiring security under section 70 of the Arbitration Act may be a just and proportionate condition of allowing the appeal to proceed.

The claimant had obtained an arbitral award in its favour and leave to enforce the award as a judgment. The defendant sought to pursue applications under sections 68 and 69 of the Arbitration Act, and also sought to set aside the order permitting enforcement on the basis that the earlier court had not known of the proposed appeal.

The claimant applied for security for costs incurred in resisting the proposed appeal. It also sought security for the amount of the award, offering to defer enforcement if adequate security was provided. The court considered whether the enforcement order should be set aside and whether security should be required before the defendant could proceed further.

1. The claimant’s application for security for costs was granted. The application arose after the claimant had obtained an award and leave to enforce it as a judgment, rather than at the commencement of proceedings. That procedural stage was a powerful factor.

2. The proposed appeals had very low prospects of success. The section 68 application appeared to challenge legitimate factual and case-management decisions by the arbitrators. The alleged point of law under section 69 was difficult to identify and its effect on the outcome was unclear. The court therefore proceeded on the basis that the applications would probably be refused.

3. The defendant’s poor financial position was relevant, but the evidence did not establish that it was wholly unable to obtain finance. Potential third-party support might reasonably be available.

4. The order permitting enforcement was not set aside. Even if the judge who made it had known of the proposed appeal, the order would have remained appropriate given the court’s provisional view that the appeal had little substance.

5. Under section 70 of the Arbitration Act, security for the award was required as a pre-condition to proceeding further with the appeal. That conclusion was proportionate because the claimant held an enforceable judgment and offered to defer enforcement if the award was secured.

The judgment concerns applications arising from an arbitral award and an order granting leave to enforce that award as a judgment. It is not itself an appellate decision. The prior arbitral decision and enforcement order are not otherwise identified by citation in the judgment.