Nomihold Securities Inc v Mobile Telesystems Finance SA

The court may make payment into court a condition of permission to appeal where the judgment debt remains unpaid and the circumstances justify protecting the successful party’s position. The court must consider whether the condition would stifle the appeal. That concern is not established merely because a parent company chooses not to fund a subsidiary, where the group has the means to pay. The court may also give substantial weight to the need for court orders to be obeyed and to evidence that enforcement or satisfaction of the judgment is being deliberately frustrated.

The appellant sought to pursue an appeal from a judgment of Mr Justice Burton confirming an arbitration award and entering judgment under section 66. The remaining issue was whether permission to appeal should be granted subject to a condition that the judgment debt, or the relevant amount, be brought into court.

The respondent relied on Hammond Suddards v Agrichem International Holdings Limited. It argued that the appellant had not paid the judgment debt, that steps had been taken to reduce the value of the appellant’s principal asset, and that the appellant’s parent was able but unwilling to fund payment. The appellant argued that the condition would stifle the appeal and engaged article 6.

1. Disposition. Permission to appeal was made conditional on the appellant bringing the amount of the judgment debt into court. Lord Justice Stanley Burnton gave the judgment; Lord Justice Ward agreed.
2. The court had an accepted jurisdiction and discretion to impose such a condition. The relevant considerations were those identified in Hammond Suddards v Agrichem International Holdings Limited, including the circumstances affecting satisfaction of the judgment debt and the risk that the successful party’s position would otherwise be prejudiced.
3. The evidence showed that the appellant was effectively a one-asset company. Its principal asset was indebtedness owed by its parent, while the parent had directly paid loan-note holders, thereby reducing the indebtedness owed to the appellant, assuming a set-off. The appellant also had no intention of meeting the award or judgment debt.
4. The condition would not stifle the appeal in the relevant sense. The difficulty did not arise from impecuniosity or an unavailability of funds within the group. The parent was fully able to finance the subsidiary but chose not to do so. That was not the kind of stifling contemplated by the authorities.
5. The court also considered the fact that the judgment debt had not been paid and reaffirmed the importance of obeying court orders. Lord Justice Ward regarded the observations in Hammond Suddards concerning wealthy owners and compliance with court orders as applicable despite factual differences in that case.

• Court of Appeal (Civil Division): On 19 January 2012, the court dealt with the condition attached to permission to appeal from the judgment of Mr Justice Burton. It required the appellant to pay the arbitration award, as confirmed by the judgment, into court as a condition of proceeding with the appeal.