Enercon GmbH & Anor v Wind World (India) Ltd

Reserved costs in English court proceedings supporting an arbitration remain matters for the court that reserved them. A mandatory stay under section 9 of the Arbitration Act 1996 is unavailable where the relevant proceedings were brought by the applicant itself, rather than against it. The court may have an inherent jurisdiction to stay or adjourn costs issues, but should determine them where that is just and appropriate. A party’s success on one issue does not prevent the court identifying the overall successful party. Costs may be recovered separately as damages in an arbitration, without depriving the court of jurisdiction to make its costs order. Where costs are subject to detailed assessment, an interim payment should ordinarily be ordered unless there is good reason otherwise.

The claimants commenced arbitration-related proceedings seeking the appointment of an arbitrator and anti-suit relief. The court granted and later discharged interim orders, stayed the proceedings pending litigation in India, and reserved costs on several occasions. Subsequent applications concerning the stay, undertakings and the filing of a special-leave petition in India also generated reserved costs.

The Indian Supreme Court ultimately upheld the existence of an arbitration agreement but held that India was the seat and had supervisory jurisdiction. The defendant then applied for determination of the reserved costs. The claimants sought a statutory or inherent stay, or an adjournment until the arbitral tribunal determined related damages claims.

1. Application granted. The defendant was entitled to 90% of the reserved costs, subject to assessment, and to a payment on account of £300,000.
2. Section 9 of the Arbitration Act 1996 did not apply. The relevant legal proceedings were the arbitration claim form proceedings, which had been brought by the claimants, not against them. The reserved costs were also matters reserved for determination by this court and were not matters agreed to be referred to arbitration.
3. The court assumed that it possessed an inherent jurisdiction to stay proceedings, but declined to exercise it. The same considerations applied as under section 9, and it was just and appropriate for this court to determine the costs of proceedings before it.
4. The court accepted that a single tribunal determining the wider costs consequences might be desirable, as recognised in T & N v Royal & Sun Alliance [2002] CLC 1342. That did not require adjournment here. Once determined, the costs could still be claimed as damages in the arbitration. The merits of the underlying disputes, including any set-off, were matters for the arbitral tribunal.
5. Although the claimants had succeeded on the existence of a binding arbitration agreement, the Indian Supreme Court’s conclusion that India had supervisory jurisdiction meant that the English proceedings had lacked proper foundation. The defendant was therefore the successful party under CPR 44.2. A 10% reduction was appropriate to reflect the issue on which the claimants had succeeded.
6. Under CPR 44.2(8), an interim payment should ordinarily be made where costs were subject to detailed assessment. Despite initially limited evidence, the defendant supplied invoices promptly, justifying an interim payment of £300,000.