Micula & Ors v Romania

Permission to appeal should be granted where difficult points of law arise and the statutory test is satisfied. A court considering whether to make security a condition of a stay must identify a legal power to grant the order and assess whether the order, or enforcement of it, would conflict with applicable European Union law. A persuasive case for security may nevertheless be outweighed by a material risk of inconsistency with a Commission decision, the prospect of parallel enforcement proceedings, and the imminent resolution of related European proceedings. The court may leave open the possibility of revisiting security if circumstances change.

The claimants sought security of £150 million, or such other sum as the court considered appropriate, as a condition of a stay of enforcement of an ICSID award against Romania. The court had previously stayed enforcement pending proceedings concerning the European Commission’s Final Decision prohibiting payment of the award, and had indicated that the claimants had made a persuasive case for security: [2017] EWHC 31.

This decision determined the alternative security application and applications for permission to appeal. The European Commission intervened. The central questions were whether the court had power to order security and whether security, or steps following non-compliance, would itself conflict with the Commission’s Final Decision or European Union law.

1. Permission to appeal. Difficult issues of law arose, and both limbs of CPR r.52.6(1) were satisfied. Permission to appeal was granted in accordance with the draft grounds.
2. Power to order security. IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation [2017] UKSC 16 concerned a different statutory context, namely security under section 103 of the Arbitration Act 1996. It established the importance of identifying the legal power relied upon, but did not determine the present application. The court did not need finally to decide whether CPR 3.1(3), together with the inherent jurisdiction, supplied the power, because the European Union law issue was decisive to the exercise of discretion.
3. European Union law and non-compliance. The court accepted that the claimants’ unpaid award and the size of the debt supported security. However, the Commission stated that provision of security would be regarded as payment under the Final Decision and that enforcement measures could be unwound by recovery of aid. A security order could therefore lead to a conflict which the court had previously sought to avoid.
4. The possibility of conflict did not depend on Romania expressly refusing to comply. The draft order contemplated enforcement without further direction following non-provision of security. There was consequently a material risk that the court would need to take enforcement-related steps while the European proceedings remained pending. Air Canada v Emerald Supplies [2015] EWCA Civ 1024 supported taking such material risk into account.
5. Although the claimants were prejudiced by delay, the prejudice did not involve the same risk of asset diminution as in the case of a non-state party. The European proceedings had been given priority and were expected to be resolved comparatively soon. The balance therefore favoured refusing security as a condition of the stay, without ruling out a future application if circumstances changed. The security application was refused.

The decision followed an earlier judgment of the same court concerning the stay and security issue: [2017] EWHC 31. The present court granted permission to appeal from that judgment.