Leidos Inc v The Hellenic Republic

Under Arbitration Act 1996, s 103(2)(f), an award is suspended where the courts at the seat temporarily prevent its enforcement pending determination of a challenge. The provision does not require a permanent suspension or an express extra-territorial effect. Suspension of enforcement is treated substantively as suspension of the award.

Enforcement may still be sought because the court retains a narrow discretion to enforce despite s 103(2)(f). On a later set-aside application, the court considers the position when that application is determined, including whether the foreign challenge has since failed.

Costs remain discretionary. A successful party’s culpable failure to give full and frank disclosure of a material legal issue on a without-notice application may justify depriving it of costs.

Leidos obtained an order from Teare J permitting enforcement in England of an ICC arbitration award against The Hellenic Republic. The order was made without notice under the Arbitration Act 1996.

When the enforcement application was made, the Greek Supreme Court had suspended enforcement of the award pending determination of The Hellenic Republic’s challenge in Greece. The Hellenic Republic later applied to set aside Teare J’s order, relying principally on s 103(2)(f).

The Greek Supreme Court subsequently dismissed the challenge, lifting the suspension, and The Hellenic Republic paid most of the award. The set-aside application was agreed in principle to be withdrawn. The hearing before Jacobs J was therefore confined by consent to costs, including the effect of alleged non-disclosure and the parties’ conduct.

1. Scope of hearing. The Consent Order confined the hearing to costs. The Hellenic Republic could not revive its set-aside application at short notice. The court nevertheless considered the alleged non-disclosure insofar as it affected costs.
2. Meaning of suspension. The Greek Supreme Court’s orders prevented enforcement pending determination of the substantive challenge. That amounted to suspension of the award for the purposes of s 103(2)(f). Suspension need not be permanent, need not be expressed to have extra-territorial effect, and is not materially different from suspension of enforcement. The issue is one of substance.
3. Discretion to enforce. Section 103(2)(f) gives the court a discretion to refuse enforcement, not an automatic prohibition. That discretion is narrow. It remained open to Leidos to seek enforcement and explain why enforcement should nevertheless be permitted. Section 103(5) separately permits an adjournment where a challenge is pending.
4. Effect of subsequent events. A set-aside application is determined by reference to the circumstances existing when it is heard. Once the Greek challenge had been dismissed, the substantive ground under s 103(2)(f) had fallen away. The court would have continued Teare J’s order, despite innocent non-disclosure, because the non-disclosure concerned legal consequences of facts that had been disclosed and the possible ground of challenge no longer existed.
5. Costs. Leidos was the successful party because it obtained and retained an enforcement order and the award was substantially paid. However, it had culpably failed to draw attention to the potentially applicable s 103(2)(f), despite disclosing the underlying facts. That material failure justified departing from the usual costs rule. Leidos had also unreasonably insisted on security before agreeing to a stay, although no such security was available in the context of s 103(2)(f). The appropriate order was no order as to costs, with each party bearing its own costs.

The judgment records that Teare J had made the enforcement order. The present judgment determined the scope of the subsequent costs hearing and ordered that each party bear its own costs.