Palladian Partners LP & Ors v The Republic of Argentina & Anor

A condition attached to permission to appeal under CPR requires a compelling reason. That requirement is necessary but not sufficient. The court must still exercise its discretion on the overall circumstances.

Relevant considerations include likely enforcement difficulties abroad, the appellant’s ability to fund litigation or make payment, the quality of its financial evidence, and whether the condition would stifle the appeal. The assessment may take account of an appellant’s wider history and related conduct, rather than being confined to conduct in the proceedings. A condition securing part of a judgment may therefore be justified where there is a substantial risk of non-payment and lengthy enforcement, and the appeal would not be stifled.

The claimants held EUR-denominated GDP-linked securities issued by the Republic. The Commercial Court construed an Adjustment Provision in the securities, ordered a payment exceeding EUR1.3 billion with interest for the 2013 reference year, and ordered specific performance for later years: [2023] EWHC 711 (Comm).

The judge stayed execution pending appeal. When granting the Republic permission to appeal, the Court of Appeal imposed a condition that approximately 20% of the judgment sum be paid to the trustee and held in escrow. The Republic sought reconsideration after material opposing evidence had not initially been before the court. The issue was whether the condition should remain.

1. The Republic’s application was dismissed. The condition on permission to appeal remained, subject to extending the compliance date to 5 April 2024.

2. The court held that the compelling-reason restriction in CPR 52.18(2) also governed a condition imposed under CPR 52.6(2)(b). A requirement to pay or secure a judgment debt is exceptional, not routine. Following the approach in [2014] EWCA Civ 1108, a compelling reason is necessary but does not conclude the issue. The court must then exercise its discretion.

3. The court could consider enforcement difficulties abroad, resources and financial disclosure, and whether the appeal would be stifled. It was not confined to conduct in the present litigation. The Republic’s prior defaults, the lengthy enforcement history concerning its bonds, its conduct in other enforcement proceedings, and the absence of any identified plan or source for payment if its appeals failed were relevant to the risk assessment.

4. Those matters established a very high risk that the Republic would fund further appeals but not voluntarily satisfy the judgment, leaving the respondents to undertake protracted and difficult enforcement. That was a compelling reason for the escrow condition.

5. The asserted harm to the Argentine population did not justify refusing the condition. The Republic had not identified what expenditure would in fact be diverted, accepted that it could find the sum within its existing budget, and did not contend that the condition would stifle its appeal. The High Court’s unconditional stay did not constrain the Court of Appeal, which had to decide the condition afresh. The court did not rely on its preliminary view of the appeal’s merits.

• Court of Appeal (Civil Division) The Republic sought reconsideration of a condition attached to permission to appeal. The court maintained the requirement to pay EUR309,876,449.80 into escrow, while extending the date for compliance.
• High Court, Commercial Court Picken J granted declarations on the construction of the securities, entered monetary and specific-performance relief, and stayed execution pending appeal: [2023] EWHC 711 (Comm).