JSC DTEK Krymenergo v The Russian Federation

Where parallel foreign proceedings may determine overlapping issues, the court may stay English enforcement proceedings under its case-management powers where doing so serves the overriding objective and the requirements of justice. The court should assess the strength of the foreign challenge on a sliding scale, together with delay, prejudice, overlap, comity, efficiency and the risk of inconsistent judgments.

A substantial delay and the creditor’s inability to obtain the award promptly may weigh strongly against a stay. Interest is not necessarily sufficient compensation. A stay may nevertheless be granted for a limited period where the foreign challenge has a realistic prospect of success and the foreign court is the curial court. Before state immunity is determined, the court has no power under Civil Procedure Rules 1998 r.3.1 to require payment into court where the purpose is to secure enforcement of the judgment debt.

The claimant obtained an arbitral award against Russia for USD 207.8 million plus interest and was given permission to enforce it in England. Russia challenged the award before The Hague Court of Appeal and applied in England for a stay of the enforcement-related immunity proceedings pending final determination of the Dutch annulment proceedings.

The claimant opposed the stay, alternatively seeking a condition requiring Russia to pay the award, interest and costs into court. The central issues were whether the overlapping Dutch challenge had a realistic prospect of success, whether delay and inconsistent decisions justified a stay, and whether security could be ordered before Russia’s state-immunity claim was determined.

1. Stay granted in limited form. The court stayed the English proceedings until determination of the annulment proceedings by The Hague Court of Appeal, rather than until all Dutch appellate recourse was exhausted. The claimant was given liberty to apply if the Dutch proceedings were not pursued with due expedition.
2. Under Civil Procedure Rules 1998 r.3.1(2)(g), the court applies ordinary case-management principles, including the overriding objective in r.1.1. A stay may be appropriate where parallel foreign proceedings raise similar or related issues and earlier resolution abroad would better serve justice. Such cases are rare or compelling, but the relevant factors cannot be reduced to a fixed checklist.
3. The strength of the foreign challenge is assessed on a sliding scale. The court is not determining the challenge, but forms a preliminary view of its plausibility. Russia’s territory argument was weak because the reasoning of the Dutch courts in Naftogaz provided a complete answer. Its active-investment and cross-border arguments were not fanciful and had a realistic prospect of success.
4. The potential four-to-five-year delay was a significant factor against a stay. The claimant would suffer prejudice from being kept out of a substantial award, and interest was not a complete answer. The claimant’s ultimate beneficial owner’s wealth did not remove that prejudice.
5. The overlap between the Dutch annulment proceedings and the English immunity application created an obvious risk of inconsistent or conflicting decisions. That risk, the role of the Dutch courts as curial courts, and the realistic prospect of success on some grounds outweighed the prejudice caused by a limited stay. The short duration of the English hearing reduced the weight of efficiency considerations.
6. The court had no power to make the stay conditional on payment into court where the purpose of the payment would be to protect enforcement of the award rather than support the stay or immunity determination. Such an order would amount to an exercise of substantive jurisdiction over Russia before state immunity had been decided. The security application was therefore refused.

First-instance decision. The judgment records pending annulment proceedings before The Hague Court of Appeal, but no appeal from the present decision.