The Czech Republic v Diag Human Se & Anor

Section 70(7) of the Arbitration Act 1996, which applies when the losing party seeks to challenge an arbitration award in the court, provides that:

The applicants, Diag Human SE and Mr Josef Stava, sought an order that money payable to them under an arbitration award dated 18^th May 2022 by the respondent, the Czech Republic (“the Republic”), be secured pending the determination of the Republic’s challenges to the award under sections 67 (substantive jurisdiction) and 68 (serious irregularity), and that if such security was not provided, the Republic’s challenges to the award should be dismissed. By his order of 12^th July 2023, Mr Justice Bright dismissed the application for security and refused permission to appeal.

The applicants now apply to this court for permission to appeal. Their application raises the preliminary question whether this court has jurisdiction to grant permission to appeal. That depends on whether the dismissal of an application for security made pursuant to section 70(7) is a “decision under” section 67 or 68. If this court does have such jurisdiction, the further questions arise whether permission to appeal should be granted and, if so, whether the judge was wrong to dismiss the application for security.

These issues were considered at a rolled-up hearing on 7^th December 2023. The application was expedited because the substantive challenge under sections 67 and 68 is due to be heard at an eight day hearing (including one reading day) in the Commercial Court commencing on 29^th January 2024.

The award which the Republic seeks to challenge was made pursuant to the Bilateral Investment Treaty on the Promotion and Reciprocal Protection of Investments dated 5^th October 1990 made between the Czech and Slovak Federal Republic and the Swiss Confederation (“the 1990 BIT”). The arbitration was commenced on 22^nd December 2017. Its seat was in London. The arbitral tribunal awarded some CZK 4 billion (about £140 million at current rates) to the applicants for what were found to be breaches of the requirement for fair and equitable treatment contained in the 1990 BIT.

The background to the arbitration was somewhat convoluted, but the following brief summary will suffice for present purposes.

The underlying disputes date back to 1992. Conneco, a Czech company to which the first claimant, Diag Human SE, a Liechtenstein company, is the successor, carried on business in the blood/plasma market in what was then Czechoslovakia. The applicants’ case is that its business was unlawfully destroyed as a result of a letter written by the then Czech Minister of Health, Dr Martin Bojar, on 9^th March 1992 (“the Bojar letter”). That led to an ad hoc arbitration agreement, subject to Czech law, between Conneco and the Czech Ministry of Health.

An arbitral tribunal appointed pursuant to this agreement issued a partial award on 25^th June 2002, awarding some CZK 326 million in favour of Diag Human. This has been paid. A final award of CZK 8.3 billion in further damages and interest was issued on 4^th August 2008 (“the 2008 award”), but has not been paid.

The arbitration agreement provided for an award to be challenged by way of Review proceedings. The Ministry of Health applied for a Review, which resulted in a Resolution by the Review Tribunal dated 23^rd July 2014 (“the 2014 Resolution”) declaring that the arbitral proceedings were discontinued.

The applicants’ case is that the Review proceedings were corrupted. They say that the Republic unlawfully used its intelligence services, its police force and a Parliamentary Enquiry Commission to obtain information and pressure the members of the Review tribunal. They also say that the Republic improperly ensured that those appointed to the Review tribunal lacked independence and were pressurised and/or bribed.

The “high point” of this case, as the judge described it, is a manuscript note (“the Note”) made by Mr Michal Švorc, then the Director of the Legal Department of the Czech Ministry of Finance, which appears to have been made at a meeting in the Prime Minister’s office on or about 8^th December 2009, in relation to the Review proceedings. The manuscript appears to record that the Czech police and intelligence services held one member of the Review tribunal “by the balls” and that another member wanted “subsidies” in order to ensure a decision that nothing more would be payable by the Republic.

There have been proceedings in Luxembourg, the Netherlands, the United States, Austria, Belgium and England in which Diag Human has sought to enforce the 2008 award. With the exception of Luxembourg, where it transpired that the Republic held no assets available for enforcement, the courts in those jurisdictions have held that the 2008 award was not enforceable as a result of the pending Review proceedings and/or the 2014 Resolution.

In the meantime, on 22^nd December 2017, the applicants commenced fresh arbitration proceedings against the Republic, under the 1990 BIT, contending that the Republic had breached the requirement of fair and equitable treatment as a result of (1) the Bojar letter, (2) interference with the Czech arbitration and (3) interference with the Review proceeding which led to the 2014 Resolution, as shown by the Note and other matters. The BIT arbitral tribunal upheld those complaints. It held that the 2014 Resolution was not entitled to recognition in international law; in consequence the 2008 award was to be recognised as valid and binding, which would compensate the applicants for damage suffered as a result of sending the Bojar letter and interference in the Review process; and it ordered the Republic to pay the applicants the amount of the 2008 award, with interest.

Again in brief summary, the Republic contends that the BIT award is seriously flawed. Its case is that the applicants did not have a qualifying investment in the Czech Republic at the time of the alleged breaches and are not “investors of the Contracting Party” within the meeting of Article 1(1) of the 1990 BIT. Among other things, it says that Mr Stava parted with his shares in Diag Human in June 2011 by placing them into a Liechtenstein discretionary trust, as a result of which he had no investment capable of giving rise to a claim under the 1990 BIT; and that Diag Human cannot claim to be an investor either, because its claim depends on it being controlled by a Swiss person, and from the moment that Mr Stava parted with his shares, he was no longer in control of the company. As a result, it submits that the BIT arbitral tribunal did not have substantive jurisdiction to determine the dispute.

As to section 68 of the 1996 Act, the Republic contends that the BIT tribunal decided the case on a basis that had not been argued, in breach of section 33; and that it failed to decide some of the issues which were put to it.

I observe that these grounds of challenge do not appear to involve any challenge to the BIT arbitral tribunal’s factual finding that the Republic exerted pressure on and/or corrupted members of the Review proceedings tribunal. The Republic’s case is simply that the tribunal had no jurisdiction to make that finding. Moreover, although the Republic has suggested, in my view somewhat implausibly, that the reference in the Note to an arbitrator wanting “subsidies” has to do with an issue about the level of the tribunal’s legitimate fees, it has not advanced any case that there is a lawful or proper explanation for the reference to another of the arbitrators being held “by the balls”. If the Note is to be interpreted as the applicants suggest, it demonstrates a serious interference with the integrity of the arbitral process to which the Czech Ministry of Health had agreed.

At one time the applicants sought to have the sections 67 and 68 applications dismissed summarily on the ground that they have no real prospect of success. It did so in accordance with the procedure set out in paragraphs O8.6 and O8.7 of the Commercial Court Guide (11^th Edition, 2022). These provide:

However, that application has not been pursued as a separate application and the substantive challenge to the award is due to be heard at an eight-day hearing beginning on 29^th January 2024. Instead, the applicants sought orders pursuant to section 70 of the 1996 Act that the Republic provide security for the applicants’ costs of the section 67 and section 68 proceedings and that it provide security for the amount of the BIT award, failing which the applications under section 67 and section 68 would be dismissed.

Mr Justice Bright refused to order security for costs in the light of an undertaking given to the court by the Republic to comply with any order to pay costs made in favour of the applicants. It is his refusal to order security for the amount of the award with which we are now concerned.

In a judgment produced with commendable promptness, Mr Justice Bright summarised the principles applicable to an application for security under section 70(7) as follows:

The judge found himself unable “to form any real view as to the substance or flimsiness of the [Republic’s] case”. That was because almost all of the time at the hearing had been taken up with a different application, for security for costs pursuant to section 70(6) of the 1996 Act, and the judge had been asked to read far more than he possibly could in the time estimated as appropriate for pre-reading. As a result he did not have the benefit of oral submissions and had not had an opportunity to read enough of the evidence to form a view. However, he concluded that this did not matter because there was no real evidence that the Republic was likely to dissipate its assets so as to put them beyond the applicants’ reach. The applicants relied on the Republic’s interference in the Review proceedings as demonstrating that the Republic would do whatever it could to avoid paying the award, but the judge did not regard that alleged misconduct as analogous to the peril which the applicants claimed to face, i.e. that in the period until determination of the sections 67 and 68 challenges in January 2024, the Republic might put its non-sovereign assets beyond the applicants’ reach.

Finally, the judge addressed a submission on behalf of the applicants that in a case where the award debtor had acted egregiously, that should itself be enough to justify an order for security under section 70(7). After referring to the decision of Mr Justice Eder in Konkola, he rejected that submission, concluding that:

The applicants seek permission to appeal, contending that the judge erred in his approach to the power to order security contained in section 70(7). They submit that he ought to have concluded that the Note provided compelling prima facie evidence of the Republic’s corruption of an arbitral tribunal; and that although the principles summarised by the judge are appropriate for the general run of cases, this was an interference with the integrity of the arbitral process, contrary to fundamental requirements of due process, the rule of law and public policy, which ought to have led to an order for security under section 70(7). The applicants contend that section 70(7) should be approached in the light of the rule of interpretation in section 1 of the 1996 Act that “the object of arbitration is to obtain the fair resolution of disputes by an impartial tribunal without unnecessary delay or expense”.

Because the judge refused permission to appeal, the applicants can only pursue their appeal if they can obtain permission from this court. But the preliminary question arises whether this court has jurisdiction to grant such permission. In National Iranian Oil Company v Crescent Petroleum Company International Limited [2023] EWCA Civ 826 this court held that the Court of Appeal has no jurisdiction to grant permission to appeal from a decision, pursuant to section 73 of the 1996 Act, that a party has not lost the right to raise an objection to arbitrators’ substantive jurisdiction when bringing a challenge to an award under section 67. Mr Lucas Bastin KC for the Republic submits that the present case is materially indistinguishable, or is if anything a fortiori, and that accordingly this court has no jurisdiction to grant the necessary permission.

Sections 66 to 71 of the 1996 Act are a group of sections contained within Part 1 of the Act under the heading “Powers of the court in relation to award”. They include the three grounds on which an award may be challenged, set out in sections 67 to 69 of the Act. These are (1) a challenge to the arbitral tribunal’s substantive jurisdiction under section 67, (2) that there has been a serious irregularity (section 68), and (3) an appeal on a question of law arising out of the award (section 69). Each of these sections allows for the possibility of an appeal to the Court of Appeal, but provides that such an appeal may only be brought with the leave of the first instance court. For example, section 67(4) provides that:

Section 68(4) is in the same terms, while section 69(8) is to the same effect, with the additional requirement that leave shall not be given unless the court considers that the question of law is one of general importance or should for some other special reason be considered by the Court of Appeal.

The reference in these provisions to “the court” is a reference to the first instance court which determines the challenge to the award (Athletic Union of Constantinople v National Basketball Association (No. 2) [2002] EWCA Civ 830, [2002] 1 WLR 2863; NIOC v Crescent at [37]). Section 105 provides that “the court” in relation to England and Wales means the High Court or the county court.

Section 70 has the heading “Challenge or appeal: supplementary provisions”. I have already set out subsection (7), but the section as a whole reads as follows:

The Departmental Advisory Committee Report on the Arbitration Bill commented on what became section 70(7) of the 1996 Act in these terms:

By way of comparison, section 73, which was the provision considered in NIOC v Crescent, provides as follows:

It can be seen that neither section 70 nor section 73 contains any express equivalent to section 67(4) or the corresponding provisions in sections 68 and 69.

My judgment in NIOC v Crescent, with which Lord Justice Nugee and Lady Justice Falk agreed, drew together a number of points from the previous case law:

I stated my conclusion as follows:

Mr Patrick Green KC for the applicants submitted that the decision in NIOC v Crescent is distinguishable and that different considerations apply to an application for security under section 70(7). He submitted that the starting point must be that clear statutory words are required if a right of appeal is to be excluded, and that in order to qualify as a “decision under” section 67 or section 68, a decision had to be one which substantively determined the challenges under those sections, or formed a necessary step in order to do so.

Applying that principle, Mr Green submitted that NIOC v Crescent was correctly decided because a necessary step in determining the section 67 challenge was to decide whether the award debtor’s right to object that the tribunal lacked substantive jurisdiction had been lost as a result of failing to raise the objection at an earlier time. Similarly, Mr Green accepted, or as he said asserted, that a decision under section 70(2) whether an applicant had exhausted any available arbitral process of appeal or review, or recourse under section 57, would also be a necessary step in determining a challenge under section 67 or section 68, and would therefore qualify as a decision under one or other of those sections, so that only the first instance court could give leave to appeal; and that the same analysis applies to a decision under section 70(3) whether a challenge to an award had been brought within 28 days. In contrast to these provisions, however, a decision whether to order security under section 70(7) was not a necessary step in determining a challenge under section 67 or section 68, but was an ancillary matter which did not form part of the critical pathway of decisions leading to the substantive determination of the challenge to the award.

In my judgment only the first instance court can give leave to appeal from a decision either to order or not to order security under section 70(7). I reach this conclusion substantially for the reasons advanced by Mr Bastin.

I accept that the starting point, as a matter of statutory interpretation, is that in the absence of clear words or necessary implication there should be no restriction on whatever right of appeal a party has under the general law (see Inco Europe Ltd v First Choice Distribution [2000] 1 WLR 586, 590E-F, although the issue in that case was whether a right of appeal had been excluded altogether; that is different from the present issue, as there is no doubt that the first instance court has jurisdiction to grant leave to appeal to this court). However, in my view the position is clear.

I consider that the reasoning in NIOC v Crescent applies here. Section 70 is ancillary or supplementary to an application under sections 67, 68 or 69, and has no application independent of those sections. That is spelled out by subsection (1), which states that the provisions of the section apply to an application or appeal under section 67, 68 or 69. It is also made clear by the heading of the section (“Challenge or appeal: supplementary provisions”). The terms of the section fully justify that heading.

Deciding whether to order security is part of the process of determining a challenge under section 67, 68 or 69. Such a decision only needs to be made if the award creditor makes an application for security, but it is equally true that a decision under section 73 whether a right of challenge to an award has been lost will only need to be made if the award creditor argues that it has been.

Indeed, the terms of section 70(7) provide expressly that one outcome of an application for security is an order that if security is not provided, the challenge under section 67 or section 68, or the appeal under section 69, will be dismissed. That will be the typical sanction when security is ordered. It is the order which the applicant sought in this case. A decision dismissing the challenge to the award, albeit contingent on security not being provided as ordered, is a paradigm case of a decision under section 67, 68 or 69.

This view is confirmed by the structure of the Act, with section 70 located in the group of sections which deal with the powers of the court in relation to an award, and by the policy considerations which I described in NIOC v Crescent.

For these reasons, this court does not have jurisdiction to grant permission to appeal and the decision of the judge must stand.

If (contrary to my view) this court does have jurisdiction to grant permission to appeal, I would grant permission. The circumstances in which the court should exercise its power under section 70(7) of the Arbitration Act 1996 to order security for money payable under an award which is subject to challenge under sections 67, 68 or 69 have not been considered at appellate level, and the question whether or to what extent it is relevant to form any view as to the merits of a section 67/68 challenge warrants consideration by this court.

As I shall explain, a series of first instance cases has arrived at what seems to be a firm position that it is a “threshold requirement” for the ordering of security when the challenge is to the arbitrators’ substantive jurisdiction under section 67 that the challenge is “flimsy”, but that this threshold requirement does not apply when the challenge is made under section 68 (or, presumably, under section 69). I would not criticise the judge for having followed this approach, but in my view it is at least questionable, and could usefully be reconsidered at appellate level. I should explain why.

The first case to notice is Peterson Farms v C&M Farming Ltd [2003] EWHC 2298 (Comm), [2004] 1 Lloyd’s Rep 614. In an extempore judgment which he described at [2] as containing his “necessarily undigested reasons” for declining to order security for an ICC award which was being challenged under section 67, and in which he expressed reluctance at [29] to lay down any general principles or guidance, Mr Justice Tomlinson said at [30] that “one circumstance which is likely always to weigh very heavily with the Court in determining whether it is appropriate to exercise a power under s.70(7) will be the question whether the challenge appears to have any substance”. In that context he rejected a submission by the award creditor that the challenge under section 67 was “flimsy”. On the contrary, although Mr Justice Tomlinson was careful not to express any final view, it is apparent that he thought the challenge was a strong one (as he put it at [34], it was “far from flimsy”). That later proved to be correct (see [2004] EWHC 121 (Comm), [2004] 1 Lloyd’s Rep 603, where Mr Justice Langley described the arbitrators’ approach as “seriously flawed”). Mr Justice Tomlinson went on to say:

This reference to a “threshold requirement” was picked up in A v B [2010] EWHC 3302 (Comm), [2011] 2 All ER (Comm) 935, which also involved a challenge to the arbitrators’ substantive jurisdiction under section 67:

On the facts that threshold requirement was not satisfied which meant, on that ground alone, that the application should fail (see at [43]). However, Mr Justice Flaux went on to consider what other criteria might apply in determining whether to order security under section 70(7). His conclusion was as follows:

The application for security in A v B failed on that ground also.

This approach, consisting of a threshold requirement of flimsiness, combined with the need for an applicant for security to show that the challenge to the award would prejudice its ability to enforce the award, has been followed in later cases (X v Y [2013] EWHC 1104 (Comm), [2013] 1 Lloyd’s Rep 230; Konkola Copper Mines Plc v U&M Mining Zambia Ltd [2014] EWHC 2146 (Comm), [2014] 2 Lloyd’s Rep 507; Y v S [2015] EWHC 612 (Comm), [2015] 2 All ER (Comm) 85; Erdenet Mining Corporation LLC v ICBC Standard Bank Plc [2017] EWHC 1090 (Comm), [2018] 1 All ER (Comm) 691; and Progas Energy Ltd v Islamic Republic of Pakistan [2018] EWHC 209 (Comm), [2018] 2 All ER (Comm) 287) as well as by Mr Justice Bright in the present case.

X v Y introduced a further refinement to the flimsiness requirement, which has also been followed in later cases. This is that it applies only when the challenge is made under section 67 and not when it is made under section 68 or section 69. The justification for that distinction, picking up dicta in the earlier cases, is said to be that in the case of a challenge under section 68 or section 69 the award is presumed to be valid unless and until the court rules otherwise, but that this presumptive validity does not apply in the case of an application under section 67. As to the circumstances in which an order should be made when the threshold requirement (when applicable) has been satisfied, Mr Justice Teare summarised the position in these terms in X v Y:

For my part, I can see no basis in the terms of section 70(7) for drawing a distinction with the effect that in the case of a challenge under section 67 there is a threshold requirement before security can be ordered that the challenge be shown to be “flimsy”, but that this requirement does not apply in the case of a challenge under section 68 or section 69. Presumptive validity may be a valid ground for distinguishing between challenges under section 67 and section 68 for some purposes, but in my view it has no bearing on the exercise of the court’s discretion under section 70(7). On the contrary, section 70 treats these different grounds of challenge or appeal equally, with no suggestion that different considerations apply according to the nature of the challenge. Indeed, because an appeal under section 69 can only be brought with the agreement of the parties or the leave of the court (section 69(2)), and because the leave of the court will only be given if the decision of the arbitrators is either obviously wrong or at least open to serious doubt (section 69(3)), section 70 plainly contemplates at least the possibility that an order for security may be appropriate even where there is a strong case that the award is wrong – although I would accept that this is likely to be a rare case.

This strongly suggests that, in general at any rate, the merits of the challenge are likely to be irrelevant to the question whether security for the award should be ordered and that, again in general, the primary and usually the only question is whether the making of the challenge is likely to prejudice the ability of the award creditor to enforce the award or the ability of the award debtor to honour it. That is, as the DAC Report explained, the mischief at which section 70(7) is directed. It strikes a fair balance. The losing party has a right to challenge an award under section 67 or section 68, and (with the agreement of the other party or the leave of the court) to appeal on a question of law under section 69, but if doing so is likely to prejudice the award creditor, the price of exercising that right may be the provision of security.

Moreover, there is no need to introduce a threshold requirement of “flimsiness”, and it is undesirable to do so. It is unnecessary because, if a challenge to an award has no real prospect of success, the appropriate course is for the challenge to be summarily dismissed, if necessary without a hearing in accordance with the procedure set out in paragraphs O8.6 and O8.7 of the Commercial Court Guide.

It is true that the “flimsiness” requirement has the formidable support of Lord Mance in IPCO (Nigeria) Ltd v Nigerian National Petroleum Corpn [2017] UKSC 16, [2017] 1 WLR 970:

However, this approval of the first instance cases was plainly obiter and is not binding. More fundamentally, neither Lord Mance nor (with one exception) the judges who decided those cases took any account of the fact that, if a challenge to an award is flimsy in the sense that it has no real prospect of success, it should be summarily dismissed, so that no question of security arises. The only exception is the judgment of Sir Jeremy Cooke in Erdenet Mining. He recognised at [11] that if an application has no real prospect of success it can be summarily struck out or dismissed, and suggested that “flimsy” in this context means something like “unlikely to succeed” or “shadowy”. That seems to me, with respect, not to have been what the other judges who used the term had in mind, and is likely to create uncertainty. While the concept of a case having no real prospect of success is familiar and established, a threshold test that a case has a real prospect of success but is nevertheless “unlikely to succeed” or “shadowy” would not be easy to apply.

It is in my view undesirable to adopt a criterion that an application be shown to be “flimsy”, “unlikely to succeed” or “shadowy” before security can be ordered, because that will lead to precisely the kind of “minitrial” which the courts have deprecated in other procedural contexts. The merits of a challenge ought not to have to be examined twice, once in order to see whether they are “flimsy” for the purpose of an application for security, and then again on the hearing of the substantive application. Such an approach could only add to the delay and expense which section 1 of the 1996 Act tells us it is the object of arbitration to avoid. This view is supported by the practice of the Commercial Court that applications for security under section 70(7) should in general be marked with a time estimate of one hour or less (see paragraph O8.11 of the Guide – although the hearing below, including the application for security for costs, was listed for a full day). That practice plainly envisages that it will not be necessary or appropriate to investigate the merits of the substantive challenge in any detail. While listing practice cannot dictate the way in which the discretion under section 70(7) should be exercised, there is in my view good sense in the thinking which underpins this practice.

I would also suggest that there is considerable wisdom in the approach of Lord Justice Staughton in Soleh Boneh International Ltd v Government of the Republic of Uganda [1993] 2 Lloyd’s Rep 208. Dealing with the question whether security should be ordered on an adjournment of proceedings to enforce a New York Convention award pursuant to Article 5(5) of the Convention (see now section 103(5) of the Arbitration Act 1996), which is in some respects an analogous situation, Lord Justice Staughton emphasised the need to avoid going into the merits in too much detail on such an application (emphasis added):

To go beyond a brief consideration of the award and the challenge in order to see whether the challenge is manifestly valid or invalid is unlikely to be helpful on an application of this nature. It is, moreover, only too easy for a picture of complexity to be painted. Take the present case. The award alone runs to 336 pages. The documents and evidence which it would be necessary to consider in order to form any view about the prospects of success of the Republic’s challenges are voluminous. In order to decide whether those challenges are well-founded an eight day hearing in the Commercial Court will be required. At the end of that hearing, the challenges may or may not turn out to be without substance. At this stage, neither Mr Justice Bright nor this court could hope to form any sensible view, even provisionally, about the Republic’s prospects (as I have said, they appear to have nothing to do with the conduct revealed by the Note) without undertaking an exercise which would be thoroughly disproportionate, and which cannot have been contemplated by Parliament as necessary in order to decide whether security should be ordered in accordance with section 70(7) of the 1996 Act.

The irrelevance in general of the merits of the challenge to an award is also in accordance with principle. If an award creditor can show that it is prejudiced by the challenge, for example because the debtor is actively taking steps to make enforcement more difficult, that is a powerful reason for ordering security as a condition of proceeding with the challenge, regardless of whether the challenge can be characterised as “flimsy”. That is equally so regardless of whether the challenge is made under section 67 or section 68 or, as is commonly the case and is so in the present case, both.

Another issue which would have merited permission to appeal being given is the applicants’ submission, not considered in previous cases, that the misconduct of the Republic as revealed by the Note provides an independent ground for making an order for security under section 70(7) in the present case.

I would accept that, on appropriate facts, an award debtor’s misconduct may be evidence that the debtor is likely to take steps to render enforcement of the award more difficult while a challenge is pending. If so, that is capable of supporting an application for security in accordance with the conventional approach described in the cases. However, the judge was not persuaded that the applicants’ allegations of misconduct (which in the court below were not confined to the Note but extended much more widely) constituted such evidence. He described those allegations as being concerned with “historic misconduct”, which did not suggest that the Republic would be likely now to take steps to render enforcement more difficult than it already is. That is the kind of assessment which is quintessentially for a judge in the Commercial Court to make.

Mr Green went further, however, submitting that the misconduct revealed by the Note demonstrated an interference with the integrity of the arbitral process, contrary to fundamental principles of the rule of law, which was so serious that it ought to have led to an order for security under section 70(7). He submitted that the BIT award was itself the remedy for the Republic’s misconduct, such that public policy rendered it desirable to order security in order to assist the applicants to enforce the award in the event that the Republic’s challenges to the award under sections 67 and 68 fail.

While I would accept that the statutory discretion under section 70(7) is not fettered by express words, and that the principles which I have so far discussed are not rigid rules, I have considerable reservations about this approach. In general, as the cases rightly explain, it is not the purpose of an order under section 70(7) to assist in the enforcement process (e.g. X v Y at [32], cited at [50] above). Although Mr Green described the facts of this case as “bizarre and unusual and hopefully never to be repeated”, experience suggests that allegations of gravely improper conduct in relation to litigation or arbitration, whether or not well-founded, are not as unusual as might be wished. I am concerned that to recognise misconduct in the course of an arbitration as a sufficient ground in itself for ordering security under section 70(7), whether or not accompanied by adjectives such as “bizarre”, “unusual” or “egregious”, would open up a significant volume of such applications, the overall effect of which would be to add expense to the challenge process and to delay the resolution of the substantive challenge.

For these reasons I would have been prepared to grant permission to appeal if this court had jurisdiction to do so, although that is not to say that I would have allowed the appeal. As it is, however, I conclude that there is no such jurisdiction.

I agree.

I also agree.