MDIL (UK) Ltd v Mittal Steel Skopje (CRM) AD

The first matter is the claimant's application for security for costs. It seeks security for costs which it has incurred in resisting the application by the defendant to appeal the decision of the arbitrators who have made an award in favour of the claimant. The relevant principles are helpfully set out in the skeleton argument put forward on behalf of the claimant and are not in dispute, so I do not restate them. What I will do is give the main reasons why I reach the decision that I do.

First, this is not an application for security of costs at the start of an action. It is an application for security of costs made after the claimant has already obtained an award which they have had leave to enforce as a judgment against the defendant. That is a powerful factor of its own.

Secondly, security is sought in support of an appeal by the defendant. The paper application put in so far is in the bundle. I invited counsel for the defendant to develop for me the basis upon which her clients contend that these applications stood any prospect of success. She was unable to do so. I found it difficult to understand how the section 68 application related it to anything other than legitimate decisions which the arbitrators took when finding facts or managing the case. I had difficulty in understanding what the point of law for section 69 was at all, let alone how it would have had an impact on the outcome. The advocate for the claimant has at least superficially convincingly demolished the applications for permission to appeal, so I proceed on the basis that they have very low prospects of success and will probably be refused.

The third consideration is that while I have evidence of the parlous financial position of the defendant, I do not accept the claims that the defendant is marooned without access to finance. There are, it seems to me, third parties like (inaudible) from IMN Marketing(?) who might reasonably be expected to secure the position of the defendant to enable it to prosecute an appeal.

So if and to the extent that this appeal is prosecuted to a hearing, I will order security for costs to be lodged 21 days before any permission or other application comes before the court. I will debate shortly how much that security should be. It is not my job to give free advice, but at the moment it seems to me the defendant's money would be better spent on ventures other than what seem to be a very unpromising pair of appeals. So I will order security for the reasons I have given.

There are two further applications which in simple terms are these. The court, not knowing of the existence of an application by the defendant to appeal, gave leave to the claimant to enforce the award as a judgment and the defendant seeks to set aside that order of this court made by (inaudible) J really on the basis that had (inaudible) J known about the appeal, which he did not, the outcome would or might have been different.

There is also an application by the claimant for security, in the sense of seeking an order to require the defendant to secure or bring into court the amount of the award on the ground before this appeal goes any further. The position of the claimant is this. It has a judgment which it could enforce should it choose to do so. It has no wish to take a disproportionate response. Provided steps are taken to secure the award, it is prepared to defer enforcement.

The first question is about the order permitting the claimant to enforce. The court on the last occasion made an inevitable order, which was that the permission to enforce this judgment should be given. As I see it, because I have formed a view there is nothing or virtually nothing in the appeal, if the matter had come before the judge on the last occasion with details of the appeal that would have made no difference. The judge would not have declined to make an order to enforce the judgment once he had formed some provisional view about the appeal. It would then have been up to the defendants to get on with the appeal in a way which they have so far not done.

In a situation where the appeal seems to me to have very little in it and where what is being offered, as it were, is a promise not to enforce if security is given, it seems to me that justice requires that the defendant should under section 70 of the Arbitration Act secure this award in some reasonable amount. Provision of security will be a pre-condition to proceeding further with the appeal and I will make an order to that effect.