Consolidated Contractors (Oil and Gas) Company Sal (Acting By Mr Lee Manning As Receiver) v And:

MRS JUSTICE GLOSTER: On 1 December 2010 on the judgment creditors without notice application, I granted certain orders in aid of enforcement of the judgment creditors judgment against the judgment debtor, Consolidated Contractors (Oil and Gas) Company SAL (CCOG). These orders were the receivership order and injunction (the ROI) and, in support of the ROI, an asset preservation order (APO) pending the hearing of an arbitration which I directed the court-appointed Receiver, Mr Lee Manning, (the Receiver) to bring against the Respondents, Canadian Nexen Petroleum Yemen, Nexen Petroleum Operations Yemen Limited and Nexen Incorporated whom I shall collectively refer to as CNPY.

The ROI appointed the Receiver, in addition to his appointment under my previous order dated 20 December 2007, receiver over and in respect of all oil and rights to which CCOG is or may from time to time hereafter become entitled, including oil not yet allocated, under the terms of the joint operating agreement between the participants in the Marcilla oil concession as referred to in my previous order of 20 December 2007.

The order also directed the Receiver to take possession of, sell, deal with or otherwise dispose of all such oil and to exercise all such rights to oil in the name of and on behalf of CCOG. Paragraph 7 of the order contained further provisions regarding the Receiver's power in relation to the sale of oil. The order also provided that the Receiver should hold all such oil and any proceeds of it to the credit of this action and, to the order of the court.

The order also provided at paragraph 2 that the Receiver should be entitled to exercise in the name of CCOG to the exclusion of CCOG all associated rights of CCOG as set out in the JOA, including in particular CCOG's right to be provided with information concerning oil production by CNPY and to make nominations of quantities of oil thereunder. The order also provided an injunction restraining CCOG to taking or receiving oil to the exclusion of the Receiver, restrained it from selling, encumbering or otherwise dealing with such oil and requiring it, if it retained possession or control of any oil, to immediately take steps to transfer the oil to the Receiver. It also restrained CCOG from commencing any proceedings or taking any steps in any existing proceedings in any jurisdiction in the world, other than in the EU, the object or effect of which would be to interfere with or obstruct the receivership including by interfering with or obstructing the arbitration proceedings referred to in paragraph 4 of the ROI or any orders of the court in support of such proceedings and restrained it from procuring that others should do so.

Paragraph 4 of the order also directed the Receiver to commence arbitration proceedings in the name of CCOG against the operator CNPY under Article 17 of the JOA for the purposes of establishing the Receiver's right in law as against the operator to the receipt of the oil and to exercise associated rights under the JOA as Receiver for and on behalf of CCOG.

I also directed the Receiver to raise the question of his recognition by the Arbitral Tribunal as an issue for determination in the arbitration. Paragraph 5 of the order directed the Receiver to seek in the name of CCOG an order from this court in the form of the draft APO in order to preserve CCOG's entitlement to Masila Oil in the hands of the Operator pending the outcome of the arbitration proceedings.

The APO provided for an injunction as against CNPY requiring it not to permit any person to carry out any lifting of oil to which CCOG was entitled under the terms of the Masila joint operating agreement and restraining it from otherwise disposing of or dealing with any such oil other than with the written consent of the Receiver acting for CCOG, subject to the proviso that CNPY was entitled to permit a lifting of such oil after the date of the order where CNPY was contractually obliged to do so by virtue of specific lifting arrangement in relation to particular quantities oil which were finally concluded prior to CNPY having notice of the terms of the order.

On 14 and 15 December 2010, I heard argument from the judicial administrators of CCOG appointed by the Lebanese court to the effect that I should discharge the orders insofar as they affected the judicial administrators. On those dates, I also heard brief argument from leading counsel Mr Timothy Howe on behalf of CNPY, as a result of which certain amendments were made to the APO in terms proposed by CNPY's counsel. At CNPY's request, I also extended the time for CNPY to appoint an arbitrator and directed if necessary there could be a further hearing so that, if so advised, CNPY could apply for the discharge of or variation of the APO and/or the ROI.

Subsequently, there was a hearing on 31 January 2011 which was fixed at the request of CNPY to the court for an urgent hearing. On 21 December 2010, a short hearing took place where I ordered that the order should continue as against the judicial administrators with certain amendments with my reasons for such decision to follow. My reasons for continuing the orders as against the judicial administrators were set out in my judgment dated 3 March 2011. I refer to that judgment for the full background and history of this matter.

Subsequently, late on Sunday, 9 January 2011, Freshfields on behalf of CNPY indicated that CNPY intended to apply to discharge or vary the orders as appropriate. Various witness statements were filed prior to the first hearing of CNPY's application which took place on 31 January and 1 February 2011. Because of the limited time available for the Receivers and the Judgment Creditor to obtain evidence in answer of Yemeni law, I granted an adjournment of the hearing so that evidence of Yemeni law could be obtained by the Judgment Creditor and/or Receiver. The adjourned hearing took place on 15 February 2011.

In the course of his submissions, and by service of an application notice handed to the court on 31 January 2011, Mr Howe made it clear that he was seeking to set aside to discharge the APO in its entirety and to discontinue the arbitration which he referred to as purportedly commenced under the JOA. Thus, CNPY effectively sought to set aside the orders insofar as they affected CNPY and, in particular, to set aside paragraphs 4 and 5 of the ROI which directed the commencement of the arbitration. Alternatively, CNPY sought the variation of the APO in various respects including, most significantly, a proviso Baltic Shipping terms so as to provide that nothing in the APO should in respect of assets located outside England and Wales prevent CNPY or any third party from complying with: (1) what it reasonably believed to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets are situated, or under the proper law of any contract between itself and any of the parties to the present proceedings, or any party to whom it owes contractual or other duties in relation to the Masila concession or in relation to the terminal; and (2) any orders of the courts of that country or state provided that any reasonable notice of any application for such a order is given to the Claimant's solicitors.

CNPY also sought further fortification of the cross-undertaking given in damages by Mr Masri during the without notice hearing on 1 December 2010 and the undertaking to pay CNPY's reasonable costs compliant with the APO and the ROI given at the inter partes hearing and also sought an order that the Judgment Creditor and/or CCOG should indemnify CNPY for all its costs incurred or to be incurred in the arbitration purportedly commenced by the Claimant under the JOA pursuant to the ROI.

CNPY, represented by Mr Howe, QC, at the hearing, put forward four principal reasons why the APO and the ROI ought to be discharged or varied. In summary, these are as follows. First, he submitted that the orders were an exorbitant exercise of the court's jurisdiction.

Secondly, he submitted that the arbitration which the Receiver had commenced pursuant to the ROI, and in support of which the APO had been made, had no reasonable prospect of being effective. That was because the arbitration could not achieve what the Judgment Creditor and the Receiver designed, because the extended enforcement mechanism had been founded upon the direction by the court of a reference to arbitration pursuant to the JOA, whilst dismissing two other agreements, namely the PSA and the LPA and their distinct and different arbitration provisions, as irrelevant.

Mr Howe argued that that analysis was fundamentally flawed since it was only under the PSA and the LPA that any participant obtains title to oil from the Government of Yemen. Consequently, he submitted the commencement of the arbitration pursuant to the JOA was misplaced and should not have been directed, and the enforcement mechanism as a whole could not achieve its intended effect or be permitted to stand. Accordingly, the English court had no section 44 jurisdiction because the JOA was not the applicable agreement, and the relevant arbitration clauses contained in the PSA and the LPA did not provide for arbitration with an English seat.

Thirdly, Mr Howe submitted that the orders were oppressive and exposed CNPY to serious risks of double jeopardy and even more serious interference, or so it was alleged, with sensitive negotiations in which CNPY was currently engaged with the Government of Yemen over a five-year extension to the Masila concession which expires in December 2011. In those circumstances, he submitted that recourse to cross-undertakings by Mr Masri would not be an adequate remedy and, therefore, CNPY was subject to real prejudice plus uncertainties.

Fourthly, he submitted that the seat of the arbitration under the JOA was in any event Geneva not England and thus the court had no jurisdiction under section 44 of the 1996 Act either to make the APO or direct the commencement of the arbitration pursuant to the ROI. In the alternative, and without prejudice to its primary submission that the order should be discharged with immediate effect, CNPY sought the further variation of the APO in various respects, including in particular the insertion of a Baltic proviso in appropriate terms to protect CNPY.

At the hearing before me on 31 January, 1 February and 15 February, in addition to Mr Howe QC, Mr Michael Green QC appeared on behalf of the Receiver and presented arguments on his behalf and Mr Salzedo appeared on behalf of the Judgment Creditor, together with their respective juniors in the case of Mr Salzedo and Mr Howe.

The pragmatic approach which I have adopted is whether, applying American Cyanamid principles, and in circumstances where there is an imminent arbitration hearing on 15 March, I should maintain the injunctions in their current form or vary them, in particular by the addition of a Baltic Shipping proviso, or discharge them in their entirety insofar as they affect CNPY. In other words, I approach the question that I am being asked to hold the ring, in effect, pending the determination by the arbitrators in the arbitration as between CNPY and CCOG acting by the Receiver. I was told that the arbitration which is due to start tomorrow in Geneva is going to determine the substantive issues between the parties and it is not merely going to be a directions hearing.

I heard extensive argument from counsel for the various parties on an extensive range of issues that, in my judgment, are more properly the subject matter of the arbitration. In particular, I heard detailed argument as to whether CCOG's entitlement to the delivery and possession of oil arose under the JOA or the PSA or the LPA or indeed other agreements. I heard further detailed argument as to the construction and effect of those various agreements in addition to arguments as to the relevant arbitration provisions and their effect under the other agreements.

Mr Howe sought to support his arguments by reference to evidence of Yemeni law in lengthy reports from Sheikh Abdullah. The Receiver and the Judgment Creditor referred to reports from their respective Yemeni law experts, Mr Al-Dhahab and Mr Luqman.

I remind myself that under section 44 I should only grant relief so far as is necessary to preserve the position pending the arbitration. In my judgment, it is not appropriate that I should purport to decide issues that properly will arise in the arbitration unless I am convinced that there is no serious issue to be tried in relation to certain of those issues. Accordingly, insofar as the second issue raised by CNPY is concerned, in my judgment there is clearly, and contrary to Mr Howe's submissions, a serious issue to be tried or rather arbitrated in relation to the issues which arise in the arbitration. These may be summarised as follows and, to a certain extent, they overlap.

The first issue is whether there is indeed a list between CNPY and CCOG which CCOG, acting by the Receiver, can arbitrate under the arbitration provisions of the JOA in the terms sought by CCOG acting by the Receiver.

Secondly, there is the issue as to whether CCOG acting by the Receiver can give a good receipt to CNPY for the delivery of oil, whether that issue is within the arbitration clause in the JOA.

Thirdly, there is the issue whether CCOG as a participant in the Masila oil concession is entitled to enforce its oil entitlement as against CNPY under the provisions of the JOA.

Fourthly, there is the issue whether the arbitrators have jurisdiction under the terms of the JOA to decide the issues raised by CCOG by the Receiver. There may, in addition, be other issues. These issues appear to me to be issues that it is for the arbitrators to decide rather than this court, on an application to discharge or vary the orders. In my judgment, the Judgment Creditor has satisfied the threshold of establishing that there is indeed a serious issue to be resolved in relation to all of the issues which I have identified.

As to issue 4 raised by CNPY in support of its argument that the order should be discharged (namely, whether the seat of the arbitration is Geneva or England), in my judgment, the seat of any arbitration under the JOA is clearly England and Geneva is merely the place designated by the parties as the geographically convenient place to hear the arbitration. Accordingly, in my judgment, the English court clearly has supervisory jurisdiction of the arbitration under the JOA.

In this context, I rely on the relevant arbitration provisions in the JOA and the authorities cited by Mr Green and Mr Salzedo: namely, Dicey and Collins at paragraph 16035, 036 and 1604; Merkin on Arbitration Law paragraph 7.14 and the case of Braes of Doune Wind Farm v Alfred McAlpine Business Services Limited [2008] EWHC 426 and also C v D [2008] 1 LR 239.

I turn now to the first issue raised by CNPY, namely whether the orders should be discharged because in making them the court was wrongly exercising an exorbitant jurisdiction, particularly in circumstances where it did not include any proviso in Baltic Shipping terms; that is to say, that in respect of assets located outside England and Wales nothing in the APO would prevent CNPY from complying with what it believed to be its obligations, contractual or otherwise, under the laws and obligations of a foreign country or state in which the assets were situated or under the proper laws of relevant contracts to which it was subject.

In relation to this issue, I accept the submissions of Mr Salzedo. In my judgment, the English court does, in relation to disputes between CNPY and CCOG acting under the JOA, have subject matter jurisdiction as against CNPY because the relationship between CNPY and CCOG under the JOA is subject to London arbitration and English law; see clause 17.2 for that reason, the English court has subject matter jurisdiction over CCOG's claim acting by the Receiver as against CNPY even though the latter is out of the jurisdiction. In those circumstances, the English court will assert personal jurisdiction over CNPY provided it can be served and found pursuant to the provisions of part 6 of the CPR.

I refer to the well-known passage of Hoffmann J, as he then was, in Mackinnon v Donaldson Lufkin and Jenrette Corporation [1986] 1 Chancery 482 at page 493C where the judge defined personal jurisdiction as "who can be brought before the court" and "subject matter jurisdiction" as "to what extent the court can claim to regulate the conduct of those persons."

The point that Hoffmann J was making in that passage was that the existence of a general personal jurisdiction over a person does not automatically bring with it jurisdiction over everything that such a person may do beyond the jurisdiction of the court. I also refer to the passage at 494F in the same case where Hoffmann J said:

That essentially is the Judgment Creditor's submission in this application and, in my judgment, is why Mr Howe's point about the Baltic proviso is not well founded. The rights with which the present application is concerned are CCOG's rights against CNPY under the JOA. Those are private rights arising out of the contract which, as described by Hoffmann J, is probably subject to the jurisdiction of this court as supervisory court under the arbitration agreement in the JOA. As stated by Hoffmann J in Mackinnon and, as confirmed by Masri (No.2), there is no objection to the enforcement of such rights by in personam orders, even though the Respondent may be abroad. As I said a moment ago, the court has subject matter jurisdiction over the relationship governed by the JOA and thus personal jurisdiction over CNPY follows because there is a relevant gateway for service under the rules.

Accordingly, CNPY is not, in my view, a third party within the meaning of Lawrence Collins LJ's description at paragraph 39 in Masri (No.2). Under the terms of the JOA, CNPY has signed up to English law, English arbitration and the supervisory jurisdiction of the English court in relation to its relationship with CCOG under the JOA. In those circumstances, the exercise by the English court of its power to grant an injunction binding upon CNPY is not, in my judgment, an exorbitant exercise of its jurisdiction. Of course, even where the court has subject matter and personal jurisdiction, the court retains a discretion not to grant an injunction or to make any such injunction subject to a proviso in the terms of a Baltic Shipping clause or similar in cases where double jeopardy or other considerations may require the protection of the Respondent but that, as Tomlinson J, as he then was, made clear in his judgment in this case [2008] EWHC 2492, paragraph 26 and by his reference to Brannigan v Davidson [1997] Appeal Cases 238, points to the court adopting a flexible discretionary approach to issues of this sort. I also refer to the Court of Appeal's decision to similar effect on the application for leave to appeal from the judgment of Tomlinson J [2008] EWCA Civ.1367 at paragraph 31.

I also refer to the decision of Neuberger J, as he then was, in Morris v Banque Arabe [2000] CPRE 65 where Neuberger J thought it appropriate to assess the real risk of a prosecution ensuing as a result of compliance with orders of the English court.

Accordingly, I turn to consider the exercise of my discretion and the arguments put forward by Mr Howe in relation to CNPY's alleged double jeopardy and commercial prejudice. He submitted that CNPY would or might be exposed to double jeopardy of suffer irremediable commercial prejudice, if the injunctions were to continue, whether at all or in their present form as varied or as not varied. His argument was that it would be inappropriate to continue the injunctions even in circumstances that contemplated the Receiver succeeding in the arbitration in establishing his right on behalf of CCOG to take delivery or possession of the oil. First of all, applying the Cyanamid principle, I take the view that the Judgment Creditor would suffer serious and irremediable pressure that would be uncompensatable by any claim for damages as against CNPY if the injunctions were not continued in their present form. It is effectively common ground that the inclusion of a Baltic Shipping-type proviso and, of course, also necessarily the discharge of the injunctions would effectively have the consequence that CCOG, acting by the Lebanese judicial administrators, would have the ability to lift oil and to sell it as it has done in the past, albeit not recently, pending the outcome of the arbitration and, if that went in the Receiver's favour, pending further attempts by the Receiver to ensure compliance with any award by the arbitrators.

Given the terms of the exclusion clauses in the JOA, and indeed in the other agreements governing the Masila concession (and even in the absence of the Baltic Shipping proviso) it is difficult to see how in the circumstances of a successful outcome of the arbitration in the Receiver's favour, CCOG, acting by the Receiver, or the Judgment Creditor would have any claim against CNPY for failing to deliver oil to CCOG acting by the Receiver in the interim.

(I should have said a moment ago -- and I will correct it when I get the note of this judgment -- and "in the absence of a Baltic Shipping proviso".)

In my judgment, there is a real risk given that CCOG's entitlement to oil from the Masila concession expires at the end of 2011, that the Judgment Creditor would suffer an irremediable loss in the injunctions are not maintained in the meantime. It is clear from the evidence which has been before the court on various occasions that, in effect, the only identifiable asset to generate funds to satisfy the judgment debt is indeed the oil entitlement of CCOG under the Masila concession agreements.

I turn now to consider whether, for the reasons outlined by Mr Howe, CNPY would suffer any prejudice or irremediable loss that i not compensatable by an award of damages against the Judgment Creditor under the cross-undertaking if the Judgment Creditor were to be unsuccessful in the imminent arbitration. First of all, I take into account that the time-span is relatively short. One is looking at a period effectively from December when I originally made the order through 15 February to the delivery of the arbitrator's award. That is on, of course, the projected hypothesis that the Receiver is unsuccessful in the arbitration. If the Receiver is successful, on the other hand, it will be for the arbitrators to consider whether any further relief or the existing relief should continue.

Second, I am not persuaded on the evidence before me that CNPY as operator under the various agreements will have a serious or substantial or irremediable problem in relation to the alleged build-up of oil at the terminal pending the resolution of the arbitration proceedings. In Freshfields' letter of 20 January 2011, it was disclosed by CNPY that CCOG acting by the Lebanese judicial administrators had indicated that CCOG intended to postpone any delivery in respect of its oil entitlement to April 2011. Both the Receiver and the Judgment Creditor have made it clear that they do not object so far as CNPY is concerned to other participants in the Masila concession over-lifting oil provided that CCOG's entitlement is maintained pending the resolution of the arbitration. The evidence put forward by CNPY in Mr Knoll's first witness statement certainly suggested that arrangements could be made with the Yemeni Ministry, and indeed other parties, in order to over-lift oil provided that arrangements were made in good time.

Moreover, on a proper reading of the second statement, I am not persuaded, contrary to Mr Howe's submission, that the Ministry would not continue to be prepared to over-lift oil. Moreover, I was not persuaded on the evidence that such arrangements to over-lift could not be made going forward or indeed that, if CNPY as operator had to exercise its powers to sell oil in order to deal with under-capacity problems at the terminal, that would lead to sales at depressed prices given the recent upward trend in oil prices. Nor was I persuaded, given the exception clauses in the various agreements, CNPY itself would be subject to claims from CCOG acting by the judicial administrators or other participants in the concession.

Finally, under this head, there seems historically to have been a substantial build-up of some 600,000 barrels in respect of CCOG's entitlement, even before the making of the ROI and the APO. In such circumstances, it is difficult to see how CCOG, acting by the judicial administrators, could complain if measures had to be taken by CNPY to sell excessive build-up of CCOG's oil entitlement. Nor was I persuaded on the evidence that CNPY itself would directly suffer any financial loss if it had made arrangements to sell excessive oil that had built up at the terminal on a distressed sale basis.

Fourth, I was not persuaded on the evidence, including the recent Yemeni law evidence, that CNPY is indeed subject to a serious and substantial risk of a claim by CCOG acting by the judicial administrators for breach of contract if the injunctions continue, pending the outcome of the arbitration. Although the Yemeni law witness statements filed respectively on behalf of the Receiver and Judgment Creditor are in conflict with by the evidence given by Sheikh Abdullah on behalf of CNPY, there are, in my judgment, good grounds set out in the evidence of the former for suggesting that Yemeni law would indeed recognise the arbitration awards and the arbitration process, whether or not it formally recognised the English court orders. There are also good grounds for suggesting that the Yemeni court, if a claim is indeed brought by CCOG in the Yemeni courts, would thus recognise their effect and would treat them as proper reasons for CNPY's conduct in complying with the orders of this court pending the resolution of the arbitration.

Moreover, the exemption clauses in the various other agreements, not merely the JOA but also the PSA and the LPA, excuses CNPY for liability for breach of contract in wide circumstances, save in cases of gross negligence or wilful default. It seems to me, when assessing the risk of the alleged double jeopardy, that it is difficult to see how CNPY's conduct in complying with the provision of this court's order, pending the arbitration or with directions of the arbitrators thereafter, would be characterised gross misconduct or wilful default.

Moreover, this court has to assume that CCOG, as party to the proceedings in this jurisdiction and as a judgment debtor, will abide by the orders of this court restraining it from interfering with the Receiver's conduct of the receivership and his claim to the receivership assets and will not act in breach of the orders of this court, in particular by taking steps to bring proceedings in foreign jurisdictions.

If CCOG itself can demonstrate that it has suffered loss in the event that the arbitrators reject CCOG's claim, acting by the Receivers, as against CNPY, and the court were to consider that it is appropriate that the Judgment Creditor should pay any such damages, any such liability of the Judgment Creditor under the cross-undertaking would, of course, be subject to set-off as against the Judgment Creditor's judgment against CCOG. Whilst of course that would not protect CNPY against a direct claim from CCOG acting by the judicial administrators, in my judgment, the prospect of the Yemeni court or arbitrators under any relevant agreements would be unlikely to require CNPY to pay damages for breach of contract for all the reasons I have enumerated above.

In any event, I regard such prospect (that is to say, a claim by CCOG acting by the judicial administrators as against CNPY) as realistically remote or certainly recovery under any such claim as remote. In coming to that conclusion, I also take into account the recent increase in oil prices which would suggest that any delay to CCOG's right to uplift oil will have worked to its commercial advantage. Moreover, in my judgment, CCOG acting by the judicial administrators would also have real difficulty in showing that any loss it suffered was attributable to conduct on CNPY's behalf since the reality is that any commercial damage that CCOG might have suffered, or any loss it might have suffered as a result of the delay in any uplift, has been caused by its own conduct in failing to discharge its judgment debt to the Judgment Creditor.

Finally, I am not persuaded by Mr Howe's submission that the evidence shows, or the circumstances justify a conclustion, that there is a real risk that CNPY's commercial interests in ongoing negotiations with the Government of Yemen or the Ministry to extend the concession will be damaged by the continuation of the injunctions. It seems to me that this court must assume that the Government will behave in a rational and commercial way. I refer in this context to paragraph 85 of the recent judgment in proceedings in the Court of Appeal in Jersey. Moreover, as the respective evidence of the Receiver and the Judgment Creditor in relation to Yemeni law suggested, the Government's commercial interests are not affected by disputes as between CNPY and CCOG as to who, on behalf of CCOG, is entitled to take delivery of the oil. It is unlikely, in my judgment, in those circumstances, that there would be any real commercial difficulties so far as the Ministry is concerned.

Finally, given the relatively short period during which the injunctions will continue, namely until the outcome of the arbitration is known, it seems to me that consideration needs to be given to whether the fortification of Mr Masri's cross-undertaking in damages up to the current figure of $500,000 is sufficient. Mr Howe submitted that a claim by CCOG or its potential loss could be much, much greater and put forward figures in the region of $9.6 million.

As I have already said, I consider that, although no doubt such a risk theoretically exists, realistically a risk of such a claim is remote. However, I do take on board Mr Howe's submissions that, given the current and ongoing costs which CNPY is facing in relation to the arbitration, $500,000 is in the circumstances not perhaps a sufficient fortification in respect of the likely costs that CNPY may have already incurred and may well in future incur in relation to these proceedings and the arbitration.

I take the view that in the circumstances the Judgment Creditor should, if he wishes the injunctions to continue and the receivership order to continue, increase the fortification to a figure of $1 million.

In conclusion, I consider that notwithstanding CNPY's exposure to the potential risk of a claim being bought by CCOG by the judicial administrators against CNPY, which under any of the relevant agreements would have to be the subject of an arbitration in any event, and notwithstanding the potential for impact on CNPY's commercial relationship with the Yemeni Ministry, I estimate or assess such risks as not so great as to tip the balance of justice in favour of discharging the injunctions or subjecting them to variations in the form of Baltic provisos which would effectively emasculate the injunctions pending the outcome of the arbitration.

Accordingly, subject to the provisions in relation to the increase in the fortification of the cross-undertaking in damages, I maintain the orders in their previous form as previously amended as a result of agreement between the parties.

I will hear argument as to the time within which the further fortification is to be provided but any subsequent consequential matters or any additional consequential matters, as I indicated in an e-mail that was sent last week, I will reserve to a later date.

MR SALZEDO: My Lady, thank you very much.

As far as I am aware, the only urgent matter is the one your Ladyship has indicated which is the increase of fortification. Could I ask your Ladyship to give me seven days to either increase the fortification or say that we will not do or make an application for more time if I need it because, without knowing your Ladyship's judgment, I was not able to take instructions as to how long any particular figure would take.

MRS JUSTICE GLOSTER: I think $500,000 is too small in the circumstances. I think the $1 million is the appropriate figure. Of course, in expressing that view, I do not know whether the arbitrators have required any security to be given by either party in the context of the arbitration. You may not know that either, but I will adjourn the matter for seven days for you to take instructions as to how long you require to put the money to fortify. I will need to know then, otherwise the injunctions will be discharged.

Does anybody else from any of the other parties wish to say anything or raise any point? Someone will let me have the shorthand note so that I can correct it. As I said in my e-mails, I am content, if nobody else objects, for the note to go out in unapproved form but I would be grateful if I could have an opportunity of checking it during the course of today.

Thank you very much.