We have previously reported the Court of Appeal's decision in these proceedings (see Legal update, No security for costs against New York Convention award holder.)

Tomlinson J has now dismissed the substantive application to set aside the order of Colman J granting permission to enforce a Russian award. The facts of the case were unusual. The "Brotherhood" gas pipeline, through which Russia supplies gas to other countries, passes through the Ukraine. In return, the defendant's Ukrainian predecessor, U, was permitted to withdraw specified quantities of gas. U was accused of exceeding its contractual entitlement. It was felt to be politically embarrassing for the Russian supplier to pursue claims in its own name, and so an insurance/reinsurance structure was established whereby title to sue vested in a subrogated non-Russian reinsurer. Neither the insurer nor reinsurer bore any risk, as the premiums were equal to the insured loss. The subrogated reinsurer commenced arbitration against U in Russia, and obtained an award in its favour. The benefit of the award was then assigned to the claimant, who obtained an order from the English court granting permission to enforce it.

The defendant applied to set aside the order, arguing that the award had been obtained by fraud, or that enforcement was contrary to public policy, because the reinsurer had concealed the true nature of the reinsurance arrangements from the tribunal. Tomlinson J rejected the application, holding that the court would only refuse to enforce an award, pursuant to section 103 of the Arbitration Act 1996, where there was clear evidence of reprehensible or unconscionable conduct, such as deliberately concealing documents. The evidence fell short of establishing such conduct.

Case:Gater Assets Ltd v Nak Naftogaz Ukrainiy [2008] EWHC 237 (Comm)