Award Enforced But Successful Party Denied Costs

In Leidos Inc v The Hellenic Republic [2019] EWHC 2738, the Claimant successfully enforced an ICC arbitration award in England but failed to explain to the Court that the Defendant’s challenge of the award at the seat of arbitration (Greece) might constitute a defence to enforcement in England. The English Commercial Court found that this was a serious omission, stating that it was “material” and that the Claimant was “highly culpable” resulting in a “very clear failure” to satisfy the requirements of full and frank disclosure, and, as a result, considered it unjust to order the Defendant to pay the Claimant’s costs.

The court stated [40]:

“I agree with The Hellenic Republic that this omission was highly culpable. I also consider that this is a matter which is sufficiently serious that it justifies a departure from the general approach that a successful party is entitled to his costs. The importance of proper preparation of without notice applications, and full and frank disclosure in that regard, has been made clear in many authorities, including those to which I have referred. In the present case, an important legal argument, material to the resolution of the application, was not drawn to the attention of the court, although a number of other arguments were identified. I consider that it would be unjust to require The Hellenic Republic to pay the significant costs claimed by Leidos in circumstances where there was a culpable failure to make disclosure of a highly material matter at the outset of the enforcement proceedings. I also bear in mind that the costs claimed are very high, and include the substantial costs of making the enforcement application in circumstances where that application was not properly prepared in view of the culpable non- disclosure. This does not, however, mean that it would be appropriate to require Leidos to pay any costs to The Hellenic Republic, not least because I do not consider that it would be just to order a successful party to pay the costs of an unsuccessful party.”

See the review of the case by Herbert Smith Freehills who comment:

“This rare example of a party successfully enforcing an arbitration award before the English courts but not being awarded the costs of such an application demonstrates the high threshold for satisfying the duty of full and frank disclosure when making a without notice enforcement application. To satisfy this requirement, it is not enough for an applicant to provide the court with the full factual context of the case, it must also make the specific legal arguments which the respondent party would have made to the court, even if the applicant does not believe that such arguments are applicable on the facts.”

About Phillip Rompotis

Phillip practices as a barrister and arbitrator in Hong Kong. He has over 25 years’ litigation and arbitration experience in commercial disputes relating to construction & engineering, financial services, joint venture & shareholders agreements, technology, trusts, property and landlord & tenant. He is a Fellow of the Chartered Institute of Arbitrators, the Singapore Institute of Arbitrators, the Malaysian Institute of Arbitrators, and a member of various lists/panels of arbitrators.

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