Infrastructure Services Luxembourg S.À.R.L. v The Kingdom of Spain

Hearing date: 24 January 2024

Approved Judgment

This judgment was handed down remotely at 10.00am on 1 February 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Sir Geoffrey Vos, MASTER OF THE ROLLS:

Introduction

The single question in this application is whether this court should require the Kingdom of Spain (Spain) to provide security for the satisfaction of an arbitration award in the sum of €120,083,287.88 (the Award) as a condition of being permitted to pursue its appeal from the decision of Mr Justice Fraser (the judge). The judge decided on 24 May 2023 to dismiss Spain's application to set aside Mrs Justice Cockerill's order registering the Award as a judgment of the High Court under section 1(2) of the Arbitration (International Investment Disputes) Act 1966 (the 1966 Act).

The Award was granted against Spain on 15 June 2018 in an International Centre for Settlement of Investment Disputes (ICSID) arbitration in respect of losses incurred by the Claimants on investments in Spanish solar power installations. It was alleged that Spain breached its obligations under the Energy Charter Treaty.

This application arose as follows. On 11 August 2023, Spain filed its Notice of Appeal seeking permission to appeal against the judge's order. On 28 August 2023, the Claimants filed their brief statement of reasons (the Statement) as to why permission should be refused under [19(1)] of CPR Practice Direction 52C (PD52C). At [13] of the Statement, the Claimants said:

If the Court were minded to grant permission, in accordance with PD52C.19(1)(c) [the Claimants] identify the following condition to which they contend the appeal should be subject, namely that Spain should provide security for the Registration Order in the sum of EUR 120,083,287.88 or such sum as the Court may think fit, under CPR 52.6(2)(b), in accordance with and in service of the UK's international obligations under the ICSID Convention, as implemented in the 1966 Act, to register and enforce the Award, the authenticity of which is not in dispute (see: [ Micula v. Romania [2020] UKSC 5 ( Micula SC)] at [68]; and [ Micula v. Romania [2018] EWCA Civ 1801 ( Micula CA)] at [247]–[248] as to security).

The solicitors for both parties wrote letters to the court adducing further arguments concerning the imposition of conditions upon any permission to appeal that might be granted. Males LJ dealt with Spain's application for permission to appeal on paper on 5 October 2023. The order was headed: “On consideration of the appellant's notice and accompanying documents, but without an oral hearing, in respect of an application for permission to appeal”. Males LJ granted Spain permission to appeal on the grounds that there were important issues raised as to the enforcement of ICSID awards that merited consideration by the Court of Appeal. His order made no mention of whether or not conditions should attach to Spain's permission to appeal.

On 19 October 2023 (outside the 7-day period allowed for a request for reconsideration under CPR Part 52.24(7)), the Claimants filed a Respondents' Notice, including in “Section 9: Other Applications” an application for an order that:

[Spain] should not be permitted to proceed further with the appeal without first paying into court security for the full judgment debt, as ordered by Cockerill J in the Registration Order, in the amount of EUR 120,083,287.88 (or its pound sterling equivalent) [because] [p]ursuant to CPR 52.18(1)(c) there are compelling reasons to impose such a condition, for the reasons set out in [Saluzzo(4)].

On 8 November 2023, Males LJ gave directions on paper as to what he called the Claimants' “application for security for costs”. It was not, of course, an application for security for costs under CPR Part 25.15. It was an application for a condition to be attached to the permission to appeal that Males LJ had already granted. Males LJ directed an expedited one-day hearing of the Claimants' application. His reasons included saying that: (a) he had, when granting permission to appeal, deliberately not imposed conditions, despite the Claimants' request that he do so, (b) he had not, at that time, been aware of the Luxembourg proceedings, in which Spain sought anti-suit injunctions “requiring [the Claimants] to terminate these proceedings and imposing a penalty for non-compliance” (the Luxembourg Proceedings), (c) at least arguably, knowledge of the Luxembourg Proceedings might have led to a different result, (d) the Luxembourg Proceedings were already in existence when he made his permission to appeal order, but the Claimants “may have a point in saying that it was not required to deploy its evidence in support of the application for permission at that stage”, and (e) the hearing would, therefore, consider: (i) whether in these circumstances the court had jurisdiction now to impose conditions, and (ii) if so, whether it was appropriate to do so.

Against that background, we suggested, and the parties accepted, that (i) Spain should go first in oral submissions on jurisdiction, since it was making the case that the court did not have jurisdiction now to impose a condition on the grant of permission to appeal, and (ii) the Claimants should go first on whether it was appropriate to impose the condition sought.

On jurisdiction, Spain contended: (a) that the Claimants had made their application for a condition in the Statement, (b) that Males LJ had decided, when granting the Claimants permission to appeal, not to impose the condition, and (c) that the only way in which that decision could have been challenged was by an application for reconsideration under CPR Part 52.24(6), which the Claimants had not done in time or at all. Even if it were open to the Claimants to apply under CPR Part 52.18, they could only do so on the basis of new facts, and the Luxembourg Proceedings were not new, having been started and corresponded about before Males LJ determined permission to appeal. Spain said that the finality principle in Henderson v. Henderson (1843) 3 Hare 100 applied so as to prevent the Claimants raising the question of a condition again.

In response on jurisdiction, the Claimants submitted that they had not made any application to Males LJ for a condition to be imposed in their Statement. They had simply indicated that that was their position in accordance with [19(1)] of PD52C. Males LJ had, on the face of his order, not determined the condition question when he granted Spain permission to appeal. It was, in any event, not open to Claimants to apply to the court for a condition to be imposed under CPR Part 52.18(1)(c) until after permission to appeal was granted. The permission to appeal decision could not be challenged by way of reconsideration because of the express wording of CPR Part 52.24(6). Accordingly, the court did have jurisdiction to consider the Claimants' application for a condition to be imposed.

On the question of whether there was a compelling reason for the condition sought to be imposed, the Claimants relied on three matters: (i) the UK's ICSID obligations, (ii) Spain's conduct in commencing and prosecuting the Luxembourg Proceedings seeking both anti-suit relief and orders against the directors of the Claimants, and (iii) Spain's conduct in seeking to secure an adverse state aid finding from the European Commission. Spain's answer was to say that it had offered to stay the Luxembourg Proceedings until the determination of the appeal (even if it went to the UK Supreme Court). Indeed, it offered in oral argument to give an undertaking in these terms to the court. Spain argued that it had been given permission to appeal and should be allowed to pursue that appeal without securing the judgment. The imposition of conditions is “unusual, and perhaps rare” (see Dumford Trading AG v. OAO Atlantrybflot [2004] EWCA Civ 1265 at [9]). Spain is a sovereign state, and regard must be had to its rights and obligations under international law.

Against that background, this court has to decide the two issues referred to it by Males LJ. For the reasons that I shall now give, I have decided that, whilst the court does have jurisdiction under CPR Part 52.18 to impose the condition that the Claimants seek, there is no compelling...