Progas Energy Limited & Others v The Islamic Republic of Pakistan, [2018] EWHC 209 

The decision by the Court (Mr Justice Picken) in this case is one of the first Commercial Court decisions to consider the potential impact of third party funding of arbitration disputes before the Courts.

In the Commercial Court, Pakistan sought against the Progas Claimants: (1) c. £8.1 million as security for the claim against the Progas Claimants pursuant to s 70(7) of the Arbitration Act 1996 (“the Act”); and (2) £482,029 as security for costs pursuant to s. 70(6) of the Act. Pakistan’s applications were made in the context of proceedings initiated by the Claimants who had challenged an arbitration award (“the Award”) pursuant to section 68 of the Act. Mr Justice Picken  refused to order the c. £8.1 million as security for the claim, but did order a reduced amount of £400,000 as security for costs. In refusing to grant the c. £8.1 million as security for the claim, the Court stated that to do so would have improved Pakistan’s ability to enforce the cost provisions of the Award and that this would represent an inappropriate use of s. 70(7) of the Act. Moreover, Mr Justice Picken rejected the argument that third party funders ought to bear some liability in the Courts in relation to costs which are incurred by an opposing party in defending a challenge made pursuant to s. 68 of the Act.

Mr Justice Picken in granting security for costs relied heavily on the impecuniosity of the Claimants and held that the s. 68 challenge would not be stifled if an order for security were made since “the Claimants have funding for the section 68 proceedings”.

The case is available here: http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2018/209.html&query=(title:(+progas+))