The court recently granted a stay, in order for the parties to await the outcome of proceedings elsewhere which will determine whether or not the arbitration award is set aside.
The judgment explored whether interest accruing on an award may be sufficient to outweigh the prejudice caused by the delay of enforcing the award, and whether the stay could be consistent with the court’s overriding objective to deal with cases justly and at proportionate cost.
It is an interesting decision for parties looking to apply for the court’s assistance in arbitral proceedings. The court is often reticent to stay proceedings, but where there are parallel proceedings in a foreign jurisdiction, the court may deem it necessary in the interests of justice to await the outcome. While delay is inevitable in those circumstances, the risk of conflicting or contradictory judgments weighs heavier than the prejudice that may be caused by the delay.
Relevant procedural history
JSC DTEK Krymenergo (JSC) were awarded damages in an international UNCITRAL arbitration to the value of $208m plus costs and interest, in an investment treaty dispute against the Russian Federation (Russia). JSC was given permission to enforce the award by an order of Andrew Baker J on 15 November 2023.
Russia applied to the Hague Court of Appeal to annul the award on the basis that the tribunal did not have jurisdiction to hear the dispute. Those proceedings are ongoing, and it is estimated that the proceedings could take as long as 5.5 years to conclude.
Russia applied to the English Courts in October 2024 to set aside the enforcement order on grounds of state immunity, or for a stay of the immunity application until the annulment proceedings had been determined by the Dutch Courts.
JSC brought an application for the stay to be refused, or (in the alternative) for the stay to be granted subject to a condition for Russia to make payment into court.
Legal principles for granting a stay
Judge Dame Clare Moulder DBE considered the principles in Hulley v The Russian Federation [2021] EWHC 894 (Comm), which apply where the Court exercises its case management powers in relation to a stay.
In particular, a stay may be justified where there are related parallel proceedings in a foreign jurisdiction. Where the earlier resolution of those issues in the foreign proceedings would better serve the interests of justice than by allowing the English proceedings to continue, then a temporary stay may be appropriate. Also, the costs and inconvenience of duplicated proceeding to the parties, the court and other court users may favour a stay. However, usually such a stay is only justified in rare or compelling circumstances.
In the above mentioned circumstances, to refuse a stay would allow “two horses to be running” at the same time. There are various possible outcomes in this case, and one of those is that if no stay is granted, some of the same issues would fall to be considered by the English Court and the Dutch courts at the same time and between the same parties. With that in mind, there was an “obvious risk” of inconsistent and possibly conflicting judgments.
The case law indicates that risk of inconsistent decisions in proceedings in different jurisdictions is always capable of amounting to a very strong reason for granting a stay.
Does the award of interest compensate for potential prejudice?
The judge considered that if a stay were to be granted, then it could add 4-5 years on to the dispute. Delay is a “very significant factor” when the Court is exercising its discretion in deciding whether or not to grant the stay. Judge Clare Moulder mentioned that she was “very concerned about the length of the potential delay... and the prejudice to the Claimant which will result from that delay.”
However, there is an argument that the prejudice to a party resisting a stay can adequately be compensated by an award of interest. There are potentially conflicting statements in the authorities on this point.
In this case, the judge said that it is fundamental that a creditor should be entitled to receive payment promptly when due and although the interest rate here is “not low in absolute terms” nevertheless JSC is a “forced creditor”. It is no answer that the ultimate beneficial owner of JSC may be wealthy. If the debt is due, a creditor is entitled to his money to invest in whatever way he deems fit and not to accept a forced investment in a debt even one which bears a reasonable rate of interest by reference to current interest rates.
The judge conceded that there is a prejudice to JSC by any delay in enforcement and the potential length of the delay and the size of the debt means that interest is not an answer to the prejudice which will arise if the stay is granted.
The risk of conflicting judgments tips the balance
The Judge considered all of the individual factors for and against a stay and in particular in this case the risk of conflicting judgments. She found that the balance lay in granting a stay.
However, she limited the timeframe. Russia sought the stay until final determination of the annulment proceedings, i.e. until it reached the very highest court in the Netherlands. The English Commercial Court granted the stay until determination of the annulment proceedings by The Hague Court of Appeal.
In this way, the potential prejudice to JSC could be mitigated.
Read the full decision here: JSC DTEK Krymenergo v The Russian Federation [2025] EWHC 1060 (Comm)
