UK: English Court Retains Power To Award Costs After Arbitration Challenge Dismissed

In Viking Trading OU v Louis Dreyfus Suisse SA [2023] EWHC 2160 (Comm) the English Commercial Court clarified its discretionary power to grant costs of defending a s69 application under the English Act (Act) for permission to appeal an arbitral award, even if costs were not initially sought.

This decision provides helpful guidance on best practice for recovering costs in this and other arbitration-related claims.

Background

Viking attempted to appeal an arbitration award under s69 of the Act alleging various errors of law (the Application). Louis Dreyfus Suisse (LDC), the respondent, opposed the Application but did not initially seek to recover its costs. After Viking's application for permission to appeal was dismissed, LDC requested payment of its costs by Viking. When Viking refused, LDC applied to court for a costs order, and the judge awarded LDC £20,000 subject to Viking's right to challenge that order.

Viking subsequently challenged the order, arguing that (i) the court had no jurisdiction to make the order because its jurisdiction ended when it dismissed the application for permission to appeal; (ii) the general rule is that no party is entitled to recover their costs if the order does not mention costs; and (iii) £20,000 was excessive in any event.

Decision

Bright LJ emphasised the court's residual discretion to award costs after the fact ("ex post facto") but cautioned that this discretion will not be exercised lightly. He noted the lack of clear guidance on when and how a respondent should seek its costs in such cases and upheld his decision to award costs in this case. However, he reduced LDC's recoverable costs to £17,500 and further reduced that amount to account for a small award of Viking's costs incurred since the Order.

Nevertheless, Bright LJ considered the argument to be "a close-run thing", and he commented that he "would not want any practitioner or litigant who may read this judgment to assume that every respondent who successfully opposes an application for permission to appeal under s. 69 of the Arbitration Act 1996, but neglects to ask for costs when doing so, will invariably receive the benefit of a similar exercise of discretion. On the contrary, they should assume that they will not."

Comment

Bright LJ offered guidance on how respondents should approach costs in s69 application emphasising cost control, the importance of stating the desire for cost recovery in a respondent's notice and the potential to provide a statement of costs along with the respondent's notice and skeleton. He warned against causing unnecessary costs, which would be reflected in the judge's decision.

This case underscores the importance of seeking costs upfront to avoid inefficiencies. While cost recovery is discretionary and case-dependent, this decision provides useful guidance for s69 applications and potentially other claims under the Act.

The authors would like to thank Abigail Adams for her assistance with this post.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.