LONDON — In a case involving enforcement of an $88.3 million arbitration award rendered in favor of a Monaco reinsurer, an English appellate majority ruled Oct. 17 that the assignee of the award should not be forced to post security for costs incurred by the opposing party in challenging the award (Gater Assets Ltd. v. Nak Naftogaz Ukrainiy, No. 460, English App.).
In separate opinions written by Lord Justice Rix and Lord Justice Moses, ruled that Gater Assets Ltd. is not required to post the amount of costs that Nak Naftogaz Ukrainiy will sustain in challenging the award.
AO Ukragazprom contracted with AO Gazprom to transport natural gas by pipeline across Ukraine to Europe. Ukragazprom was entitled to withdraw 235 million cubic meters of natural gas, but, according to Gazprom, additional unauthorized withdrawals were made, giving rise to a breach of contract. Gazprom was reimbursed for the value of the improperly withdrawn gas from its captive insurer, Sogaz Insurance Co., which was in turn reimbursed by Sogaz’s reinsurer, Monegasque De Reassurances S.A.M. (Monde Re).
Monde Re, exercising its subrogation rights under Russian law, commenced arbitration in Moscow against Naftogaz, Ukragazprom’s successor. An arbitral tribunal awarded Monde Re $88,256,704 plus $117,697 in costs.