CL-2021-000253 - [2025] EWHC 1189 (Comm)

Costs consequent on the judgment

India as the successful party seeks an order that the 4^th to 6^th Claimants shall pay to India its costs of and occasioned by the hearing of the s. 2 question, on the standard basis, such costs to be subject to detailed assessment if not agreed. India seeks an order that the 4^th to 6^th Claimants shall pay to India the sum of £365,000 as payment on account of these costs, within 14 days of the date of the order. It says that its costs as of 18 March 2025 total £582,900.33 and in respect of which it seeks a detailed assessment.

The 4^th to 6^th Claimants submit that costs should be reserved, alternatively stayed, pending the outcome of the 4^th to 6^th Claimants’ application for recognition and enforcement. This is because:

India responds that:

My view of these contentions is as follows. I agree with India that since the 4^th to 6^th Claimants sought to have the applicability of the consent provisions in s. 2(2) SIA decided as a discrete question, the fact that it may have been reasonable to take this course in an attempt to simplify proceedings, cannot in itself be a reason to withhold the usual incidence of costs in favour of India as the successful party. I also accept that the court cannot base its decision on the disputed assertion that India chose to withhold the illegality allegations in the arbitration proceedings.

All other things being equal, India is, in my view, entitled to an order now for its costs of and occasioned by the hearing of the s.2 question. As noted, it says its costs total £582,900.33 as of 18 March 2025 in respect of which it seeks a detailed assessment, with the sum of £365,000 as a payment on account.

However, the more difficult question is as to the impact of the arbitration awards against it in favour of the 1^st to 3^rd Claimants, and whether India should be entitled to payment now, or whether the 4^th to 6^th Claimants are right that this liability should be set off against the awards. There are apparently disputed issues as to the validity of assignments in favour of the 4^th to 6^th Claimants, but these have not been explored in this hearing.

So far as the courts of England and Wales are concerned, the awards are disputed, since India contests whether it entered into an arbitration agreement – if it did, then by s. 9 State Immunity Act, where a State has agreed in writing to submit a dispute to arbitration, the State is not immune as respects proceedings in the courts of the United Kingdom which relate to the arbitration. This was a point I made in paragraph 9 of the judgment, which includes an agreed statement as to the respective positions of the parties as to s.9 SIA.

However, I think it is relevant that the awards have been upheld in the Courts of the seat, and indeed in other jurisdictions in which the illegality allegations have arisen other than India itself. The decisions in the Netherlands go right up to the Supreme Court. This is not a situation in which (as India puts it) the 4^th to 6^th Claimants are “simply asserting that they might succeed in their substantive claim”. They have substantive grounds, and the English courts are supportive of arbitration and the enforcement of awards.

India relies on the statement of Norris J in Redstone Mortgages v B Legal [2015] EWHC 745 (Ch) at [23] that, “The ordinary expectation would be that an order for costs would be made at the conclusion of the preliminary issue. Reserving the costs simply requires another judge on another day to adjudicate upon how the costs of the earlier determination of issues on which he or she did not adjudicate should be borne”. This was quoted with approval by Birss J in Unwired Planet International Ltd v Huawei Technologies Co., Ltd [2015] EWHC 3837 (Ch) at [21].

The general point is clear, but it does depend on the facts. In most instances, the decision as to the incidence of the costs of preliminary issues like the present one is made when the application is decided. It does not wait the outcome of the litigation. Also, from a practical point of view, it is the judge who decided the application who is in the best position to decide the incidence of costs. But this case is rather different, because it concerns a dispute as to arbitration awards which have been the subject of a considerable number of rulings in favour of the 4^th to 6^th Claimants in various courts. If at the end of the day, the 4^th to 6^th Claimants are successful in these proceedings as well, and the awards are upheld, the question could reduce simply to a calculation of the amount of costs due to India on this application, for set off against India’s overall liability. I say “could” because that reflects my view at this time, but if costs are reserved then at the conclusion of the proceedings, it would be for the judge hearing the matter to decide at that stage, including any issues relating to assignment which were not explored in this hearing. If on the other hand the awards are not upheld, the 4^th to 6^th Claimants’ contention that the costs of the present application should not follow the event is likely to lapse, with the same caveat that it would be for the judge hearing the matter to decide.

The matter is not altogether easy, but this is an exceptional case. Exercising my discretion, I have come to the conclusion that, no doubt exceptionally, on the facts of this case, costs should be reserved. It would be unjust to decide the incidence of costs now, because India may be held in the English courts, as in the courts of the seat, to owe much more under the awards, and in these circumstances, costs are better dealt with against the background of the proceedings as a whole.

I should say something about the quantum of India’s costs, since I am in the best position to express a view on this. The 4^th to 6^th Claimants object that there is no justification for India’s costs being (it appears) 30% greater than their costs. They say that this cannot be explained by reference to legal research. Both parties engaged in heavy research, and this cannot justify the disparity in legal fees. They submit that India’s costs totalling £582,900.33 “appear to exceed [the 4^th to 6^th Claimants’] costs by around 30%”.

India responds that the 4^th to 6^th Claimants have not provided their own statement of costs to support that assertion. Even assuming their calculation to be accurate, it would still mean that the 4^th to 6^th Claimants’ own costs of the s.2 SIA question are at least £448,000. India says that two other points made by the 4^th to 6^th Claimants, being that they took the lead in preparing the legal position, and that India had a smaller counsel team, are wrong or irrelevant.

There was no detailed challenge by the 4^th to 6^th Claimants to India’s Statement of Costs dated 18 April 2025. As noted, India seeks a detailed assessment of its costs, with the sum of £365,000 as a payment on account. There is no suggestion from the 4^th to 6^th Claimants that this would not be a case for a payment on account. Should it be relevant, had I been deciding this question, I would have proceeded on the basis that India’s recoverable costs would likely be reduced on an assessment given that this was a relatively short hearing (1 ½ days), but not drastically so because of the importance of the issues to the parties. I do not think that the 4^th to 6^th Claimants’ other points have any weight. I would have ordered a payment on account of £330,000 (which is roughly 2/3^rds of £500,000).