English Court Provides Guidance To Parties Challenging Or Seeking Enforcement Where The Award Debtor Is In Administration

In BSG Resources Ltd v Vale SA and others [2019] EWHC 2456 (Comm), the English Commercial Court (the Court) considered five applications concerning an arbitration award dated 4 April 2019 (the Award) which had resulted in an order of the English court for BSGR to pay damages of US$1.247 billion to Vale (the Enforcement Order). BSGR's challenge of the award (the Challenge Application) under the Arbitration Act 1996 (the Act) is due to be heard in November 2019.

Moulder J's decision in this case provides helpful guidance to parties which are either challenging or seeking to enforce an English award, in circumstances where the unsuccessful party in the arbitration has gone into administration.

Background

As Moulder J noted, she did not need to consider the detailed background in order to determine the applications before her. In summary, however: BSGR and Vale were parties to a mining joint venture in Guinea, whose mining rights were revoked in April 2014 following a change in government in Guinea and allegations of bribery and misconduct on the part of BSGR. This resulted in two sets of arbitration proceedings: the LCIA proceedings brought by Vale, which resulted in the Award, and ICSID proceedings brought by BSGR against Guinea.

The Court was asked to consider the following applications:

an application by Vale under s70(7) of the Act for security for the amount payable under the Award (the s70(7) Application); an application by Vale under s70(6) of the Act for security for its costs in respect of the Challenge Application (the s70(6) Application); an application by BSGR to set aside the Enforcement Order or to stay the enforcement thereof (the Set Aside Application); and an application by Vale to impose as a condition of pursuing the Challenge Application that BSGR pay an outstanding costs order against it (the Costs Order Application). The Court also considered BSGR's application to amend its claim form in respect of the Challenge Application, but this was readily granted and is not considered further below.

BSGR went into administration in March 2018 and two joint administrators were appointed by the Court of Guernsey, one of them being a partner of BDO LLP, whom Moulder J found to be “an experienced insolvency practitioner at a leading accountancy firm“.

(i) Vale's s70(7) Application

S70(7) of the Act, which applies to any application or appeal under ss67, 68 or 69 of the Act, provides thatThe court may order that any money payable under...