This dispute arose out of an alleged breach of a gas transit agreement, in which Russian gas giant Gazprom alleged that Naftogaz’s predecessor took more gas than it was entitled to under the terms of a transit agreement. Gazprom’s captive insurer, Sogaz, paid Gazprom over $88 million dollars to cover its loss. Sogaz’s reinsurer, Monde Re, in turn paid Sogaz the like sum. Gazprom’s claims against Naftogaz passed to Monde Re by way of subrogation. Monde Re succeeded on its claim against Naftogaz at the International Commercial Arbitration Court in Moscow. The award was later assigned from Monde Re, which was in liquidation, to Gater Assets Limited (“Gater”).
Subsequently, an English court ordered enforcement of the arbitration award. Naftogaz applied to the English High Court to have the award set aside based on the fact that there was no arbitration agreement between the claimant and the defendant, among several other reasons. Naftogaz also applied for an order that Gater provide security for costs pursuant to CPR 25.12 and 13.
Over Gater’s objections, the Court ruled that it had jurisdiction to order security for costs in favor of a party seeking to set aside enforcement of a domestic or New York Convention arbitration award because such a party can qualify as a defendant under CPR 2.3(1). The court ordered Gater to provide security in the amount of £250,000. Gater Assets Ltd. v. Nak Naftogaz, [2007] EWHC 697 (Comm. Ct. Mar. 22, 2007).