The Russian Federation v Hulley Enterprises Limited & Ors

Factual and Procedural Background

The Respondents sought recognition and enforcement in England and Wales of three Netherlands-seated arbitration awards under which the Appellant was ordered to pay approximately US$50 billion plus interest. Proceedings began in 2015. Following earlier state-immunity litigation, the High Court decided further preliminary issues in favour of the Respondents on 2 March 2026. [1][2][3]

The High Court ordered the Appellant to pay £2.5 million in interim costs and granted permission to appeal on one ground. The Court of Appeal later granted permission on two additional grounds and provisionally on others, reserving the question of conditions concerning unpaid costs and appeal security. [4][5]

The Respondents applied for conditions on the appeal and for security for costs after the Appellant failed initially to pay outstanding costs and interim costs. The outstanding costs were subsequently paid into court, while the interim costs were paid late in two instalments. [6][7][8][9]

Legal Issues Presented

1. Whether there was a compelling reason under CPR 52.18 to impose conditions on the pursuit of the appeal. [10][11][12][13]
2. Whether security for the costs of the appeal should be ordered under CPR 25.29, having regard to the Appellant’s foreign residence and the circumstances of enforcement. [14][15][16][17]
3. Whether an order for security for costs was impermissibly equivalent to imposing a condition on the appeal contrary to CPR 52.18(3). [18][19][20]
4. What deadline and amount of security were just and proportionate. [21][22][23][24]

Arguments of the Parties

Respondents’ Arguments

• A condition should require payment out of the outstanding costs and payment of accrued interest, although the Respondents did not pursue a condition concerning the small remaining interest once a payment mechanism had been agreed. [12][25][26][27]
• Security for costs was justified because the Appellant’s identity, the arbitration awards, its conduct, the absence of sufficient assets in the jurisdiction, and likely enforcement difficulties in Russia created a real risk of non-payment or substantial delay. [16][28]
• The court could take account of the political and legal circumstances affecting enforcement of foreign judgments against the Appellant in Russia. [29][30][31][32][33]
• The Respondents proposed security based on their estimated appeal costs and sought a deadline allowing approximately three months for payment. [22][23]

Appellant’s Arguments

• No compelling reason existed to impose conditions, and the Court of Appeal lacked power to impose the requested condition. [34][35]
• The Appellant’s prior payments and asserted willingness and ability to pay demonstrated good faith and meant that security was unnecessary. [36][37][38][39]
• There was no evidentially established real risk of non-payment, and the Respondents could enforce any costs order in Russia. [17][40][41]
• An order for security would effectively impose a condition on the appeal, which the Respondents could not seek after being present when permission was granted. [18][42]
• The proposed security was excessive, and the requested period for payment was justified by the time required for executive authorisation. [22][23][24]

Table of Precedents Cited

Court’s Reasoning and Analysis

CPR 52.18 permits conditions on an appeal only where there is a compelling reason. The Court found no such reason because the outstanding principal sums had been paid into court, the remaining non-payment appeared administrative, and the remaining interest was comparatively small. Permission was therefore confirmed on grounds 2–6, and no condition was imposed on any ground. [10][11][13][54][55][56][57]

The Court treated security for costs under CPR 25.29 as distinct from a condition under CPR 52.18(1)(c). The restriction in CPR 52.18(3) therefore did not prevent the Court from determining the Respondents’ freestanding Part 25 application. [20][58]

The Appellant was resident outside the jurisdiction, and the Court found a real risk that the Respondents would be unable to enforce a costs judgment in Russia. That conclusion followed from the particular relationship between the parties, the Russian legal and constitutional position, the findings concerning state conduct, and the changed geopolitical circumstances. The Court expressly limited this conclusion to the exceptional facts of the case. [16][28][30][59][32][33][46][47]

The Appellant’s payment history did not sufficiently demonstrate that future appeal costs would be paid promptly. The delays, the lack of a convincing explanation, and the absence of a clear assurance concerning future costs supported the need for protection. [37][60][38][39][61][62]

Security would not stifle the appeal because the Appellant could pay it. The Respondents faced potential delay and further enforcement expense, while the Appellant faced only administrative inconvenience and modest transfer costs. It was therefore just to order security. [47][63][64]

The Court rejected the Respondents’ proposed quantum as excessive. It considered £600,000 appropriate for counsel’s fees and £375,000 appropriate for solicitors’ profit costs and other disbursements, producing total security of £975,000. [24][65][66][67][68]

Holding and Implications

Security for costs ordered. The Appellant was required to provide £975,000 by 4pm on 1 March 2027 through the agreed payment route or an alternative route involving an SRA-regulated law firm. If unpaid, the appeal would stand struck out without further order. [69][70][71][68]

No conditions were imposed under CPR 52.18, and permission to appeal was confirmed for grounds 2–6. The appeal was not to be listed before 9 June 2027. [56][57][71]

The Court stated that its conclusion concerning enforcement risk was confined to this unusual case and did not establish a general precedent for other cases. [47]