Overview
International law firm McDermott Will & Emery has achieved a significant milestone in enforcing a US$2.4 billion arbitration award in favour of its clients, UAE-based Crescent Petroleum and Crescent Gas Corporation Limited (Crescent), against the National Iranian Oil Company (NIOC). In a judgment issued on 15 April, the English High Court ruled in Crescent’s favour and ordered a transfer of a high-value London property linked to NIOC to Crescent to partially satisfy the award.
In September 2021, Crescent secured an arbitral award ordering NIOC to pay US$2.4 billion in damages in relation to NIOC’s breach of a long-term gas supply agreement. Crescent sought to enforce the award in England, and obtained an enforcement order against a prime London commercial property, known as “NIOC House”, valued at approximately £100 million. Six days later and before the enforcement order became final and effective, NIOC transferred ownership to a closely-related Iranian pension fund. Crescent applied to the Court under s. 423 of the Insolvency Act 1986, seeking to unwind the transfer as a transaction defrauding creditors.
Last week, the High Court ruled in Crescent’s favour and ordered the transfer of the property to Crescent. The Court dismissed NIOC’s argument that the property had been held on trust for the pension fund and that the likely only explanation for the urgency with which NIOC effected the transfer was to put the property beyond Crescent’s reach before enforcement action could be taken. The Court thus held that the transaction was at an undervalue and that the property should be transferred to Crescent in partial satisfaction of the award debt.
This ruling sends a strong message that the English courts will assist award creditors by taking a robust approach against attempts to dissipate assets to frustrate enforcement, and the success showcases McDermott’s expertise in devising and executing innovative strategies to enforce high-value arbitral awards, even in the face of determined opposition from award debtors.
The McDermott team, comprised of London Partner Michael Darowski, assisted by Campbell Herbert and Jannika Glendon, acted alongside a team of barristers comprising Joe Smouha KC, Ricky Diwan KC of Essex Court Chambers, Tariq Baloch of 3VB, Moeiz Farhan of 36 Stone and Luka Krsljanin of Blackstone Chambers.
McDermott also acted for Crescent in its successful defence of challenges to the award before the English High Court and Court of Appeal. You can read more about those here.
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