AIC Ltd v The Federal Airports Authority of Nigeria

JurisdictionEngland & Wales
JudgeVeronique Buehrlen
Judgment Date13 August 2019
Neutral Citation[2019] EWHC 2212 (TCC)
CourtQueen's Bench Division (Technology and Construction Court)
Docket NumberCase No: HT-2019-000060
Date13 August 2019
Between:
AIC Limited
Claimant
and
The Federal Airports Authority of Nigeria
Defendant

[2019] EWHC 2212 (TCC)

Before:

Veronique Buehrlen QC

(Sitting as a Deputy High Court Judge)

Case No: HT-2019-000060

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS

OF ENGLAND AND WALES

TECHNOLOGY AND CONSTRUCTION COURT (QBD)

The Rolls Building,

Fetter Lane, London, EC4A 1NL

Michael Collett Q.C. (instructed by Westbrook Law) for the Claimant

Hermann Boeddinghaus and Edward Crossley (instructed by Joseph Hage Aaronson LLP) for the Respondent

Hearing date: 25 July 2019

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Veronique Buehrlen QC (Sitting as a Deputy High Court Judge)

Veronique Buehrlen QC:

Introduction

1

There are 2 applications before me. They arise in connection with a Nigerian arbitration award made on 1 June 2010 awarding the Claimant a principal sum of US$48,124,000 plus interest at 18% per annum from the date of the Award until payment ( the Award).

2

The first application is the Defendant's application dated 27 March 2019 (i) to set aside the order of O'Farrell J dated 28 February 2019 giving the Claimant permission to enforce the Award; and (ii) for the Claimant's application dated 10 January 2019 for judgment in terms of the Award to be adjourned pursuant to section 103(5) of the Arbitration Act 1996 ( the 1996 Act). The second application is the Claimant's application dated 28 June 2019 for an order that the Defendant give suitable security for the Award pursuant to section 103(5) of the 1996 Act in the event that the Claimant's application to enforce the Award is adjourned.

3

The questions for the Court are whether it has the requisite jurisdiction in the circumstances of this particular case and, if so, whether to adjourn enforcement of the Award and on what (if any) terms.

The Parties

4

The Claimant, AIC Limited ( AIC) is a construction and property development company incorporated in Nigeria in 1971. Its principal place of business is in Ibadan, Oyo State, Nigeria. The Defendant is The Federal Airports Authority of Nigeria or “FAAN” (formerly known as the Nigerian Airports Authority). FAAN is an entity incorporated by a Nigerian governmental decree in 1976. It oversees the operations and maintenance of Nigeria's several federal airports.

The Factual Background

5

By a Deed of Lease dated 17 February 1998 ( the Deed of Lease) FAAN leased parcels of land at Murtala Mohammed Airport, Ikeja, Lagos to AIC for a term of 50 years (with the possibility of renewal of the lease for a further term of 25 years) for the sole purpose of developing a flightpath hotel and resort complex. The Deed of Lease contained an arbitration agreement at clause D1(ii) to (vii) which provided for disputes to be arbitrated in accordance with the Nigerian Arbitration and Conciliation Act 1990.

6

Work on the hotel and resort complex commenced. However, by letter dated 16 May 2000, FAAN directed AIC to refrain from work on the hotel development. Following that letter, all further work on the hotel site was stopped and AIC was never permitted to continue with the construction of the hotel and resort as planned.

7

The resulting dispute was referred to arbitration pursuant to the arbitration agreement in the Deed of Lease. The late Hon. Justice Kayode Eso was appointed as arbitrator ( the Arbitrator). The seat of the arbitration was Nigeria. As already explained, the Award was issued on 1 June 2010. The disposition is at paragraphs 34 to 36 of the Award. The Arbitrator awarded AIC a principal sum of US$48,124,000 (together with Administrative Costs in the sum of N3,700,000, that is approximately US$10,000 at current exchange rates) plus interest at 18% per annum from the date of the Award until it was fully liquidated.

The Nigerian Legal Proceedings

8

Following publication of the Award, both parties commenced proceedings before the Nigerian courts. Those proceedings have been lengthy and convoluted in their history. A high level summary of them is set out in the second witness statement of Professor Alfred Bandele Kasunmu SAN served on behalf of AIC. I summarise them below.

9

At the outset there were three sets of proceedings brought:

(i) An originating motion filed by FAAN on 23 July 2010 to set aside the Award ( the Set Aside Application). That suit was filed within the required statutory 3 month time limit following issue of the Award. It was followed by an application by FAAN for leave to serve the Set Aside Application on AIC in Oyo State on 29 July 2010 and leave was granted on 5 August 2010;

(ii) An originating motion filed by AIC on 30 August 2010 to remit the Award on a point of law (namely that the Arbitrator ought to have ordered specific performance of the Deed of Lease thus enabling the project to be completed); and

(iii) An originating summons, also filed by AIC on 30 August 2010, to enforce the monetary judgment element of the Award.

10

In addition to those proceedings, AIC filed a preliminary objection challenging the validity of the originating motion filed by FAAN to set aside the Award ( the Preliminary Objection), AIC's case being that the Set Aside Application was a nullity because FAAN failed to obtain leave (what we would call permission) to serve the originating motion out of Lagos State prior to the issue of the motion. As already noted, the originating motion was issued on 23 July 2010 but the application for leave to serve in Oyo State was not filed by FAAN until 29 July 2010, six days later.

11

The various motions and summonses were all heard together by the Honourable Justice Buba. He rejected AIC's Preliminary Objection. He went on to set aside the Award and declared it to be null and void and of no effect whatsoever. He also dismissed AIC's applications. He gave judgment on 19 June 2013.

12

AIC then filed 3 appeals in relation to its applications with the Nigerian Court of Appeal. On 16 June 2015 that Court allowed AIC's appeal on its preliminary objection case, holding that the issuance and service of FAAN's originating process seeking to set aside the Award was invalid because leave of the court for service on AIC outside Lagos State had not been obtained at the appropriate time. On all three of AIC's appeals, the matters were remitted to the Federal High Court. In other words, the question of whether the Award should be set aside or enforced was remitted by the Court of Appeal back to the Federal High Court of Lagos State to be tried by a different first instance judge. I understand it to be common ground that the effect of the decisions of the Nigerian Court of Appeal is that Justice Buba's order setting aside the Award no longer stands. However, the Nigerian Court of Appeal did not address the motion to set aside the Award or the summons to enforce the Award on their merits remitting these matters to the Federal High Court of Lagos State instead.

13

Neither party has pursued its motions in the Federal High Court to date. Instead, the judgments of the Court of Appeal were then appealed by FAAN and cross appealed by AIC to the Nigerian Supreme Court. FAAN has appealed the Court of Appeal's decision that its originating motion on the Set Aside Application was defective. That appeal was commenced by the issue of a Notice of Appeal dated 8 July 2015. In turn, on 4 November 2015, AIC appealed the decision to remit the motions, including the application to set aside the Award, to the Federal High Court. The gist of the cross appeals is that the Court of Appeal should have dismissed FAAN's Set Aside Application rather than remitted it to the Federal High Court and should have determined AIC's applications for specific enforcement of the Lease and enforcement of the Award in its favour rather than remitted them. Those cross appeals were made by AIC out of time but I understand that it is anticipated that an extension of time for issuing those cross appeals will be granted by the Supreme Court of Nigeria in due course.

14

There is then a dispute between the parties as to when the various appeals are likely to be heard by the Nigerian Supreme Court. AIC's evidence is that the appeals will not be heard before 2023 or even 2024. FAAN's evidence is that the appeals will be listed for hearing in 2020. There have been delays in the preparation of the Record of Appeal required to be compiled and transmitted to the Nigerian Supreme Court before the appeals can be heard. In the event, FAAN did not file its Appellant Brief until 6 May 2019. That is nearly 4 years after issuing its Notice of Appeal. In turn, AIC has yet to file its Appellant Brief as well as its Respondent's Brief in response to FAAN's appeal.

15

It goes without saying that there has already been considerable delay between the issue of the Award in June 2010 and resolution of the proceedings as to the validity and enforceability of the Award before the Nigerian Courts, not to mention the earlier delay between the appointment of the Arbitrator by the Chief Judge of Lagos State on 22 February 2002 and the date of the Award i.e. 1 June 2010.

The English Legal Proceedings

16

AIC issued an arbitration claim form in this Court on 10 January 2019 seeking an order for the enforcement of the Award without notice pursuant to the procedure set out in CPR Part 62.18. O'Farrell J made the Order on 28 February 2019. By paragraph 4 of the Order, FAAN was entitled to apply to set aside the Order within 22 days of service of the Order upon it.

17

By application notice dated 27 March 2019, FAAN applied to set aside the Order and for an adjournment of AIC's application for judgment in terms of the Award pursuant to s.103(5) of the 1996 Act. By application notice dated 28 June 2019, AIC applied for an...

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