Federal Republic of Nigeria v Process & Industrial Developments Ltd
| Jurisdiction | England & Wales |
| Court | Supreme Court |
| Neutral Citation | [2025] UKSC 36 |
| Year | 2025 |
2025 July 8; Oct 22
Costs - Order for costs - Currency - Judge awarding costs of arbitration application to successful foreign claimant - Whether costs to be paid in sterling or foreign currency - Whether costs order intended to compensate receiving party for expenditure incurred -
The claimant, which was the Federal Republic of Nigeria, applied under section 68 of the Arbitration Act 1996 to challenge two arbitration awards that had been made in favour of the defendant. The judge set the awards aside on the ground of serious irregularity and awarded the claimant the costs of its application, to be paid in sterling. The defendant applied to the Court of Appeal for permission to appeal against the currency of the costs order, contending that the costs order should have been in Nigerian naira since although the claimant had been billed and paid its legal fees in sterling in reality it had incurred its costs in naira because it had funded the payment of its fees by exchanging naira from its consolidated revenue fund. The Court of Appeal granted permission to appeal but dismissed the appeal, rejecting the defendant’s submission that an award of costs to a successful party should be made in the currency which most accurately reflected the loss suffered by that party in funding its litigation.
On the defendant’s further appeal—
Held, dismissing the appeal, that an order for costs was not intended to provide compensation for loss in the same way as awards of damages in tort or for breach of contract; that, rather, the task of the court exercising its costs discretion under section 51 of the Senior Courts Act 1981 and CPR r 44.2 was to identify the reasonable amount which the party ordered to pay costs should pay, which was not the same as the sums which the receiving party had paid its lawyers and excluded the costs of funding the litigation; that, thus, an award of costs was no indemnity but was a statutorily authorised award of a contribution toward the costs incurred in litigating in the courts of England and Wales; that, therefore, the court in awarding costs would usually have no idea of the arrangements by which the litigant had obtained the funds to meet its liability to its solicitors and did not investigate those arrangements in order to ascertain that party’s loss; that it followed that although the court did have jurisdiction to make an order for costs in a foreign currency, there was no need to make an inquiry as to the currency which most truly reflected the loss which the receiving party had suffered, which could add significantly to the cost of litigation; that, furthermore, it was consistent with the nature of the court’s costs jurisdiction and with legal certainty that there be a general rule that an order for costs should be made in sterling or in the currency in which the solicitor had billed the client and in which the client had paid or there was a liability to pay; that there might, nonetheless, be circumstances in which the court chose not to award costs in the currency in which the receiving party had paid its lawyers if the court considered that the parties’ choice of the currency of payment was abusive or otherwise inappropriate; and that, accordingly, since the claimant had been billed by its legal representatives, and had paid those bills, in sterling and there was no reason to award costs in any currency other than sterling the judge’s order would stand (post, paras 11–20, 24–25, 27–28, 31).
Per curiam. If it were to become common for parties litigating in England and Wales to pay their lawyers and seek the recovery of costs in a currency other than sterling, it might be necessary to develop practice directions to make sure that a party is aware that another party is using a foreign currency to meet its lawyers’ invoices, to safeguard the court’s methods of cost control, including costs budgeting, and to protect the paying party from significant currency fluctuations (post, para 26).
The following cases are referred to in the judgment of Lord Hodge DPSC and Lady Simler JSC:
BP Exploration Co (Libya) Ltd v Hunt (No 2) [
Cathay Pacific Airlines Ltd v Lufthansa Technik AG
Food Corpn of India v Carras (Hellas) Ltd (Dione, The) [
Harold v Smith (
Hunt v R M Douglas (Roofing) Ltd The Times, 23 November 1987,
Livingstone v Rawyards Coal Co (
Miliangos v George Frank (Textiles) Ltd [
Owners of the Eleftherotria v Owners of the Despina R (The Despina R and the Folias) [
Robinson v Harman (
The following additional cases were cited in argument:
BP Exploration Co (Libya) Ltd v Hunt (No 2) [
Deutsche Bank AG v Sebastian Holdings Inc
Elkamet Kunststofftechnik GmbH v Saint-Gobain Glass France SA
Jopling v Leavesley
Micula v Romania [
Primeo Fund v Bank of Bermuda (Cayman) Ltd
Rowe v Ingenious Media Holdings plc
Times Newspapers Ltd v Burstein
Zabihi v Janzemini
APPEAL from the Court of Appeal
By a claim form dated 5 December 2019 the claimant, the Federal Republic of Nigeria, commenced proceedings under section 68 of the Arbitration Act 1996 against the defendant, Process & Industrial Developments Ltd, challenging two arbitral awards made by an arbitration tribunal comprising Lord Hoffmann, Sir Anthony Evans and Chief Bayo Ojo SAN, namely: (1) a part final award dated 17 July 2015 finding that the claimant had committed a repudiatory breach of a gas supply and processing agreement signed with the defendant, that the agreement had been terminated on the defendant accepting that repudiatory breach and that the claimant was liable to the defendant in damages; and (2) a final award dated 31 January 2017 requiring the claimant to pay the defendant US$6.6bn in damages with interest awarded at the rate of 7%. The grounds of the claim were that the awards had been obtained by fraud and/or the way in which the awards were procured was contrary to public policy, within section 68(2)(g) of the 1996 Act. By a judgment dated 23 October 2023 Robin Knowles J [2023] EWHC 2638 (Comm); [2024] 1 Lloyd’s Rep 1 allowed the claim and set aside the two awards.
On 8 December 2023 Robin Knowles J ordered the defendant to pay the claimant’s costs of and occasioned by the section 68 proceedings, to be paid in pounds sterling, as well as provide an interim payment on account and dismissed the defendant’s application for permission to appeal against the currency in which the costs were ordered to be paid.
By an appellant’s notice filed on 25 January 2024 the defendant applied to the Court of Appeal for permission to appeal against the currency of the costs order. By a statement of objection to the grant of permission, the claimant claimed that section 68(4) of the 1996 Act deprived the Court of Appeal of any jurisdiction to hear such an appeal. On...
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...position as to the currency of costs has very recently been addressed by the UK Supreme Court in Process & Industrial Development Limited v The Federal Republic of Nigeria [2025] UKSC 36. The question considered in that case was whether costs of some £44.217 million, which were billed to th......
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JXX (a Protected Party by his Litigation Friend ABB) v Mr Scott Archibald
...by Mr Mallalieu in his reply by reference to the recent decision of the Supreme Court in the Federal Republic of Nigeria v Process & Industrial Developments Ltd [2025] UKSC 36. The lead judgment makes specific reference to Hunt when stating, at paragraph 16, that: “The task of the court mak......
