IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation
| Jurisdiction | England & Wales |
| Judge | Lord Justice Christopher Clarke |
| Judgment Date | 10 November 2015 |
| Neutral Citation | [2015] EWCA Civ 1145 |
| Docket Number | Case No: A3/2014/1282 |
| Court | Court of Appeal (Civil Division) |
| Date | 10 November 2015 |
[2015] EWCA Civ 1145
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
MR JUSTICE FIELD
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Christopher Clarke
Lord Justice Burnett
and
Lord Justice Sales
Case No: A3/2014/1282
Michael Black QC and Edward Knight (instructed by Weightmans LLP) for the Appellant
Jonathan Nash QC and James Willan (instructed by Stephenson Harwood LLP) for the Respondent
Hearing dates: 23 rd, 24 th and 25 th June 2015
When we circulated our judgment in draft paragraph 175 indicated that we proposed to require security for the whole of the Award including principal and interest both accrued and outstanding. After we had done so we received a letter from NNPC's solicitors which invited the Court to reconsider its judgment in respect of two matters:
i) our decision that NNPC should forthwith provide security for the full amount of the Award and interest accruing thereunder; and
ii) our decision that if the fraud challenge to the Award failed there should be immediate enforcement of the full amount of the Award together with interest notwithstanding the unresolved non fraud challenges to the Award before the Nigerian Court.
We have done so. This is the supplementary judgment of the Court.
Security
As to security it was said that our proposed order was made without jurisdiction since, in the light of section 103 (5) of the Arbitration Act 1996 security may only be ordered on the application of the enforcing party. Since no such application was made by IPCO to the court below the appeal court was not entitled to order security of its own motion.
In addition it was said to be wrong in principle to make an order save on the basis that there were assets in the jurisdiction that might be dissipated in the interval between the making of any order and the determination of the fraud challenge. That was said to be apparent from the passage in Soleh Boneh cited at [123] of the judgment. There was, it was said, no misprint in the report. Staughton LJ was dealing in the penultimate line with a case where there were insufficient assets within the jurisdiction. In such a case the case for security was weakened because, if there were insufficient assets anyway, the effect of any difficulty of access or dissipation would be much reduced. In the present case there was no evidence as to the assets which NNPC has within the jurisdiction against which enforcement could be ordered or as to whether and to what extent delay would affect the prospects of enforcement. It would, therefore, it was said, be wrong in principle, or at least require some special justification, to make an order which requires the Award debtor to bring assets into the jurisdiction as a condition of further adjournment or enforcement.
Reliance was placed on the case of Dardana Ltd v Yukos Oil Co [2002] Lloyd's Rep 326 at [31] in support of the contention that it was wrong to make it a condition of any fraud challenge under the section 103 (3) public policy head that security be provided. If any order for security was to be made it should only be on the basis that, if security was not provided, the adjournment would lapse, but that the fraud challenge under section 103 (3) would fall to be determined prior to any order for enforcement taking effect.
As to jurisdiction, we regard it as somewhat artificial to say that there was and is no extant application on the part of IPCO, the party claiming enforcement, for the court to order security if enforcement itself is not ordered. Gross J had before him an application by NNPC to set aside the order giving leave to enforce the Award or, in the alternative, for an adjournment of enforcement of the Award. IPCO issued a cross application for security in the event that adjournment was ordered. Thereafter the possibility of an adjournment subject to the provision of security has always been in play. Gross J ordered an adjournment upon payment of security. Tomlinson J increased the security as a condition of permission to appeal. IPCO then applied for further enforcement of the Award. It was implicit in this string of applications that, if the court declined to enforce to the extent sought, it should, at least, order security. In any event IPCO plainly seeks such security now.
In Dardana Mance LJ (as he then was), with whom Neuberger J (as he then was) and Thorpe LJ agreed, was
" fully prepared to proceed on the basis that s.103(5) provides the court with jurisdiction to make such an order, in a case where it, either of its own motion (cf Soleh Boneh1) or at the instance of the party seeking recognition or enforcement, decides to adjourn, pending a foreign application to set aside by the party resisting recognition or enforcement".
It is not wholly clear to us how s 103 (5) was thought to provide jurisdiction to the Court to act of its own motion but, in any event, a court which is asked to adjourn, or continue an adjournment of, enforcement is entitled to impose conditions on the exercise of its discretion to do so: CPR 3.1 (3) (a); and may do so of its own initiative: CPR 3.3. Section 103 (5) cannot be treated as precluding the exercise of that right. We also note that in its skeleton argument before Field J NNPC argued (paragraph 322) that either no security should be required as a price of continuing the adjournment or that the amount of security should be substantially reduced. It did not suggest that the court simply lacked jurisdiction to make any order for security at all.
As to the contention that the order would require NNPC to bring assets into the jurisdiction, it does no such thing. It imposes a condition of full security, in the form of a bank guarantee, for the further adjournment sought by NNPC so that, if successful, IPCO will be afforded " simple and swift enforcement from a creditworthy source", per Popplewell J in Monde Petroleum v Westernzagors [2015] EWHC 67 (Comm) [61].
The essence of the submission, however, is that it is wrong to make an order the effect of which is to require the Award debtor to bring assets into the jurisdiction, or procure the equivalent. Staughton LJ, it was submitted, was contemplating a situation where there were insufficient assets within the jurisdiction with the result that the case for security was weakened because there could be no question of losing the possibility of enforcement against that which did not exist 2. That such loss was one of the matters that Staughton LJ had in mind does, indeed, appear from a later passage at page 213 (" some protection for the contractors against any deterioration of their prospects of enforcement here"). But the first sentence of the passage cited in [123] of our
judgment made clear that the risk of a reduction in assets already within the jurisdiction was one factor and that there might be others. One factor to which he referred was the desirability of providing a real incentive to the award debtor to proceed with its challenge to the award in Sweden expeditiously. In the event the court appears to have ordered the provision of security for about half the principal.In Continental Transfert Technique Ltd v Federal Government of Nigeria [2010] EWHC 780 Hamblen J took much the same view, ordering £ 100 million by way of security, when the amount due on the due date for payment was about £ 140 million. That was a case where he thought that the challenge to the Award had no real prospect of succeeding. The matters he took into account were (a) the lack of merits (as he saw them); (b) the fact that there was an element of delaying tactics on the part of the award debtors; and (c) the prejudice the award creditor would suffer from being kept out of the fruits of its award. The security was ordered to be provided by the first three defendants, being the Federal Government of Nigeria, the Attorney General of the Federation, and the Ministry of the Interior.
In Dowans Holding SA v Tanzania Electric Supply Co Ltd [2011] EWHC 1957 (Comm), at [50], Burton J accepted that he ought to be looking for prejudice specifically by reference to any delayed enforcement of the award by converting it into an English judgment. But he also held that there was nothing in the authorities that limited him to considering assets within the jurisdiction. In that case it was the evidence of the award debtor that it had no assets in England and Wales. But he thought it was a highly likely possibility that it had assets in a European country subject to the Judgments Regulation. In a case in which the merits of the challenge were at the lower end of the scale he made an order for security because he thought that there was a real risk that in the interval before enforcement there could be assets within the relevant European countries, which might have been the subject of execution, in relation to which arrangements to make them free from execution might be adopted.
Gross J in IPCO v NNPC [2005] EWHC 726 at [15] said that it would be " wrong to read a fetter into this understandably wide discretion". In that case he ordered security of $50 million in addition to judgment for the $ 13 million indisputably due. That was the amount of the Award with...
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