Nigerian National Petroleum Corporation v Ipco (Nigeria) Ltd

JurisdictionEngland & Wales
JudgeLord Justice Tuckey,Lord Justice Rimer,Lord Justice Wall
Judgment Date21 October 2008
Neutral Citation[2008] EWCA Civ 1157
Docket NumberCase No: A3/2008/1037.PTA+(A)
Date2008
Year2009
CourtCourt of Appeal (Civil Division)
Between :
Nigerian National Petroleum Corporation
Appellant
and
Ipco (Nigeria) Ltd.
Respondent

[2008] EWCA Civ 1157

Before:

Lord Justice Tuckey

Lord Justice Wall and

Lord Justice Rimer

Case No: A3/2008/1037.PTA+(A)

Claim no. 2004 Folio 1031

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM QUEEN'S BENCH DIVISION

MR JUSTICE TOMLINSON

Royal Courts of Justice

Strand, London, WC2A 2LL

Jonathan Nash Q.C. and James Willian (instructed by Messrs Stephenson Harwood) for the Appellant

Michael Lyndon-Stanford Q.C. and Ciaran Keller (instructed by Lovells LLP) for the Respondent

Hearing dates: 7 & 8 October 2008

Lord Justice Tuckey
1

Can part of a New York Convention arbitration award be enforced? How should sequential applications for enforcement of such an award be approached? Tomlinson J. gave permission to appeal to enable these questions to be considered by this court after giving judgment for the claimant (IPCO) for over U.S. $85m. against the defendant (NNPC) on IPCO's adjourned application to enforce a convention award here.

2

IPCO is a Nigerian subsidiary of a Hong Kong registered company. In March 1994 it entered into a turnkey contract with NNPC, the state oil company of Nigeria, to design and construct a petroleum export terminal near Port Harcourt. The progress of the project was delayed by 22 months because, as IPCO contended, NNPC required substantial variations to the contract works. IPCO's disputed claims to be paid substantially more than the contract price were referred to arbitration in Lagos in accordance with Nigerian law as the contract provided. On 28 October 2004 the arbitrators issued their award in favour of IPCO in a net amount (taking account of NNPC's relatively small counter claim) of U.S. $152,195,971.55.

3

In November 2004 NNPC applied to the Federal High court in Nigeria to set aside the award and IPCO applied to our High Court to enforce it. NNPC's application has not yet been determined. IPCO's without notice application was successful but on NNPC's application on 12 April 2005 Gross J. adjourned enforcement on terms that NNPC pay IPCO approximately $13m., which it admitted was owing, and provide security to IPCO of $50m. NNPC complied with these conditions.

4

IPCO renewed its application to enforce the award before Tomlinson J. in February 2008 because NNPC's challenge to the validity of the award in Nigeria was taking very much longer to determine than first expected and because it alleged that Gross J. had been inadvertently misled in a manner material to his evaluation of the merits of one aspect of the challenge. Tomlinson J. [ (2008) EWHC 797 (Comm.)] decided that both these matters justified revisiting Gross J's decision and the judgment he gave was for the amounts awarded by the arbitrators on two of IPCO's six heads of claim less credit for part of the $13m. paid under Gross J's order. NNPC says the judge had no jurisdiction to enforce part of the award in this way and that he should not have revisited Gross J's evaluation of the merits of its challenge to the award which in any event was correct. IPCO says the judge answered both questions correctly but by way of cross appeal contends that he should have gone further and given judgment on additional heads of claim which were the subject of the award. IPCO did not pursue before us its wider grounds of cross appeal (7, 8, 10 and 11) for which it did not have permission. It did pursue ground 9 for which we refused permission for reasons which appear later in this judgment.

5

With this short introduction to the factual background I can turn to the first question I posed at the beginning of this judgment. It is one of some importance upon which there is no English authority.

6

Sections 100 to 103 in Part III of the Arbitration Act 1996 reflect the obligations which this country assumed as a signatory to the Convention, to which Nigeria is also a party. Articles III, V and VI of the Convention provide:

Article III

Each Contracting State shall recognise arbitral awards as binding and enforce them in accordance with the rules of procedure of the territory where the award is relied upon, under the conditions laid down in the following articles…

Article V

1. Recognition and enforcement of the award may be refused at the request of the party against whom it is invoked, only if that party furnishes to the competent authority where the recognition and enforcement is sought, proof that: …

(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced; or..

(e) The award has not become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

2. Recognition and enforcement of an arbitral award may also be refused if the competent authority in the country where recognition and enforcement is sought finds that:..

(b) the recognition or enforcement of the award would be contrary to the public policy of that country.

Article VI

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in Article V (1) (e), the authority before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security.

7

The relevant parts of the 1996 Act are:

101 (1). A New York Convention award shall be recognised as binding on the persons as between whom it was made, and may accordingly be relied on by those persons … in any legal proceedings in England and Wales or Northern Ireland.

(2) A New York Convention award may, by leave of the court, be enforced in the same manner as a judgment or order of the court to the same effect.

(3) Where leave is so given, the judgment may be entered in terms of the award.

103 (1). Recognition or enforcement of a New York Convention award shall not be refused except in the following cases.

(2) Recognition or enforcement of the award may be refused if the party against whom it is invoked proves-

(a) …party … under some incapacity;

(b) …arbitration agreement …not valid …;

(c) …not given proper notice …;

(d) that the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration or contains decisions on matters beyond the scope of the submission to arbitration (but see subsection (4)); …

(e) … composition of … arbitral tribunal or … procedure not in accordance with agreement … or law …;

(f) If the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made.

(3) Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration or if it would be contrary to public policy to recognise or enforce the award.

(4) An award which contains decisions on matters not submitted to arbitration may be recognised or enforced to the extent that it contains decisions on matters submitted to arbitration which can be separated from those on matters not so submitted.

(5) Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in subsection (2) (f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award.

It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security.

8

The 88 page award is in a conventional form. Paragraph 29.1 summarises the “awards” made to IPCO as damages for breach of contract. The sub-paragraph concludes:

Summary of Award to Claimant

Head of Claim No. 2 – Non-payment … $1,641,234.00

Head of Claim No. 3 – Variations … $58,521,249.55

Head of Claim No. 4 – Phase II prolongation … $53,563.352.00

Head of Claim No. 5 – Standby … $3,870,679.00

Head of Claim No.6 – Escalation of Contract Price… $618,116.00

Head of Claim No. 7 – Financing Charges … $34,514,356.00

TOTAL … $152, 728,986.55

9

After dealing with the counter claim and costs the arbitrators concluded their award by saying:

WE … DO HEREBY AWARD AND DETERMINE as follows:

1. The Respondent shall pay to the Claimant within twenty-one days of this Award the sum of U.S. $152,195,971.55 and Naira 5,000,000.00 for breach of contract and costs.

Interest was awarded on these sums at 14% from the date of the award until payment.

10

Tomlinson J. decided that IPCO could enforce the amounts awarded on heads 2 and 3 of its claim. His order reads:

2. The defendant pay to the claimant within 28 days the following monies owing under an arbitration award made on 28 October 2004 in Lagos Nigeria and attached to this Order (“the Award”) such monies being the sum of :

(1) U.S. $1,641,234 (being Head of Claim No. 2 – non-payment);

(2) U.S. $58,521,249.55 (being Head of Claim No. 3 – Variations) less the amount of $7,691,086.33 paid in respect of this Head of Claim on 12 May 2005 (as part of the sum of $13,102,361.72 paid pursuant to paragraph 2 (1) of...

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