Process & Industrial Developments Ltd v The Federal Republic of Nigeria
| Jurisdiction | England & Wales |
| Judge | Mr Justice Butcher |
| Judgment Date | 16 August 2019 |
| Neutral Citation | [2019] EWHC 2241 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: CL-2018-000182 |
[2019] EWHC 2241 (Comm)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF
ENGLAND AND WALES
COMMERCIAL COURT (QBD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Butcher
Case No: CL-2018-000182
Ian Mill QC (instructed by Kobre & Kim (UK) LLP) for the Claimant
Harry Matovu QC (instructed by Curtis, Mallet-Prevost, Colt & Mosle LLP) for the Defendant
Hearing dates: 14th June 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.
Introduction
This is an application by the Claimant, Process and Industrial Developments Ltd (“P&ID”), pursuant to s. 66 Arbitration Act 1996, for an order that P&ID have leave to enforce an arbitration award dated 31 January 2017 in the same manner as a judgment or order of this court to the same effect. The Defendant, the Federal Republic of Nigeria (“the FRN”), resists the making of such an order.
The award of 31 January 2017 to which this application relates is stated to be a Final Award made by the majority of a tribunal consisting of Sir Anthony Evans, Chief Bayo Ojo SAN, and Lord Hoffmann (“the Tribunal”). The majority was comprised of Sir Anthony Evans and Lord Hoffmann, and Chief Bayo Ojo dissented. I will refer to that award as “the Final Award”.
The Final Award was made in arbitration proceedings relating to a dispute between P&ID and the FRN arising out of a Gas Supply and Processing Agreement (the “GSPA”) entered into between P&ID and the FRN acting by its Ministry of Petroleum Resources (“the Ministry”), dated 11 January 2010.
An application to enforce an arbitration award under s. 66 Arbitration Act 1996 is a summary procedure. It usually does not require a detailed investigation of the facts of the arbitration. In the present case, however, because there is an issue between the parties as to the seat of the arbitration, and as to whether enforcement under s. 66 Arbitration Act 1996 is available to P&ID at all, it is necessary to summarise the salient facts.
Factual Background
Under the terms of the GSPA between the parties:
(1) The FRN was to supply natural gas (“Wet Gas”), at no cost to P&ID, via a government pipeline, to the site of P&ID's production facility.
(2) P&ID was to construct and operate the facility necessary to process the Wet Gas by removing the natural gas liquids (“NGLs”) contained within it, and to return to the FRN lean gas suitable for use in power generation or other purposes, at no cost to the FRN.
(3) P&ID was to be entitled to the NGLs stripped from the Wet Gas.
(4) The GSPA was to run for 20 years from the date of first regular supply of Wet Gas by the FRN.
Clause 20 of the GSPA provided, in part, as follows:
“The Agreement shall be governed by, and construed in accordance with the laws of the Federal Republic of Nigeria.
The Parties agree that if any difference or dispute arises between them concerning the interpretation or performance of this Agreement and if they fail to settle such difference or dispute amicably, then a Party may serve on the other a notice of arbitration under the rules of the Nigerian Arbitration and Conciliation Act (Cap A18 LFN 2004) which, except as otherwise provided herein, shall apply to any dispute between such Parties under this Agreement. Within thirty (30) days of the notice of arbitration being issued by the initiating Party, the Parties shall each appoint an arbitrator and the arbitrators thus appointed by the Parties shall within fifteen (15) days from the date the last arbitrator was appointed, appoint a third arbitrator to complete the tribunal. …
The arbitration award shall be final and binding upon the Parties. The award shall be delivered within two months after the appointment of the third arbitrator or within such extended period as may be agreed by the Parties. The costs of the arbitration shall be borne equally by the Parties. Each Party shall, however, bear its own lawyers' fees.
The venue of the arbitration shall be London, England or otherwise as agreed by the Parties. The arbitration proceedings and record shall be in the English language.
The Parties shall agree to appropriate arbitration terms to exclusively resolve any disputes arising between them from this Agreement.”
By 2012 a dispute had arisen in relation to the GSPA. P&ID contended that the FRN had failed to make available Wet Gas in accordance with the GSPA. On 22 August 2012 P&ID served its Notice of Arbitration. On 19 September 2012, P&ID appointed Sir Anthony Evans to act as arbitrator. On 30 November 2012, the FRN appointed Chief Bayo Ojo, SAN as its arbitrator. The two arbitrators invited Lord Hoffmann to become “chairman” of the arbitral tribunal, and he accepted this appointment on 29 January 2013.
By its initial Statement of Case in the arbitration, served on 28 June 2013, P&ID claimed that the FRN was in repudiatory breach of the GSPA, and that that repudiation had been accepted. P&ID claimed damages, quantified at that stage as US$5,960,226,233 plus interest.
On 3 July 2014 the Tribunal made a unanimous Part Final Award. It bore the heading “In the matter of the Arbitration Act 1996 (England and Wales) and in the matter of an arbitration under the Rules of the Nigerian Arbitration and Conciliation Act (Cap A18 LFN 2004)”. That Part Final Award dealt with certain preliminary issues which arose. The first was as to whether the Tribunal had jurisdiction to rule on its own jurisdiction. It held that it had. It said that the Arbitration Rules scheduled to the Nigerian Arbitration and Conciliation Act 1988 (“ACA”) were clear on this point, and cited Article 21 of those Rules. It continued in paragraph 36: “By the law of the seat of arbitration, England, section 30(1) of the Arbitration Act 1996 confers a similar jurisdiction.” The Part Final Award also determined that the Ministry and the Government of the FRN were one and the same, and it had entered into the GSPA on behalf of the Government. The Part Final Award specified, at the end: “Place of arbitration: London, United Kingdom”.
A hearing on liability took place before the Tribunal on 1 June 2015. On 17 July 2015 the Tribunal issued a second Part Final Award, which has been referred to on this application, and to which I will refer, as “the Liability Award”. It bore the same heading as the first Part Final Award. In the Liability Award the Tribunal unanimously decided that the FRN had repudiated the GSPA by failure to perform its obligations thereunder; that P&ID was entitled to and did accept the FRN's repudiation of the GSPA; and that P&ID was entitled to damages, in an amount to be assessed, for the repudiation of the GSPA. The Liability Award stated, at the end: “Place of arbitration: London, United Kingdom”.
Following the Liability Award, there occurred a number of matters which have been the subject of debate on this application, and which it is necessary to refer to in somewhat more detail.
On 23 December 2015 Stephenson Harwood LLP, acting for the FRN, issued an Arbitration Claim Form in this Court (ie the Commercial Court). In that Claim Form the “Remed[ies] Claimed” were as follows: (1) an order under CPR Part 62.9(1) extending the time under s. 70(3) Arbitration Act 1996 for an application under s. 68 of that Act; and (2) an order setting aside the Liability Award and/or remitting it for further consideration under s. 68(2)(d) or s. 68(2)(f) Arbitration Act 1996, on the basis that there had been a serious irregularity. The Grounds specified in the Claim Form were: (A) that there was an internal inconsistency in the Liability Award; (B) that the Tribunal had not dealt with the Ministry's case that it lacked factual authority to perform the GSPA separately from its case that it lacked legal capacity to do so; and (C) that there had been no reasoning on the issue of whether the Ministry's conduct was repudiatory.
The FRN's solicitors served a witness statement in support of its applications for an extension of time and under s. 68 Arbitration Act 1996. This was a statement of Folakemi Adelore, the Director of Legal Services at the Ministry, and was dated 22 December 2015. Ms Adelore stated (at paragraph 10) that the proposed claim was brought 4 months, 8 days out of time; that “this delay was not in any way deliberate or calculated”; and that the reason for it was the political situation in Nigeria, which had seen elections on 28 and 29 March 2015 result in the defeat of the administration of President Goodluck Jonathan, and a subsequent period in which the new administration was settling into office, meaning that ministers, including the Attorney-General of the FRN, had only been appointed in November 2015.
Ms Adelore's witness statement stated, at paragraph 22:
“On 21 July 2015, TMS [Twenty Marina Solicitors (the legal representatives of the Ministry in Nigeria)] advised me as to whether the Award failed completely and/or clearly to address the issues presented by the Respondent and as to whether or not it should be challenged accordingly. The Ministry understood that in order to challenge the Award, it would need to instruct a firm of solicitors in the U.K. given that any such challenge would have had to be before the English courts under the English Arbitration Act 1996. (Nothing set out in this statement shall constitute a waiver of privilege.)”
Ms Adelore's witness statement further stated, at paragraph 33:
“Since receipt of the documents on 25 November 2015, Stephenson Harwood and Leading Counsel have been considering the merits of the Applications, advising the Ministry on the same and...
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