IPCO (Nigeria) Ltd. v Nigerian National Petroleum Corporation, Court of Appeal - Commercial Court, April 17, 2008, [2008] EWHC 797 (Comm)

Resolution Date:April 17, 2008
Issuing Organization:Commercial Court
Actores:IPCO (Nigeria) Ltd. v Nigerian National Petroleum Corporation
 
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Neutral Citation Number: [2008] EWHC 797 (Comm)

Case No: 2004 Folio 1031

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 17 April 2008

Before:

THE HON. MR JUSTICE TOMLINSON

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Between:

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Michael Lyndon-Stanford QC and Ciaran Keller

(instructed by Messrs Lovells) for the Claimant

Jonathan Nash QC and James Willan

(instructed by Messrs Stephenson Harwood) for the Defendant

Hearing dates: 21-22, 25 February 2008

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Judgment

Mr Justice Tomlinson :

Introduction

  1. On this application the court has to consider its power of enforcement of a New York Convention award in circumstances where a challenge to the validity of the award is pending before the supervisory court. An unusual feature of the application is that the court has already once before had to consider whether to adjourn a decision on enforcement of the award, and has adjourned enforcement on terms. There has been compliance by the Defendant with those terms. Now the Claimant returns to court and asks it to make a different order. It does so in part because the resolution of the challenge to the validity of the award of which the supervisory, Nigerian, court is seised is taking very much longer than was first expected and in part because this court was, it is alleged, on the earlier occasion inadvertently misled in a manner material to its evaluation of the strength of the challenge. In these circumstances the question arises whether the court should, as the Defendant would put it, revisit its earlier decision. In view of the further time which may elapse before resolution of the proceedings in Nigeria, there arises also in rather stark relief the question whether the court can and should permit enforcement of such part of the award, if any, as is, in the opinion of the court, incapable of serious challenge.

  2. The Claimant company, to which I shall refer as ``IPCO'', is a Nigerian company. It is a subsidiary of a Hong Kong registered company. It is a contractor specialising in the construction of on-shore and off-shore oil and gas facilities. It was incorporated in Nigeria in 1990 in order, as I infer, to exploit the opportunities for business in that country.

  3. The Defendant, to which I shall refer as ``NNPC'', is a Nigerian Federal Government corporation. It is and describes itself as the State Oil Corporation of Nigeria. It is one of the principal contributors to the economy of Nigeria, with a turnover in 2005 equivalent to over £5,000,000,000.00. In terms of volume and revenue it is the most important oil and gas producer in Africa.

  4. By a contract dated 14 March 1994 IPCO agreed for a lump sum price to undertake the design and construction for NNPC of a petroleum export terminal in the Port Harcourt area of Nigeria to be known as the Bonny Export Terminal. Completion of the project took some 22 months longer than was envisaged in the contract. IPCO contended that that was in part a result of NNPC requiring variations to the agreed specification.

  5. The contract was governed by Nigerian law and in the event of disputes which could not otherwise be resolved provided for arbitration in Lagos in accordance with the Nigerian Arbitration and Conciliation Act 1990.

  6. Completion of the contract was followed by a lengthy arbitration between the parties. The arbitration tribunal comprised a former Attorney General and Minister of Justice of Nigeria, a former Director of the International and Comparative Law Division of the Federal Ministry of Justice of Nigeria, also the Nigerian representative of UNCITRAL and Honorary Vice President of the International Council for Commercial Arbitration and, thirdly, a retired Chief Judge, the co-author of the leading Nigerian textbook on arbitration.

  7. On 28 October 2004 the tribunal issued its award, an expression which I use without prejudice to IPCO's argument that what was issued was a series of divisible awards. After setting off an amount of US$1,348,015.00 found due from IPCO to NNPC on NNPC's counterclaim, the award in favour of IPCO against NNPC was US$152,195,971.55, and Naira 5 million. The latter sum related to costs of the arbitration awarded to IPCO. The Dollar sum included a further US$815,000 on account of the costs of the arbitration. The arbitrators also directed that the sums awarded should bear interest at 14% per annum until payment.

  8. Being an award rendered in Nigeria by Nigerian arbitrators in a dispute governed by Nigerian law between two Nigerian entities, this is in every sense a Nigerian domestic award. However, since Nigeria is a state specified by Order in Council under section 100(3) of the Arbitration Act 1996, the award is also a New York Convention award. Accordingly it may be recognised and enforced in this jurisdiction pursuant to section 101 of the Arbitration Act.

  9. By an apparently undated Arbitration Claim Form issued in this court IPCO sought ``enforcement of the terms of the arbitral award'' in accordance with a draft order of enforcement attached thereto. On 29 November 2004 on an ex parte application on paper David Steel J ordered enforcement in the terms requested. The order in consequence made failed properly to comply with CPR 62.18(10) in that it failed properly to set out the restrictions on enforcement under Rule 62.18(9)(b). Nothing now turns on this. However the order which David Steel J was invited to and did make was an order for the payment of the sterling equivalent of the Dollar and Naira sums awarded converted at rates of exchange said to be prevailing as at 23 November 2004. Interest for 26 days, 28 October 2004 to 23 November 2004 on those sterling sums was then calculated at £811,098.88, this too was directed to be paid and interest was said to be continuing at a daily rate of £31,196.11.

  10. It was common ground before me that the conversion of the award into sterling for the purposes of recognition and enforcement was inappropriate. The power given under section 101(3) of the Arbitration Act is to enter judgment ``in terms of the award''. Mr Michael Lyndon-Stanford QC, for IPCO, invited me to amend the order made and to substitute an order for enforcement in terms of the award. I did not understand Mr Jonathan Nash QC, for NNPC, to contend that I lacked the power so to do. In the circumstances I do not need to consider whether the parties are correct in their view that the court lacks the power, absent consent, to direct that judgment be entered in a currency other than that of the award. Mr Nash pointed out that the application currently before the court is for enforcement of the order of David Steel J, and he suggested that that order did not readily lend itself to partial enforcement, even assuming that to be available in principle. He also suggested that the making of this order was the first of two occasions upon which the court, at the instance of and misled by the parties, had approached its jurisdiction under sections 101-103 of the Arbitration Act in an inappropriate manner.

  11. The second such occasion was, submitted Mr Nash, when the matter came before Gross J on 7 and 12 April 2005. Having announced his decision at the conclusion of the hearing Gross J delivered a reserved judgment on 27 April 2005. It is reported at [2005] 2 Lloyd's Rep 326. It is this decision which in one sense I am asked to revisit, although a more appropriate analysis is I think that I am asked to consider whether the continuation of Gross J's order meets the justice of the case in the different circumstances which now prevail.

  12. As Gross J recorded at paragraph 2 of his judgment, there were before the court on that occasion three applications:

    i) an application by NNPC to set aside the order, pursuant to sections 103(2)(f) and 103(3) of the Arbitration Act 1996;

    ii) in the alternative, an application by NNPC that the enforcement of the order be adjourned, pursuant to section 103(5) of the Arbitration Act 1996;

    iii) an application by IPCO, pursuant to section 103(5) of the Arbitration Act, in substance that in the event of NNPC failing on (i) but succeeding on (ii) above, then NNPC should provide security in the sum of US$50 million (or such other sum as the Court thinks fit), failing which IPCO be permitted to enforce the award as a judgment of the court.

  13. In order to put the matter into context I set out below the relevant sections of the Arbitration Act 1996.

    ``100(1) In this Part a `New York Convention award' means an award made, in pursuance of an arbitration agreement, in the territory of a state (other than the United Kingdom) which is a party to the New York Convention. ...

    (3) If Her Majesty by Order in Council declares that a state specified in the Order is a party to the New York Convention, or is a party in respect of any territory so specified, the Order shall, while in force, be conclusive evidence of that fact.

    (4) In this section `the New York Convention' means the convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration on 10th June 1958.

    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 by way of defence, set-off or otherwise 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, 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...

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