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02 Mar 2017

Stephenson Harwood wins at the Supreme Court for Nigerian National Petroleum Corporation

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Law firm Stephenson Harwood LLP has secured an important arbitration related decision in the Supreme Court of the United Kingdom in favour of the Nigerian National Petroleum Corporation (NNPC) against IPCO (Nigeria) Ltd.

The hearing is the latest in this long running dispute related to IPCO Nigeria's contract to build the Bonny Export Terminal in Port Harcourt, Nigeria in the 1990s. Following arbitration proceedings in Nigeria, IPCO was awarded US$150 million in 2004, with annual interest running at 14%. NNPC immediately challenged the award in the Nigerian courts.

The Supreme Court considered whether the English Court, as an enforcing court of a Nigerian arbitral award, was entitled to require a party resisting enforcement to provide security for the money payable under the award as a condition of being entitled to advance a good arguable defence that enforcement should be refused on grounds of English public policy, e.g. because the award was procured by fraud.

Since 2004, IPCO has repeatedly sought to enforce the award in England before the proceedings in Nigeria have been concluded. During the course of one of those enforcement attempts, NNPC discovered evidence that IPCO had forged documents relating to the claim and the related arbitration in Nigeria, and as a result the parties agreed in 2009 to adjourn the enforcement proceedings.

Despite that agreement, IPCO again sought to enforce the award in England in 2012. In 2015, the Court of Appeal decided that the length of the delays in the Nigerian legal system required the English Court to lift the adjournment and to decide whether to allow enforcement following a trial of the fraud allegations in the English Court.

Both Mr Justice Field in 2014 and the Court of Appeal had concluded that the fraud allegations were made bona fide, that NNPC has a good prima facie case that IPCO practised a fraud on the tribunal and that NNPC has a realistic prospect on that basis of proving that the whole award should be set aside.  However, the Court of Appeal ordered NNPC to provide an additional security of US$100 million (having previously provided security of US$80million) as a condition of being entitled to advance a defence that enforcement should be refused because the award had been procured by IPCO's fraud.

Lords Mance, Sumption, Toulson, Hodge and Clarke in the Supreme Court unanimously set aside the Court of Appeal's order, allowing NNPC to advance its defence in the English Court free of any such conditions.

"This judgment has not only established that NNPC is free to advance its case that the award had been procured by fraud, but it also gives legal clarity and precedent regarding the attaching of conditions to the raising of a defence to the enforcement of an international arbitration award," said partner Kamal Shah, head of the Africa group, Stephenson Harwood. "This is a significant mandate and we are pleased with this victory for NNPC. We are looking forward to trial in 2018."

The long running dispute has highlighted important issues regarding the interpretation by the English Courts of the New York Convention 1958 and the Arbitration Act 1996. In particular, this judgment from the jurisdiction’s apex court has clarified definitively the limits of an enforcing Court’s power to order security as a condition on the right to have a decision of a properly arguable challenge under the New York Convention 1958 and the English Arbitration Act 1996.

The Stephenson Harwood team advising NNPC comprises partner and head of the Africa group Kamal Shah, who has worked on the matter for more than twelve years, senior associate Stephen Ashley, who has advised since 2009, counsel Duncan Bagshaw, associates Laura Andrewes and Jide Adesokan, and trainee solicitor Krystal Lee. Counsel for NNPC was Toby Landau QC and James Willan of Essex Court Chambers.

NNPC's Nigerian counsel are Wale Akoni SAN and Jokpa Utake of Babalakin & Co and Olabisi Soyebo and Oluwafemi Adegboyega of Abdullahi Ibrahim & Co.

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KEY CONTACT

Kamal Shah

Kamal Shah
Partner

T:  +44 20 7809 2301 M:  +44 7958 272 742 Email Kamal | Vcard Office:  London

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Andrew Rieley
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