IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation

Under Arbitration Act 1996, section 103(5), an adjournment of enforcement may be revisited where there has been a significant change of circumstances which relates to the reason for the original adjournment. The applicant need not show that the foreign challenge is hopeless or not bona fide. The court must balance the plausibility of the challenge, delay, prejudice, repayment prospects, comity and the Convention’s pro-enforcement purpose. Where foreign proceedings are likely to cause generational delay, the English court may require the public-policy issue to be determined in England, subject to suitable security and conditional enforcement.

IPCO sought enforcement in England of a Nigerian arbitration award concerning a petroleum export terminal. NNPC challenged the award in Nigeria, initially on non-fraud grounds and later alleging that fraudulent and forged documents had been used. English enforcement proceedings were repeatedly adjourned under section 103(5) of the Arbitration Act 1996, and a 2009 consent order set aside earlier partial enforcement.

Field J refused IPCO’s renewed application and held that there had been no sufficient change of circumstances. He nevertheless found a good prima facie fraud case and would have continued the adjournment if exercising the discretion afresh: [2014] EWHC 576 (Comm). The central issues on appeal were whether the discretion could be reopened, how the extreme delay in Nigeria should be treated, and whether enforcement should instead be determined under English public-policy principles.

Lord Justice Christopher Clarke gave the leading judgment, with Burnett and Sales LJJ agreeing. The appeal was allowed to the extent necessary to vary the order.

1. The Court held that Field J applied too strict a test when treating a renewed application as permissible only if the fraud challenge was hopeless or not bona fide. The proper question was whether there had been a significant change since the previous order which impinged on, or related to, the reason for that order. A substantial change in the plausibility of the challenge, particularly when combined with delay, could justify reconsideration.
2. The discretion under section 103(5) required the competing considerations to be weighed. Relevant matters included the strength of the challenge, the likely delay and resulting prejudice, the prospect of repayment if enforcement occurred and the award was later set aside, the pro-enforcement purpose of the New York Convention, and comity towards the courts of the seat. The court should not maintain an indefinite watching brief over foreign proceedings.
3. Although NNPC retained a good prima facie fraud case, the delay in Nigeria had become so extreme that continued adjournment would undermine the Convention’s purpose and convert the award into a long-term loan. It was therefore inappropriate to enforce only part of the award, and increased security alone would not resolve the problem.
4. The appropriate course was to adjourn enforcement pending determination by the English Commercial Court under section 103(3) of the Arbitration Act 1996 of whether enforcement would contravene English public policy because of fraud. That determination would not defer to the arbitral tribunal on the question whether it had been deceived.
5. The Court applied the approach in Westacre Investments Inc v Jugoimport-SPDR Ltd [2000] 1 QB 288. IPCO waived reliance on the requirement that the evidence had been unavailable at the arbitration. NNPC was required to identify the evidence said to satisfy the second condition, and the Commercial Court was to decide that threshold question summarily and expeditiously.
6. The adjournment was conditional on NNPC providing further security of US$100 million. If security was not provided within the specified period, IPCO could enforce. If it was provided, IPCO could enforce if a final English order determined that enforcement was not contrary to English public policy. Recognition was also adjourned, and costs could not be set off against the award.

1. Court of Appeal (Civil Division): Varied the order by continuing the adjournment of enforcement pending an English public-policy determination, conditional on further security of US$100 million: [2015] EWCA Civ 1144.
2. High Court, Commercial Court: Field J refused to reopen the previous adjournment and refused IPCO’s renewed enforcement application: [2014] EWHC 576 (Comm).