AIC Ltd v The Federal Airports Authority of Nigeria

The power to reconsider an order pronounced in open court but not yet sealed is founded on the overriding objective. It remains subject to the fundamental importance of finality and should be exercised rarely.

Where a party applies, the court must first ask whether there is a reasonably arguable and sufficiently compelling basis to reopen the matter. If so, it must then decide whether justice requires the order to be changed. A party cannot ordinarily rely on its own late compliance with an earlier order, or on a development already foreshadowed at the hearing, as a significant change of circumstances. The absence of detriment to the other party is relevant but not decisive.

AIC obtained a Nigerian-seat arbitration award exceeding US$48 million against FAAN. AIC applied to enforce it in England under section 101 of the Arbitration Act 1996.

The High Court set aside the initial enforcement order, adjourned enforcement and required FAAN to provide security. FAAN failed to provide the security within the ordered periods. At a hearing on 6 December 2019, its application for an extension was effectively abandoned and the court permitted enforcement. FAAN obtained a guarantee shortly afterwards. The judge then reconsidered the unsealed order, granted relief from sanctions and continued the adjournment: [2019] EWHC 3633 (TCC). AIC appealed. The central issues were whether reconsideration should have been entertained and whether the judge properly exercised her discretion.

Coulson LJ, with whom Flaux and Carr LJJ agreed, allowed the appeal. The Third Buehrlen Order was set aside and the Second Buehrlen Order, permitting enforcement of the operative part of the award, was reinstated.

1. Jurisdiction and finality. An order takes effect when pronounced, not when sealed. The court nevertheless has jurisdiction to revisit an order before perfection. The jurisdiction is founded on the overriding objective and is not confined by a rigid requirement of exceptional circumstances. Finality remains of fundamental public importance, so the jurisdiction must be carefully controlled.
2. Two-stage approach. On a party’s application, the court must first decide whether reconsideration should be entertained in principle. There must be a reasonably arguable and sufficiently compelling basis, such as a mistake, fundamental misapprehension, or material evidence or law that was overlooked. If that threshold is met, the court must exercise an open-ended discretion under the overriding objective. Detrimental reliance is relevant, but the party resisting reconsideration need not prove detriment.
3. Application to the guarantee. The guarantee was not a significant change of circumstances. The evidence before the court on 6 December indicated that it was imminent and would be provided by 13 December. Its later production was the culmination of efforts already considered, not a new development. It was also wrong in principle to allow a party to rely on compliance occurring after the order, in breach of an earlier order, to reopen the result.
4. Discretion and sanctions. The judge failed to ask the threshold question and failed to consider the full period of FAAN’s unexplained delay. She also treated the abandonment of the extension application as favourable to FAAN. The appellate court was entitled to interfere under Walbrook Trustee (Jersey) Ltd v Fattal [2008] EWCA Civ 427. The underlying principles in Denton v TH White [2014] EWCA Civ 906 were relevant. FAAN’s breach was serious and significant, its delay was inadequately explained, and the circumstances favoured enforcing compliance with the court’s orders. The sanction for failure to provide security was enforcement of the award.

• Court of Appeal (Civil Division) — [2020] EWCA Civ 1585: allowed the appeal and reinstated the order permitting enforcement of the award.
• High Court, Technology and Construction Court — [2019] EWHC 3633 (TCC): reconsidered the unsealed enforcement order, granted FAAN relief from sanctions and continued the adjournment of enforcement.
• High Court, Technology and Construction Court — [2019] EWHC 2212 (TCC): set aside the earlier enforcement order, adjourned enforcement and ordered FAAN to provide security.