THE FEDERAL REPUBLIC OF NIGERIA v JP MORGAN CHASE NA

Permission to appeal requires a ground with a real prospect of success, or another compelling reason for the appeal to be heard. A challenge presented as an error of law will not qualify where it is in substance an attack on detailed factual evaluation. Fraud remains governed by the balance of probabilities. Gross negligence must be kept distinct from ordinary negligence and assessed by the applicable legal test. An indemnity clause may cover claims between the contracting parties, but its application does not automatically require costs on the indemnity basis. Calderbank offers do not inevitably produce that result. Issues-based costs orders remain unusual, particularly where issues are closely entwined. Payment on account must be assessed cautiously, especially where the sums are substantial.

The Federal Republic of Nigeria applied for permission to appeal findings concerning alleged fraud and gross negligence. The proposed grounds challenged the judge’s legal approach and factual evaluation. The application also followed disputes about the basis of costs, the effect of an indemnity clause, Calderbank offers, issues-based costs, and payment on account.

The court considered whether either proposed appeal ground had a real prospect of success and whether there was some other compelling reason for an appeal. It also determined the appropriate costs basis and the amount and timing of payment on account.

1. Permission to appeal refused. The fraud ground had no real prospect of success. The legal authorities previously considered were conventional, and the formulation that the facts must tilt the balance in favour of fraud was simply a more specific expression of the balance of probabilities. Considering facts individually before assessing the case overall was not shown to be legally impermissible. The proposed factual challenge was an attempt to re-evaluate complex factual findings, which appellate courts are generally reluctant to undertake.
2. The gross-negligence ground likewise had no real prospect of success. The court had maintained the distinction between casual negligence and gross negligence and had applied the test in The Hellespont Ardent. A statement that the bank was on notice of a risk possibly amounting to a real possibility of fraud was not a finding of negligence. In any event, the evidential position was far removed from gross negligence.
3. The court declined to consider the separate ground of some other compelling reason. That issue was for the Court of Appeal, particularly where the proposed appeal would require extensive reconsideration of factual findings.
4. JP Morgan’s indemnity clause was, on its ordinary and natural wording, apt to cover the dispute, including costs arising from allegations of fraud or negligence. The clause was primarily directed to third-party situations, but its wording was not confined to them. The carve-out operated by reference to the allegations and did not require a system of double findings. The clause did not, however, make indemnity costs automatic; the court retained a discretion, applying the necessary nuance identified in Littlestone.
5. A Calderbank offer did not by itself justify indemnity costs. Issues-based costs orders were unusual and were generally reserved for truly discrete issues. The court should ordinarily consider a percentage reduction before undertaking the complexity of an issues-based order. JP Morgan was awarded costs on the standard basis.
6. Payment on account was ordered in the sum of £9 million, payable within 28 days. The court adopted the approach outlined in Dana Gas and allowed for a substantial reduction because the costs were very large and assessment could produce a materially lower figure.

The court had previously determined the substantive claim. The judgment does not state the citation of that decision. Permission to appeal was refused by the High Court (Commercial Court).