AIC Ltd v Federal Airports Authority of Nigeria

Before a civil order is sealed, the court retains power to reopen the judgment and order. The discretion is governed by the overriding objective, but the scales are heavily weighted in favour of finality, particularly where a final order has been pronounced. The combined factors favouring reconsideration must overcome that weight.

There is no mandatory two-stage procedure, no bright-line requirement of exceptional circumstances and no exhaustive list of qualifying factors. Where non-compliance caused the order, relief-from-sanctions principles may apply directly or by analogy. The court must examine the seriousness of the breach, its explanation and all the circumstances, including the nature of the order. An appellate court re-exercising the discretion must use the facts as they stand at that time.

AIC Ltd v Federal Airports Authority of Nigeria arose from an application to enforce a Nigerian arbitration award in England. Enforcement was initially adjourned on condition that the Federal Airports Authority of Nigeria provided a bank guarantee. When the guarantee was not provided by the deadline, the High Court made an unsealed final order permitting enforcement. The guarantee became available a few hours later, and the judge reopened and set aside that order.

The Court of Appeal allowed AIC's appeal and reinstated the enforcement order: [2020] EWCA Civ 1585. The principal issues before the Supreme Court were how a judge should decide whether to reopen a judgment or order before sealing, whether a two-stage procedure was required, and how the discretion should be exercised where a final order resulted from serious non-compliance with an earlier order.

Held, unanimously, allowing the appeal in part. Lord Briggs and Lord Sales delivered a joint judgment with which Lord Hodge, Lord Hamblen and Lord Leggatt agreed.

1. A judge has power to revisit a judgment or order until the resulting order is sealed. The power must be exercised by doing justice in accordance with the applicable overriding objective. In ordinary civil proceedings, that means the overriding objective in the Civil Procedure Rules. The Supreme Court explained In re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8 as requiring a flexible evaluative judgment rather than a definitive formula.

2. The court must give the principle of finality central and substantial weight. An applicant does not begin with evenly balanced scales. The relevant question is whether the combined factors favouring reconsideration overcome the deadweight of finality and any other factors favouring the existing order. There is no mandatory two-stage procedure, no requirement to demonstrate circumstances bearing a particular verbal label, and no exhaustive list of qualifying considerations. The weight of finality varies with the proceedings, hearing and order. It is strongest after a full trial or another final first-instance determination and generally lighter for interim or case-management orders.

3. The High Court judge erred by substantially undervaluing finality and by finding a good explanation for the delay when the evidence did not justify that finding. The Court of Appeal also erred by imposing a two-stage procedure and by denying that the arrival of the guarantee was a material change of circumstances. Applying the caution in Piglowska v Piglowski [1999] 1 WLR 1360 did not prevent those errors being identified on a fair reading of the ex tempore judgment.

4. It was unnecessary to decide whether the application technically fell within Civil Procedure Rules Part 3.9. The enforcement order operated, in substance or by close analogy, as a sanction for failing to provide the guarantee on time. The three stages stated in Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) (Practice Note) [2014] EWCA Civ 906 therefore applied. The breach was very serious and no good reason had been shown, but relief could still be granted at the third stage after considering all the circumstances.

5. The discretion had to be re-exercised using the current facts. Although finality and culpable delay strongly opposed reopening, delivery of the guarantee within hours had created an unintended windfall by giving AIC both unrestricted enforcement and an immediately realisable guarantee. The enforcement order was set aside, and the enforcement application was adjourned pending the Nigerian proceedings, with liberty to apply if they did not progress. AIC was nevertheless entitled to retain the guarantee proceeds already received. This less favourable result for the defaulting party properly reflected its serious non-compliance.

• United Kingdom Supreme Court: The appeal was allowed in part. The enforcement order restored by the Court of Appeal was set aside, the enforcement application was adjourned pending the Nigerian proceedings, and AIC was permitted to retain the proceeds of the guarantee: [2022] UKSC 16.
• Court of Appeal: AIC's appeal was allowed and the enforcement order was reinstated. The court held that the judge should have used a two-stage procedure and that neither the late guarantee nor the explanation for delay justified reopening: [2020] EWCA Civ 1585.
• High Court: After making an unsealed final order permitting enforcement, the deputy judge reopened and set it aside when the bank guarantee was provided later that day. She extended time, granted relief from sanctions and adjourned enforcement pending the Nigerian proceedings.