The Federal Republic of Nigeria v Process & Industrial Development Ltd

Leave to appeal against the setting aside of arbitral awards under section 68 of the Arbitration Act 1996 was refused. The proposed grounds had no real prospect of success, and the high value, public importance and wider implications of the case did not amount to compelling reasons for an appeal.

For section 68(2)(g), causation and substantial injustice are assessed in the context of how the award was procured. Deliberately presenting a false account designed to conceal bribery may constitute an express misrepresentation, rather than mere non-disclosure. An award should be set aside rather than remitted where the irregularity goes to its foundations and there is no real prospect of justice being done by the tribunal on reconsideration.

The ruling followed a major trial concerning Nigeria’s challenge under section 68 of the Arbitration Act 1996 to arbitration awards made in favour of Process & Industrial Development Ltd. In the earlier judgment, the court held that the awards had been obtained by fraud and that the way in which they were procured was contrary to public policy.

After further argument, the court decided to set aside the awards rather than remit matters to the tribunal. Process & Industrial Development Ltd then sought leave to appeal under section 68(4), relying on proposed grounds concerning causation, section 73, alleged perjury, and other compelling reasons. The central issues were whether the proposed appeal had a real prospect of success, whether other compelling reasons justified an appeal, and whether remission was appropriate.

1. Leave to appeal. The application was refused. The proposed grounds had no real prospect of success, and the other matters relied upon were not compelling reasons for an appeal. The value of the proceedings and the fact that a state was a party were important but insufficient by themselves.
2. Causation under section 68(2)(g). The court’s findings established that the three irregularities—false evidence concealing bribery, continued corrupt payments intended to maintain silence, and retention of Nigeria’s internal legal documents—made a difference to the arbitration and the awards. The arbitration would have been completely different had the bribery been before the tribunal. The documents also enabled Process & Industrial Development Ltd to monitor Nigeria’s merits, strategy, settlement position and awareness of the deception. That was relevant to the way the awards were procured and to substantial injustice.
3. Section 73. The proposed challenge did not identify any error of law, evidential failure or irrationality in the finding that Nigeria could not with reasonable diligence have discovered the grounds for objection during the arbitration.
4. Express misrepresentation. The statement that Mr Quinn’s witness statement explained how the gas supply and processing agreement came about was an express representation. Knowingly omitting the bribery from that account, where the purpose was to conceal the truth, amounted to a positive misrepresentation. The court distinguished that situation from a genuinely neutral introduction or heading that neither states nor intends to convey that the omitted fact did not exist.
5. Setting aside rather than remission. Under section 68(3), remission was inappropriate. The tribunal had reached its conclusions on liability and quantum on false foundations. The irregularity went to the root of the awards, and there was no real prospect of justice being done by the tribunal on reconsideration. The awards were therefore set aside in whole.

High Court (Commercial Court): In the earlier judgment, cited as [2023] ECK 2638 (Comm) in this ruling, the court upheld Nigeria’s section 68 challenge and found that the awards had been obtained by fraud and contrary to public policy. This ruling refused leave to appeal and confirmed that the awards should be set aside rather than remitted.