IPCO (NIGERIA) LTD V NIGERIAN NATIONAL PETROLEUM CORPORATION

[2017] UKSC 16, Supreme Court, Lord Mance, Lord Clarke, Lord Sumption, Lord Hodge and Lord Toulson, 1 March 2017

Arbitration - Enforcement of award - Award subject to challenge in curial courts - Public policy - Security for the sum outstanding - Arbitration Act 1996, sections 103(3) and 103(5) - CPR 3.1(3)

In October 2004 IPCO obtained an arbitration award in Nigeria against NNPC, but an application to enforce the award in England was stayed by Gross J in 2005 ([2005] 2 Lloyd's Rep 326) under section 103(5) of the Arbitration Act 1996, subject to NNPC providing security, on the basis that the award was subject to a challenge in the Nigerian courts. A further application was made to Tomlinson J and the Court of Appeal in 2008 ([2008] 2 Lloyd's Rep 59), and partial enforcement was ordered. Shortly afterwards, NNPC obtained a stay of the enforcement order on the basis of new allegations that the award had been obtained by fraud. By a consent order dated 17 June 2009 those parts of Tomlinson J's order requiring payment were set aside, and a further decision on enforcement was adjourned pending a ruling of the Nigerian courts. Criminal proceedings against IPCO were under consideration in Nigeria, and the appeal against the award had not been resolved. In the present proceedings IPCO sought an order for enforcement, arguing that there had been a sufficient change in circumstances since the previous hearings in England to justify an enforcement order. The Court of Appeal ordered the enforcement proceedings to be stayed. There had been a change of circumstances in that it had become apparent that the Nigerian proceedings would not be concluded for at least 20 years. The appropriate way forward was to refer the question of fraud to the Commercial Court rather than await the outcome of events in Nigeria. IPCO's application would be adjourned pending the Commercial Court's decision on whether enforcement would be contrary to English public policy (in accordance with section 103(3) of the 1996 Act). That ruling would be determinative on enforcement. The adjournment was made subject to NNPC providing further security for the award, failing which the award would be enforced immediately. NNPC appealed to the Supreme Court against the order for security.