Nairametrics| The Supreme Court in the United Kingdom has acquitted the Nigerian National Petroleum Corporation (NNPC) from providing an additional $100 million guarantee in a case involving the Corporation and a service company, IPCO (Nigeria) Limited.
This is the latest in a 13-year old tussle between the 2 parties. The NNPC will be much relieved at the decision which not only discharged NNPC from the responsibility to sustain the additional security of US$100 million in favor of IPCO but it also clarified conclusively the limits of an enforcing Court’s power to order security as a condition on the right to have a decision of a properly arguable challenge under the New York Convention 1958 and the English Arbitration Act 1996. This is a rundown of events leading to the historic decision:
2004
- IPCO refers its claims to arbitration in Nigeria and obtained an Arbitral Award of $154 million with annual interest running at 14%. NNPC challenges at a Federal High Court in Lagos. IPCO sought to enforce the award in England before the conclusion of NNPC’s challenge of the Arbitral Award in Nigeria.
2008
- NNPC discovers evidence that IPCO had forged documents relating to the claims and the related arbitration in Nigeria during one of IPCO’s attempts to secure an order for the enforcement of the Award in the UK
2009
- Both parties agree to suspend enforcement proceedings in the UK until the determination of the fraud allegations in Nigeria
2012
- IPCO disregards the agreement and applied to the English Commercial Court to enforce the award.
- IPCO’s application was dismissed on March 14, with the court saying that NNPC had made out a good case of fraud giving it a realistic prospect of proving that the whole award should be set aside.
- IPCO appealed to the UK Court of Appeal.
2015
- The UK Court of Appeal decides that the delay in the Nigerian proceedings requires the English Court to lift the adjournment and to decide whether to allow enforcement, following a trial of the fraud allegations in the English Court.
- The Court of Appeal ordered NNPC to provide an additional security of US$100 million in addition to an initial security of US$80million as a condition of being entitled to advance a defense that enforcement should be refused because the award had been procured by IPCO’s fraud.
- NNPC appeals to the Supreme Court.
2017
- The UK Supreme Court unanimously set aside the Court of Appeal’s order, allowing NNPC to advance its defense in the English Commercial Court free of any such conditions.
With this decision, the NNPC can go on to fight against the enforcement of the arbitration without tying down the $100 million. Indications also point to the fact that the NNPC has a good chance of avoiding the whole arbitration as attested to by both the Commercial Court and the Appeal Court.
