IPCO (Nigeria) Ltd. v Nigerian National Petroleum Corporation

On this application the court has to consider its power of enforcement of a New York Convention award in circumstances where a challenge to the validity of the award is pending before the supervisory court. An unusual feature of the application is that the court has already once before had to consider whether to adjourn a decision on enforcement of the award, and has adjourned enforcement on terms. There has been compliance by the Defendant with those terms. Now the Claimant returns to court and asks it to make a different order. It does so in part because the resolution of the challenge to the validity of the award of which the supervisory, Nigerian, court is seised is taking very much longer than was first expected and in part because this court was, it is alleged, on the earlier occasion inadvertently misled in a manner material to its evaluation of the strength of the challenge. In these circumstances the question arises whether the court should, as the Defendant would put it, revisit its earlier decision. In view of the further time which may elapse before resolution of the proceedings in Nigeria, there arises also in rather stark relief the question whether the court can and should permit enforcement of such part of the award, if any, as is, in the opinion of the court, incapable of serious challenge.

The Claimant company, to which I shall refer as “IPCO”, is a Nigerian company. It is a subsidiary of a Hong Kong registered company. It is a contractor specialising in the construction of on-shore and off-shore oil and gas facilities. It was incorporated in Nigeria in 1990 in order, as I infer, to exploit the opportunities for business in that country.

The Defendant, to which I shall refer as “NNPC”, is a Nigerian Federal Government corporation. It is and describes itself as the State Oil Corporation of Nigeria. It is one of the principal contributors to the economy of Nigeria, with a turnover in 2005 equivalent to over £5,000,000,000.00. In terms of volume and revenue it is the most important oil and gas producer in Africa.

By a contract dated 14 March 1994 IPCO agreed for a lump sum price to undertake the design and construction for NNPC of a petroleum export terminal in the Port Harcourt area of Nigeria to be known as the Bonny Export Terminal. Completion of the project took some 22 months longer than was envisaged in the contract. IPCO contended that that was in part a result of NNPC requiring variations to the agreed specification.

The contract was governed by Nigerian law and in the event of disputes which could not otherwise be resolved provided for arbitration in Lagos in accordance with the Nigerian Arbitration and Conciliation Act 1990.

Completion of the contract was followed by a lengthy arbitration between the parties. The arbitration tribunal comprised a former Attorney General and Minister of Justice of Nigeria, a former Director of the International and Comparative Law Division of the Federal Ministry of Justice of Nigeria, also the Nigerian representative of UNCITRAL and Honorary Vice President of the International Council for Commercial Arbitration and, thirdly, a retired Chief Judge, the co-author of the leading Nigerian textbook on arbitration.

On 28 October 2004 the tribunal issued its award, an expression which I use without prejudice to IPCO’s argument that what was issued was a series of divisible awards. After setting off an amount of US$1,348,015.00 found due from IPCO to NNPC on NNPC’s counterclaim, the award in favour of IPCO against NNPC was US$152,195,971.55, and Naira 5 million. The latter sum related to costs of the arbitration awarded to IPCO. The Dollar sum included a further US$815,000 on account of the costs of the arbitration. The arbitrators also directed that the sums awarded should bear interest at 14% per annum until payment.

Being an award rendered in Nigeria by Nigerian arbitrators in a dispute governed by Nigerian law between two Nigerian entities, this is in every sense a Nigerian domestic award. However, since Nigeria is a state specified by Order in Council under section 100(3) of the Arbitration Act 1996, the award is also a New York Convention award. Accordingly it may be recognised and enforced in this jurisdiction pursuant to section 101 of the Arbitration Act.

By an apparently undated Arbitration Claim Form issued in this court IPCO sought “enforcement of the terms of the arbitral award” in accordance with a draft order of enforcement attached thereto. On 29 November 2004 on an ex parte application on paper David Steel J ordered enforcement in the terms requested. The order in consequence made failed properly to comply with CPR 62.18(10) in that it failed properly to set out the restrictions on enforcement under Rule 62.18(9)(b). Nothing now turns on this. However the order which David Steel J was invited to and did make was an order for the payment of the sterling equivalent of the Dollar and Naira sums awarded converted at rates of exchange said to be prevailing as at 23 November 2004. Interest for 26 days, 28 October 2004 to 23 November 2004 on those sterling sums was then calculated at £811,098.88, this too was directed to be paid and interest was said to be continuing at a daily rate of £31,196.11.

It was common ground before me that the conversion of the award into sterling for the purposes of recognition and enforcement was inappropriate. The power given under section 101(3) of the Arbitration Act is to enter judgment “in terms of the award”. Mr Michael Lyndon-Stanford QC, for IPCO, invited me to amend the order made and to substitute an order for enforcement in terms of the award. I did not understand Mr Jonathan Nash QC, for NNPC, to contend that I lacked the power so to do. In the circumstances I do not need to consider whether the parties are correct in their view that the court lacks the power, absent consent, to direct that judgment be entered in a currency other than that of the award. Mr Nash pointed out that the application currently before the court is for enforcement of the order of David Steel J, and he suggested that that order did not readily lend itself to partial enforcement, even assuming that to be available in principle. He also suggested that the making of this order was the first of two occasions upon which the court, at the instance of and misled by the parties, had approached its jurisdiction under sections 101-103 of the Arbitration Act in an inappropriate manner.

The second such occasion was, submitted Mr Nash, when the matter came before Gross J on 7 and 12 April 2005. Having announced his decision at the conclusion of the hearing Gross J delivered a reserved judgment on 27 April 2005. It is reported at [2005] 2 Lloyd’s Rep 326. It is this decision which in one sense I am asked to revisit, although a more appropriate analysis is I think that I am asked to consider whether the continuation of Gross J’s order meets the justice of the case in the different circumstances which now prevail.

As Gross J recorded at paragraph 2 of his judgment, there were before the court on that occasion three applications:

an application by NNPC to set aside the order, pursuant to sections 103(2)(f) and 103(3) of the Arbitration Act 1996;

in the alternative, an application by NNPC that the enforcement of the order be adjourned, pursuant to section 103(5) of the Arbitration Act 1996;

an application by IPCO, pursuant to section 103(5) of the Arbitration Act, in substance that in the event of NNPC failing on (i) but succeeding on (ii) above, then NNPC should provide security in the sum of US$50 million (or such other sum as the Court thinks fit), failing which IPCO be permitted to enforce the award as a judgment of the court.

In order to put the matter into context I set out below the relevant sections of the Arbitration Act 1996.

Gross J dismissed NNPC’s application, pursuant to section 103(2)(f) and 103(3), to set aside the order of David Steel J.

Gross J granted the application of NNPC, pursuant to section 103(5), that enforcement of the order, strictly the decision on enforcement, be adjourned and the cross-application of IPCO that such adjournment, if ordered, should be on terms. During the course of the hearing before him NNPC accepted that a sum of US$13,102,361.72 would remain indisputably due to IPCO even if NNPC’s challenge to the award proved wholly successful. Gross J imposed as a term of the adjournment of enforcement, in the event the first of two terms, a requirement that NNPC pay this amount to IPCO within 28 days. NNPC did not contend before Gross J that the court lacked jurisdiction to make such order, and NNPC has complied with it. Gross J then briefly considered the strength of the various grounds of challenge to the award, as enjoined so to do by the decision of the Court of Appeal in Soleh Boneh v. Uganda Government [1993] 2 Lloyd’s Rep 208. He concluded that some of the grounds of challenge had a real prospect of success but that, even making allowance therefor, the award would be likely to be upheld at least as to US$58.5 million, this being a discrete amount awarded under the heading of “Variations”. Having balanced the factors relevant to the exercise of his discretion Gross J concluded that practical justice would best be done by imposing as a second term of the adjournment of enforcement of the order a requirement on NNPC to provide appropriate security in London in the sum of US$50 million, again within 28 days. NNPC duly complied with this part of the order too. There can be no question but that the court had jurisdiction, pursuant to section 103(5), to make adjournment of the decision on the enforcement of the award conditional upon the giving of security.

NNPC did not, so far as I can ascertain, seek permission to appeal against the requirement that it pay to IPCO the amount indisputably due. Had it done so, it would of course have had to overcome the hurdle that it had not suggested to Gross J either that the court lacked the power to impose as a term of adjournment of the decision on enforcement a requirement to pay an amount indisputably due or that it was in all the circumstances inappropriate so to do. Likewise, NNPC did not seek permission to appeal against the requirement that it give security, although no doubt on this point it took the view that an appeal would have been utterly hopeless. IPCO so far as I can ascertain did not seek permission to appeal against the decision to adjourn the decision on the enforcement of the award.

Gross J gave “liberty generally to apply to both parties”. It is plain that Gross J would have been likely on an application of the sort which was before him to have done this in any event, but it is also plain that in doing so he had particularly in mind the then likely progress in the Nigerian proceedings as he had been informed.

On 15 November 2004 NNPC applied by Originating Motion to the Federal High Court of Nigeria to set aside the awards. In fact the document referred indiscriminately to “the awards” and “the award”. The grounds of challenge were stated with some economy of language at a high level of generality, thus:

the Arbitral Tribunal misconducted itself in the interpretation of clauses 79.0 and 79.3 of the General Conditions of Contract;

there are several apparent errors of law on the face of the Arbitral Award;

the Arbitral Award is against public policy;

the Arbitral Tribunal did not properly evaluate/review the evidence of the parties.”

On 22 November 2004 IPCO filed a Notice of Preliminary Objection to NNPC’s Original Motion. In effect, IPCO sought to strike it out. The Originating Motion was said to be frivolous, vexatious, calculated to delay enforcement of an arbitral award, calculated to interfere with or delay the due administration of justice and, accordingly, an abuse of process. The Preliminary Objection was successively amended so as to respond to NNPC’s various amendments to the Original Motion.

At the hearing before Gross J counsel for NNPC, then Mr Wordsworth, drew to the attention of the court “the speed with which the Nigerian proceedings are being pursued by NNPC”. He went on to observe that on the basis of IPCO’s evidence a decision on IPCO’s Preliminary Objection could be expected in the second half of 2005. That, he said, did “not seem to be in doubt at all”. Of course what was meant by this was that there would be a ruling at first instance on IPCO’s Preliminary Objection. No-one can have been under any illusion that there might not be an appeal. What however is plain is that Gross J took the view that resolution at first instance of IPCO’s Preliminary Objection might well prove to be something of a watershed. A decision at first instance of the Nigerian High Court that NNPC’s grounds of challenge to the award should be struck out would or might change the landscape against the backdrop of which the English court was called upon to decide whether to permit enforcement of the award. As Gross J himself put it in the course of argument before him, “if IPCO succeeds in its Notice of Preliminary Objection one can anticipate a return to court” i.e. a return to this court by IPCO seeking immediate enforcement of the award.

I should mention as part of the chronology that on 19 November 2004 NNPC filed an application in the Nigerian High Court to restrain IPCO from enforcing the award. So far as I am aware no order has been made on that application which was as I have already described followed within three days by IPCO’s Preliminary Objection. On 25 May 2005 IPCO filed proceedings in the Nigerian High Court, Action 505/2005, seeking an order that it be at liberty to enforce the award in the same manner as a judgment. The riposte to that from NNPC was a Preliminary Objection in those enforcement proceedings. So far as I am aware no substantive order has been made on either of these two related applications. There is therefore in force no order of the Nigerian court either permitting enforcement of the award as a judgment of the court or restraining IPCO from enforcing the award. It seems to be accepted on all sides that the next substantive step which must be achieved in the Nigerian proceedings is resolution of IPCO’s Preliminary Objection to NNPC’s RRAM.

As to the latter, on 12 July 2005, Okeke J granted IPCO’s application for accelerated hearing of the Preliminary Objection and ordered written addresses by each side, limited to four pages each, with a reply on points of law for adoption at a hearing on 31 October 2005. On 29 July 2005 IPCO filed its written address in accordance with the order of Okeke J. On 12 September 2005 NNPC filed its written address in accordance with that order. On 19 September 2005 IPCO filed a reply on points of law to NNPC’s written address again in accordance with the order. On 26 October 2005 IPCO filed a bundle of authorities relied upon in its written address and reply on points of law. On 28 October 2005 NNPC filed a Preliminary Objection to IPCO’s reply on points of law and bundle of authorities. On 31 October 2005 at the scheduled resumed hearing before Okeke J IPCO applied for the court’s permission to withdraw the reply on points of law in order to avoid delay in the proceedings. The parties adopted their written addresses. In terms of the record of the proceedings the court then announced that the “case is adjourned to 12/12/05 for Ruling”. As I understand that, the learned Judge was reserving her judgment. The hearing of the Preliminary Objection was concluded, barring unforeseen developments. It seemed therefore that there would indeed be achieved before the end of 2005 resolution at first instance of IPCO’s Preliminary Objection to NNPC’s RRAM.

It was at this point that matters took an unexpected turn, which IPCO attributes to a change in legal representation on the NNPC side which had taken place in August. On 29 November 2005 NNPC issued a Motion seeking the following relief:

This application was supported by an affidavit sworn by Mr Ganiyu Bosuro, a lawyer in the Corporate Secretariat and Legal Division of NNPC which contained the following paragraphs:

Pursuant to an application for expedition, this application was listed for hearing before Okeke J on 2 December 2005. On 1 December 2005 IPCO put in counter evidence in the form of an affidavit from Mr Mutiu Ganiyu. He is a lawyer employed by IPCO’s legal practitioners, Messrs Aluko & Oyebode. This affidavit included the following:

The matter came before Okeke J on 2 December 2005. There was discussion as to the need for oral evidence and the application was adjourned to 1 February 2006 so as to allow for the giving of oral evidence and cross-examination thereof.

All parties again assembled before Okeke J on 12 December 2005, the date appointed for the delivery of judgment on IPCO’s Preliminary Objection to NNPC’s RRAM. The official note of the ruling of the judge on this occasion reads as follows:

On 15 December 2005 Okeke J wrote to the Chief Judge of the Federal High Court. I must set out her letter in full. It is headed with the action title of NNPC’s RRAM together with the case number 1060/2004. The letter reads:

The matter was then placed before the Chief Judge. His decision is apparently recorded on a document headed “Record of Fees”. There is some manuscript on this document which is illegible in the photocopy before me. The Suit No. at the top of the page is that of NNPC’s 2004 action. Under the rubric “Execution of Judgment” is written, I think, “Reassign to Auta J” which is then signed and dated by the Chief Judge on 16/12/05. Underneath that order under the rubric “Appeals” is written, apparently in the same hand, “Okeke J” again apparently signed and dated by the Chief Judge on what looks like 17/11/04. It is quite possible that this is the date on which NNPC’s action, issued on 15 November 2004, was first assigned to Okeke J, and that the Chief Judge’s later reassignment is simply recorded on the same piece of paper on which his original assignment was recorded. The parties are not agreed as to what it was that was reassigned by the Chief Judge to Auta J. It appears to me that the procedure of the court probably necessarily involved reassignment of the whole action to Auta J, and that without such a reassignment he would have had no authority to proceed. That however still leaves a dispute as to whether the Chief Judge reassigned the action to Auta J for all purposes or whether the transfer was simply for the limited purpose, in the first instance, of hearing and determining the motion directed to securing a re-hearing of the Preliminary Objection before a different judge.

The court scheduled a further hearing for 20 February 2006, requiring any witnesses to be present on that day. There followed correspondence between the parties with IPCO pressing for details of the witnesses whom NNPC intended to call – according to IPCO NNPC had indicated at the hearing of 2 December 2005 that it intended to call a number of witnesses to buttress Mr Bosuro’s affidavit evidence. Messrs Babalakin & Co, for NNPC, responded as follows on 16 February 2006:

What was not foreshadowed in the correspondence was the positive stance which NNPC in the event adopted when the matter came before Auta J for the first time on 20 February 2006. NNPC through counsel asked for a date for the hearing of IPCO’s Preliminary Objection, contending that the whole suit had been transferred with the effect that there had to be a re-hearing of the matters upon which Okeke J had already heard argument and had prepared her judgment. IPCO for its part protested that it was only the NNPC motion of 29 November 2005 which had been transferred, not the whole case. IPCO suggested that the matter might again be referred to the Chief Judge for clarification. The ruling of Auta J is recorded as follows:

On 23 February the “sister case” Action 505/2005 came before Auta J. The ruling is recorded in this way:

I derive the following I hope uncontroversial account of subsequent proceedings very largely from the third Witness Statement of Mr Fagbohunlu, taking account where relevant of Mr Akoni’s comments in his first Witness Statement which are largely on matters of emphasis or detail.

On 2 March 2006 IPCO applied to Auta J for permission to appeal, on grounds of fact, his decision made at the hearing on 20 February 2006. That application was required by the rules of procedure to be heard within 14 days of the 20 February hearing. On 6 March 2006, the last date within that 14 day period, Auta J declined to hear the application for permission to appeal as an urgent application as it was not listed for hearing that day.

On 16 March 2006 NNPC filed a Preliminary Objection to the hearing of IPCO’s application for permission to appeal on the grounds that:

The court lacked jurisdiction to entertain the application;

The application was grossly incompetent and defective;

The application was spent and otiose.

On 6 March 2006 IPCO filed a notice of appeal to the Nigerian Court of Appeal on grounds of law, as of right, also against Auta J’s decision on 20 February 2006. As described at paragraph 39 below, IPCO’s application for permission to appeal on grounds of fact was withdrawn on 22 June 2006. IPCO then applied directly to the Court of Appeal for permission to appeal on grounds of fact. This permission was granted and, on 27 February 2007, IPCO filed a fresh notice of appeal to the Court of Appeal on grounds of fact. IPCO’s appeals on grounds of law and of fact will in due course be heard by the Court of Appeal at the same time.

On 16 March 2006 IPCO filed an application for a stay of the proceedings before Auta J pending determination of its appeal. That application was initially fixed for a hearing on 20 April 2006, but had to be adjourned to 30 May 2006 as 20 April fell within the court’s annual Easter vacation.

On 30 May 2006 IPCO’s counsel informed Auta J of IPCO’s pending stay application and requested permission to argue that application. The application was predicated on the appeal, as of right, to the Court of Appeal on grounds of law. However the court noted that NNPC’s Preliminary Objection to IPCO’s application for permission to appeal on grounds of fact was still pending. Auta J had of course declined on 6 March 2006 to hear IPCO’s application for permission to appeal. Under the applicable rules of procedure, Auta J no longer had jurisdiction to hear the application after that date and only the Court of Appeal could then grant leave to appeal. NNPC presented its arguments on why the court no longer had jurisdiction to entertain the application. Upon the conclusion of NNPC’s arguments, IPCO’s counsel requested a short adjournment to prepare IPCO’s response. The hearing was then adjourned to 22 June 2006 with costs in the sum of Nigerian Naira 10,000 awarded against IPCO.

On 22 June 2006 IPCO formally withdrew its application to the first instance court for permission to appeal on grounds of fact and sought leave to move the stay application. The hearing was adjourned to 27 July 2006 to allow NNPC to file an affidavit in response to the renewed stay application.

On 27 July 2006 IPCO’s stay application was adjourned to 25 October 2006. NNPC’s counter-affidavit had been filed only that day. Costs of Nigerian Naira 20,000 were awarded against NNPC “for wasting time of the court”.

At the hearing of the stay application on 25 October 2006 NNPC opposed the grant of a stay on five grounds:

There was no decision or ruling of the Federal Court that could be appealed against: at the hearing on 20 February 2006 Auta J merely informed the parties of an administrative action by the Chief Judge;

Assuming that there was a decision, there was no competent appeal because leave of the court or of the Court of Appeal was required before the question of the appeal could validly be before the court;

The notice of appeal was filed out of time;

As a matter of discretion, the court should refuse a stay on the basis that the affidavit of IPCO did not disclose any reason for such a stay;

A stay of proceedings should only be granted where it would terminate the proceedings, and the court should exercise extreme restraint in granting the order.

Having reserved judgment, on 4 December 2006 Auta J granted the stay application, and the matter was subsequently adjourned to 27 March 2007 for mention. On 27 March 2007 it was again adjourned to 17 May 2007 and there was a yet further adjournment in due course to 19 July 2007.

On 19 April 2007 IPCO filed its brief of argument in support of the appeal. NNPC was required to file its brief of argument by 11 June 2007. NNPC did not file its brief of argument within the time allowed.

On 17 July 2007 IPCO issued its application before this court that it be permitted to enforce the order of David Steel J.

On 9 August 2007, in the absence of NNPC’s brief of argument on the appeal, IPCO applied to the Nigerian Court of Appeal for the appeal to be determined upon IPCO’s brief of argument alone.

On 19 October 2007 NNPC lodged its brief of argument in the appeal.

I have already mentioned at paragraph 32 above that on 23 February 2006 IPCO’s application for liberty to enforce the award as a judgment of the Nigerian court was adjourned sine die. On 4 January 2007 NNPC filed a motion on notice to set aside the adjournment of that enforcement application and to strike out the application on the ground that IPCO had not served a pre-action notice. On 5 February 2007 IPCO filed a notice of Preliminary Objection to this motion on notice. On 19 July 2007 IPCO was granted leave to withdraw the application to enforce the award as a judgment of the Nigerian court. The reason given for that withdrawal was that although IPCO did not accept the position of NNPC that a pre-action notice was required before a suit of that nature was brought, IPCO nevertheless opted to withdraw the suit and to serve a pre-action notice on NNPC so as to avoid the delay that might be occasioned by litigating that technical point, potentially to the Supreme Court.

The foregoing is not intended as an exhaustive account of the course taken by the various Nigerian proceedings since the matter was before Gross J now some three years ago. However what is clear is that resolution of IPCO’s Preliminary Objection to NNPC’s RRAM is in fact no closer now than it was then – indeed it is very much further away. Before the Preliminary Objection can be ruled upon there must first be a resolution of IPCO’s appeal against the order of Auta J to the effect that there be a re-hearing of the same.

It seems that the Nigerian Court of Appeal has not yet ruled on the question whether it should determine the appeal on IPCO’s brief of argument alone or whether it should permit NNPC to serve its brief out of time. IPCO’s advocate Mr Fagbohunlu gives it as his opinion that on the assumption that the second course of action is followed the substantive appeal will not be listed for hearing before the second or third quarter of 2008. However as at the date of the hearing before me, in late February 2008, there was apparently no date fixed for the hearing of the appeal, or at any rate if there was I was not told of it. IPCO’s expert witness, retired Supreme Court Judge Justice Eso, gives it as his opinion that it is likely to take at least four years for the appeal from Auta J’s decision in the Federal High Court to be determined by the Court of Appeal. That would mean a determination in early 2010. NNPC’s expert witness, also a retired Supreme Court Judge, Justice Ayoola, thinks that Mr Fagbohunlu’s estimate of the time of disposal is more realistic, talking in terms of disposal of the appeal by October 2008. However in view of the apparent lack of further progress as at February of this year, I fear that to hope for disposal of the appeal in the course of 2008 may be optimistic.

There are of course a number of possible outcomes of the appeal when finally it is determined. The Court of Appeal might uphold Auta J’s decision in which case it will be necessary for the Preliminary Objection to be re-heard before that judge. The Court of Appeal might decide that Auta J should proceed to hear the substance of NNPC’s motion that the case should be transferred from Okeke J, i.e. effectively to rule upon the propriety of her remaining seised of the case and delivering her ruling. According to Mr Fagbohunlu a yet further outcome is that the Court of Appeal might decide that Auta J should not re-hear IPCO’s Preliminary Objection and that Okeke J should therefore deliver her prepared ruling. However it appears that the parties are not ad idem as to the extent to which the substance of the transfer application is in fact before the Court of Appeal. It is certainly the case of NNPC that what is before the Court of Appeal is simply the propriety of Auta J’s ruling that the whole action had been reassigned to him with the result that he was bound to re-hear the Preliminary Objection de novo. It is common ground that whatever the decision of the Court of Appeal the dissatisfied party may appeal to the Supreme Court on point of law as of right and may appeal with permission on matters of fact. It seems to be agreed that a realistic time estimate for such an appeal is that it may take up to five years to be resolved. If it were decided that Auta J should hear and determine the transfer application, his subsequent decision on that point alone could trigger another appeal to the Court of Appeal and thence to the Supreme Court.

In the light of all this it is apparent that even a decision at first instance on the Preliminary Objection may now be very many years away. The potential delay involved in any of the possible outcomes of the appeal is five years together with however long it takes for the matter first to be resolved in the Court of Appeal. On a best case analysis at the conclusion of that period either Okeke J would deliver her ruling, assuming she is still available to do so, or Auta J or another judge would proceed to re-hear the Preliminary Objection de novo. However if the decision of the Court of Appeal is that Auta J should hear and determine the merits of the transfer application, the timescale for achieving resolution at first instance of the Preliminary Objection might be more than twice five years, since Auta J’s decision on the merits of the transfer application, when reached, would itself be susceptible to two further appeals.

I have of course been dealing only with the timescale for achievement of a ruling at first instance on the Preliminary Objection. The prospects as to what might occur after such a determination are equally dismaying. The appeal process might take of the order of eight to nine years.

Justice Eso concludes his report to this court in this way:

In a slightly earlier passage in his report Justice Ayoola says this:

It is against this background that I am asked to revisit the decision of Gross J, now three years after he made it. Far from the envisaged watershed being reached in a matter of months, the date of resolution of the Preliminary Objection is now a matter simply of conjecture where the only confident conclusion can be that it is unlikely to be resolved at first instance before the elapse of at least another five years or so and that the delay could now be very significantly longer than that.

Having first set out the provisions of section 103 of the Arbitration Act Gross J proceeded to summarise the principles relevant to the application before him. I reproduce below those parts of this section of his judgment which are relevant to the application before me:

I respectfully agree with and adopt those conclusions of Gross J and I propose to direct myself in the same way.

Having considered and rejected NNPC’s application to set aside the order of David Steel J, Gross J turned to consider the relevant bases of challenge to Nigerian arbitration awards under Nigerian law. The evidence before me on this aspect was more extensive than was the evidence before Gross J, however I do not think that it was materially to different effect.

For present purposes it suffices to say that the permissible grounds of challenge are to be found in sections 29 and 30 of the Arbitration and Conciliation Act 1990. Section 26 (3) provides that, unless the parties have agreed otherwise, an arbitral tribunal must state on the award, by which is meant I think on the face of the award, the reasons upon which it is based. Section 29(2) gives power to set aside an award upon proof that the award contains decisions on matters which are beyond the scope of the submission to arbitration. Section 30(1) gives a like power upon proof of misconduct on the part of the tribunal.

According to the Nigerian jurisprudence error of law on the face of the award amounts to misconduct. To what extent it is permissible to challenge a conclusion of the tribunal as to a question of construction of a term in a contract may be a little elusive. Nigerian law accepts that a question of construction is generally speaking a question of law. However the tribunal’s decision on such a point cannot be set aside simply because the court would itself have come to a different view. If however the tribunal has adopted principles of construction which the law does not countenance, there is an error of law which may be a ground for setting aside the award, or some part of it. See Orojo & Ajomo, The Law and Practice of Arbitration and Conciliation in Nigeria, at pages 281 to 282.

Justices Eso and Ayoola agree that a failure to give adequate reasons for an award could also constitute misconduct. This was a point on which Gross J had no evidence as to the law of Nigeria. The more difficult question is of course, as the experts acknowledge, what constitutes adequate reasons for this purpose. Justices Eso and Ayoola are again in agreement that the Nigerian court would be likely to regard as persuasive on this question the decision of the Privy Council in Bay Hotel and Resort v. Cavalier Construction [2001] UKPC 34. They both refer to what was there said about the common law standard. However Lord Cooke of Thorndon, in giving the Opinion of the Board, did not purport to set out the content of the common law on this question. It was unnecessary to the Board’s decision. The arbitration in that case was conducted in Miami, Florida in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association. It was held that the question whether the award was “reasoned” had to be judged by reference to the understanding of those versed in working with that particular code. This was a question of fact, analogous to a trade usage or custom. What was required could not vary according to the seat of the arbitration. Lord Cooke did refer in passing to what English common lawyers might regard as a reasoned award. Such an award would at the least conform to the requirements enunciated by Donaldson LJ in Bremer Handels v. Westzucker (2) [1981] 2 Lloyd’s Rep. 130 at 132-133:

Like Gross J, I would underline that the jurisdiction of the Nigerian court to entertain a challenge to an award is limited and supervisory rather than appellate. It is a jurisdiction which is not lightly to be exercised – see again Orojo & Ajomo at page 281.

The award was made under six broad heads:

This challenge is set out in Ground A of the RRAM, although it was introduced only by way of re-re-amendment. Ground A reads:

The point is developed further, and for the first time, at paragraphs 77 to 82 of the second witness statement of Mr Akoni, a litigation partner in the firm of Messrs Babalakin. It is perhaps worth noting that that witness statement is dated 31 October 2007, i.e. just three days past the third anniversary of the making of the award. Broadly what is said in those paragraphs is that there was no request by IPCO for a determination by the Engineer and that in the course of the arbitration NNPC made clear its objection to the jurisdiction. In the alternative it is suggested that the arbitration was simply commenced outside the permissible time window.

The critical letter is before the court. Dated 4 September 2002 it is addressed to the Managing Director, Pipelines and Products Marketing Company Limited at an address in Abuja, marked for the attention of “Engineer D.M.N. Nzelu – Managing Director”. Despite Mr Akoni’s assertion that this was sent to the wrong person at the wrong address, there is subsequent and uncontroverted evidence before me to the effect that (a) this gentleman was indeed the Engineer nominated under the contract and (b) this is indeed the address which he had notified pursuant to Clause 66.3 of the contract. The letter is stamped as having been received in the CEO’s office at NNPC on 6 September 2002. The first and the final paragraphs of the letter read:

It is common ground that the Engineer did not answer that letter and that at no stage did he give any of the requested decisions, either orally or in writing. The request for arbitration was served on 26 February 2003, i.e. within 180 days of 4 September 2002.

Mr Akoni in his witness statement says that by the letter of 4 September IPCO did not refer the dispute to the Engineer, but rather reminded the Engineer that the dispute had already been referred and that a response was still outstanding. He suggests therefore that the time for commencement of the arbitration runs not from 4 September 2002 “ as IPCO suggested to the tribunal” but from the date of the reference to the Engineer which, he says, appears to have been 24 April 2002. He goes on to say “accordingly, the 180 day period ended on 23 July 2002”, which is obviously incorrect but it would follow that 26 February 2003 was more than 180 days from 24 April 2002.

NNPC appointed its arbitrator without any reservation as to the jurisdiction of the tribunal. A preliminary meeting of the arbitral tribunal and the parties’ representatives was held on 15 April 2003. Present at this meeting on behalf of NNPC was, amongst others, Mr Otu Medo, the General Manager, Litigation and Property Law Department. Minute 4.1(a) of the meeting records the following:

The Nigerian Arbitration and Conciliation Act 1990 relevantly provides:

In any arbitral proceedings a plea that the arbitral tribunal

The arbitral tribunal may rule on any plea referred to it under subsection (3) of this section either as a preliminary question or in an award on the merits; and such ruling shall be final and binding.

A party who knows—

I turn next therefore to the points which were argued before Gross J and the manner in which he dealt with them. For ease of reference I reproduce the relevant paragraphs of his judgment:

Mr Nash accepts that there is no formal issue estoppel arising out of the decision of Gross J but he contends that it is an abuse of process, indeed the paradigm example of abuse of process, for a party to seek to re-argue points before a court of co-ordinate jurisdiction. He contends that there has been no change of circumstances sufficient to justify a reconsideration of the decision of Gross J to adjourn the enforcement decision. The prospects of success of the challenge to the award must be the same as they were when the matter was before Gross J. There was no suggestion before Gross J that NNPC’s application to the Nigerian court challenging the award was other than bona fide. IPCO ought not to be allowed now to make allegations of bad faith which could have been made before Gross J. Insofar as concerns events subsequent to that hearing, the allegations of bad faith were, he suggested, groundless. The procedural delay is IPCO’s own fault because it chose to appeal against Auta J’s decision to conduct a re-hearing of the Preliminary Objection. The prejudice to IPCO arising out the delay in receipt of the money allegedly due to it had already very largely accrued and crystallised before even the matter was considered by Gross J.

Both sides cited authority on the question in what circumstances the court should reconsider an interlocutory decision. In particular I was referred to Chanel v. Woolworth [1981] 1 WLR 485; Butt v. Butt [1987] 3 All ER 657; Barrow v. Bankside Agency Ltd [1996] 1WLR 257; Rosling v. Pinnegar C.A., October 1998, unreported; Ryan v. Friction Dynamics Ltd [2001] C.P.R. Rep 75; The Leadmill Ltd v. Omare [2002] EWHC 1226 (Ch); Lloyds v. Ager-Hanssen [2003] EWHC 1740 (Ch); Collier v. Williams [2006] 1 WLR 1945; Edwards v. Golding [2007] EWCA Civ 416 and Kensington International Ltd v. Republic of Congo [2008] 1 Lloyd’s Rep. 161. In none of those cases of course were the circumstances really analogous. Furthermore Mr Nash rightly pointed out that the court is not here concerned with its power under the Civil Procedure Rules to make orders which, by reason of CPR 3.1(7), includes a power to vary or revoke those orders. The court is here concerned with the exercise of a jurisdiction derived from an international convention and given domestic effect by statute in the same terms as in other subscribing states. The approach to be adopted is not necessarily the same as that to be adopted in the domestic context. Nonetheless it is helpful to be reminded of the limited circumstances in which the court will in that context countenance the revisiting of an earlier decision by a court of co-ordinate jurisdiction. I would derive from those cases at least the following principles which should guide the court in a case such as the present. Plainly a judge of parallel jurisdiction cannot entertain what is in effect an appeal. Similarly a change of circumstances cannot ordinarily justify a variation of an earlier order unless at the least the change in circumstances impinges on or relates to the reason for seeking the variation. There must be some causative link between the change in circumstances and the variation sought.

An adjournment granted pursuant to section 103(5) of the Arbitration Act 1996 is by its nature a temporary holding measure. The appropriateness of maintaining such a measure in place will be dependent, crucially, on developments before the supervisory court. Gross J expressly approached his task upon the footing that a critical development would or might occur within months. There would be a first instance determination of IPCO’s Preliminary Objection. If the Preliminary Objection succeeded in full measure the case either for immediate enforcement or for the provision of greater security would be significantly enhanced. It would certainly bring about a wholly new and different situation, since the supervisory court, at any rate at first instance, would have declared the challenge to the award to be groundless. The emphasis before Gross J was on the speed with which the challenge to the award was being pursued by NNPC, and the early decision which could be expected on the question whether the challenge enjoyed a worthwhile prospect of success. Gross J gave a general liberty to apply. A paradigm situation in which the court, exercising its jurisdiction under section 103(5), must reconsider its earlier decision by embarking on a consideration whether the adjournment of the decision on enforcement remains appropriate is where there has been a significant relevant development in the proceedings before the supervisory court, the pendency of which is the prerequisite to the court having jurisdiction even to consider adjourning the decision to enforce an award. NNPC’s application for a re-hearing shortly before the assigned judge was due to deliver her reasoned judgment on the Preliminary Objection and the subsequent effect that that has had on the likely timescale within which there will be a determination of the Preliminary Objection is in my judgment a development of sufficient significance to justify, indeed to require, the court to consider afresh whether the decision on enforcement of the award should be further adjourned. This is in no sense a disguised appeal against Gross J’s decision. By definition it is a consideration which Gross J could not have undertaken. Gross J had to consider what was “proper” in the circumstances as they then obtained. Those circumstances have changed. It is my duty to consider what is proper in the new circumstances which now obtain.

I would however emphasise that the court will not lightly entertain a suggestion that the discretion under section 103(5) must be considered for a second or subsequent time. Because the jurisdiction is responsive to developments before the supervisory court it would be unwise and it is probably in any event impossible to attempt to fashion some threshold test as to what will be required in order to justify this course. It will certainly require significant change in circumstances. What has occurred in the Nigerian proceedings can I think properly and uncontroversially be described as catastrophic. However the test is stated, the court is in my judgment in these dismaying circumstances entitled to consider whether in the light thereof a decision on enforcement should be further adjourned.

I do not consider that the change in circumstances, catastrophic though it is, should of itself be the occasion for a complete re-run of the exercise which has already been conducted before Gross J. Ordinarily a party should not in these circumstances be permitted to develop arguments or to deploy evidence which could equally well have been developed or deployed on the earlier occasion. Ordinarily a change in circumstances should most emphatically not be an excuse for a second bite at the cherry. Ordinarily, the court will simply be concerned to consider whether the exercise of discretion which appeared proper in the circumstances which obtained earlier remains proper in the, ex-hypothesi, significantly different circumstances. That ought not ordinarily to require any revisiting of the court’s earlier decision as to the strength of the challenge to the award. That decision should have been reached on a brief consideration – see per Staughton LJ in the Soleh Boneh case at page 212. The need to reconsider the discretion must not ordinarily be regarded as an opportunity to re-run the argument on the strength of the challenge.

There is however here present an additional consideration. In the domestic context it is now well established that the power under CPR 3.1(7) is exercisable where the judge who made the earlier order was misled in some way, whether innocently or otherwise, as to the correct factual position before him. Misleading includes material non-disclosure. See Collier v. Williams cited above, at paragraphs 39 and 40 of the judgment of the Court of Appeal. In my judgment Gross J was innocently misled as to the structure of the contract, the nature of IPCO’s claim for the cost of carrying out variations to the agreed work and as to the manner in which that claim had been approached at the arbitration. An argument deployed before him by Mr Wordsworth for NNPC was recognised to be Mr Wordsworth “flying solo”, i.e. without assistance or input from those who had participated in the arbitration. Mr Wordsworth was doing his best to make bricks without straw. Unfortunately in so doing he inadvertently misled the judge. In the present context that in my judgment justifies the court in looking afresh at the relevant point. Here the relevant point is quite far-reaching.

At paragraph 47 of his judgment Gross J records that “as appears from the award (para 11.2.3), IPCO claimed the cost of the variations at rates specified in the contract.” That is in fact not quite what paragraph 11.2.3 of the award says. Paragraph 11.2.3 refers to Appendix D2 being “Cost Summary for each Variation on the principles set out in clause 52 of GCC” (General Conditions of Contract). I set out below the relevant parts of clause 52 of the contract:

This erroneous approach first appears in paragraph 42 of Mr Wordsworth’s skeleton argument of 4 April 2005 prepared for the hearing before Gross J. One finds there the very wording which the Judge not unnaturally adopted. That paragraph reads:

In that regard it is perhaps sufficient if I record the unequivocal acceptance by Mr Nash that it was not argued at the arbitration by NNPC that IPCO’s presentation of its claims under Head No. 3, Variations, Head No. 4, Phase II Prolongation and Head No. 7, Financing Charges, involved duplication. In its claim for the extra and additional work IPCO expressly claimed the direct costs of those works, and the profit on them, under the claim heading “Variations”. IPCO separately claimed overheads/indirect costs, and the profit on them, under the claim heading “Prolongation”. “Financing Charges” were claimed under a yet further separate heading. As was well understood in the arbitration and never challenged, a claim under the heading “Variations” is a claim in respect of the direct costs, and profit, referable to the extra work, not all of the costs referable thereto which IPCO was entitled to claim. The claim for the direct costs of the variations was not therefore priced on a lump sum basis. The claim for profit on the direct costs was in some places described as “Group Contribution” although always calculated at exactly 25%. It did not include any element for overheads or indirect costs, which is why it was indeed always exactly 25%. It was profit or “mark-up” as it was sometimes called. No objection was taken to the 25% Group Contribution at any stage of the arbitration. It was never suggested that it included some allowance for the costs of administration, support, equipment etc. incurred in respect of the variations, as it is now claimed by Mr Akoni in his second Witness Statement must in fact be the case.

There are other instances where Mr Akoni’s analysis in his second Witness Statement bears no relation to the actual position. Thus at paragraph 16(1) he asserts that “the tribunal awards damages under clause 52 GCC in respect of the variation claim (which included all indirect costs and profit in respect of the variation) but then proceeded to award damages again for indirect costs through the prolongation claim”. This is doubly wrong. The claim under the heading “variation” included no element of indirect costs. More fundamentally however the tribunal did not award damages under clause 52. It held that IPCO was entitled to payment for additional work done at the request of NNPC on the ground of an implied promise to pay – see paragraph 11.2.24 of the award. In doing so it relied upon a passage in Hudson’s Building and Engineering Contracts and on a decision of the Privy Council, Molloy v. Liebe (1910) 102 L.T. 616. It might equally have relied upon the decision of the House of Lords in Brodie v. Corporation of Cardiff [1919] A.C. 337 which was cited to it and is exactly in point.

Mr Akoni goes on to say that since IPCO’s claim was for damages for breach of clause 52 and since clause 52 requires the Engineer to value the work at the rates and prices set out in the contract, the rates for variations were therefore to be assessed on the same basis as the rates for other work under the contract. He then concludes at paragraph 19:

The upshot is that I do not consider that NNPC has a realistic prospect of reducing the award by up to some US$88 million on the ground of duplication alone. Gross J was misled into reaching that conclusion which he expressed at paragraph 48 of his judgment. It is true that IPCO has now identified that there might, as a result of an accounting error, be a small element of double counting between the variation and the escalation claim, although that is not a point which was raised at the arbitration. The maximum amount possibly involved is thought to be of the order of US$91,000 which in the context of this award is de minimis – less than 0.06% of the principal Dollar sum awarded.

I see no justification however for revisiting the rest of Gross J’s conclusions as to the strength of the challenge to the award. As I suggested at paragraph 73 above, the change in circumstances must impinge on or relate to the reasons for seeking the variation. There must be some causative link. Mr Lyndon-Stanford sought to persuade me that the tribunal’s arguably erroneous approach to force majeure was not causative of any error in the overall amount awarded. The relevant three force majeure events – storm damage, fuel scarcity and community disturbances, were all originally relied upon by IPCO as events which contributed to the delay and thus to the prolongation costs. It is true that by the time of IPCO’s Written Address these three events were not included in the list of “events causing delay”. Mr Lyndon-Stanford can also rightly point to paragraph 38 of Mr Akoni’s second Witness Statement in which he says “it appears that IPCO had abandoned its claim for an extension in respect of the final three items (storm damage, fuel scarcity and community disturbances). Those events are not said to be ‘events causing delay’ in IPCO’s written address and no submissions were made in support of those items (or to counter NNPC’s arguments, e.g. that no payment was due and no notification had been received).” Nonetheless, as Mr Akoni goes on to point out, the tribunal at paragraphs 17.13, 17.15 and 17.16 of the award proceeded to make findings in respect of these events. At paragraph 17.13.5, dealing with storm damage, the tribunal held “that the Claimant is entitled to payment for loss suffered as a result of the event of force majeure”. At paragraph 17.15.5 the tribunal finds that the fuel scarcity had caused a prolongation of the completion time. At paragraph 17.16.4 the tribunal finds that the community disturbances amount to force majeure “and there is evidence that this has prolonged the completion time”. As Gross J observed, it is not easy on the face of the award to assess the causative impact of individual variations on the overall time for completion of the project. Mr Lyndon-Stanford asserts that the tribunal placed no reliance upon the force majeure events either in assessing the prolongation of time in respect of which IPCO was entitled to be compensated or in relation to the award of any other damages, and he relies upon paragraph 17.17.3 of the award. In my judgment that is a matter for the Nigerian court to determine in the context of the wider attack on the award that it lacks adequate reasons.

Mr Lyndon-Stanford also sought to persuade me that it is not open to NNPC to advance many of the grounds set out in the RRAM because they were first advanced outside the applicable statutory time limit. This is a reference to section 29(1) of the Arbitration and Conciliation Act which provides:

The outcome of this exercise is that, having examined in some detail the manner in which IPCO’s claim under the heading “Variations” was both advanced and dealt with, leaving on one side the argument as to the inadequacy of the tribunal’s reasons, I can discern no plausible challenge to the tribunal’s award under that head. That was essentially the conclusion of Gross J at paragraph 48 of his judgment. Like Gross J, I regard the argument as to inadequacy of reasons as bound up with the argument on force majeure and as to prolongation of time. However I do not consider that NNPC has any realistic prospect of successfully challenging the award under the heading “Variations” on the ground of inadequacy of reasons. The tribunal’s conclusions are set out in paragraph 11.2 of the award, including the tribunal’s analysis of the circumstances in which there arose an implied promise to pay. The tribunal pointed out that each sub-head of the claim under this rubric would have to be considered separately as to the circumstances of the direction and execution of the variation in the light of the basic principles which the arbitrators had enunciated. The tribunal dealt with each sub-head of claim individually in paragraph 16 of the award. Not all of the individual sub-heads of claim succeeded. I note in passing that NNPC’s defence to the second largest individual variation claim, Variation No. 18, Change to Product Pipelines Route and Additional Right of Way Cost, US$13,662,216.00, was rejected by the tribunal as “not only simplistic but border(ing) on the ludicrous”. Equally trenchant is the tribunal’s conclusion on Variation No. 19, the largest claim, in respect of Increase in Fuel Pipeline Diameter and Wall Thickness, a claim for US$16,093,170.60. At paragraph 16.21.4 the tribunal records its view that “the defence of the Respondent that the Claimant requested for the changes and therefore should bear the cost and that the changes were consequences of detailed engineering are totally unacceptable. They do not answer the points raised in the claim and we, therefore, reject them.” As the arbitrators also found at paragraph 16.21.1 “the CDP (Conceptual Design Package) provided for the length, diameter and thickness of the wall of the pipelines. However the “as built” drawings show that these have been significantly changed at the instance of the Respondent and these changes were incorporated to the design.” In those circumstances, there being as the tribunal recorded at paragraph 16.21.4, “consensus that the changes were made on the instructions of the Respondent” it is understandable that the defence of the Respondent to the effect that it was the Claimant who requested the changes and should therefore bear the cost should be regarded as “totally unacceptable”. In the light of these conclusions of the tribunal I cannot regard it as plausible that the Nigerian court will set aside for lack of adequate reasoning the tribunal’s findings that the individual pieces of work claimed as Variations were not as claimed by NNPC included within the lump sum contract price. That leaves only a challenge to the amounts awarded. I have already recorded that there was in the course of the arbitration no challenge to the rates or prices claimed on the basis that they were unreasonable. NNPC put forward no counter-figures. In these circumstances, it is not in my judgment plausible that the Nigerian court will set aside the tribunal’s allowance of the individual amounts claimed on the basis that the tribunal has given inadequate reasons for its acceptance that the amounts claimed were reasonable and proper.

I therefore conclude that NNPC has no realistic prospect of reducing the award below US$58.5 million together with interest thereon and of course some proportion of the costs. There are grounds of challenge to the award in respect of which, like Gross J, I would draw back from pre-empting the decision of the Nigerian court. Those grounds of challenge could lead to a reduction in the amount of the award in the order of at least US$10 million or so as explained by Gross J in paragraphs 34 to 39 of his judgment. Furthermore the points as to the lack of adequate reasons and the causative impact of individual variations on the overall time for completion of the project are not easy to quantify, assuming that they can be translated into grounds of challenge which will be upheld by the Nigerian court. However the plausible grounds of challenge do not include duplication in the formulation of the heads of claim. NNPC has not identified a clear-cut and arguable head of challenge which, if successful, could result in the reduction of the award by an amount of the order of US$88 million.

On 16 August 2007 NNPC was pressed for a breakdown of the sum of US$13,102,361.72 which it had accepted before Gross J was indisputably due to IPCO under the award. At the hearing that sum was said to be reached by reference to the sum of US$20,418,636.55, to which NNPC admitted IPCO was entitled in respect of its claim, less the sum of US$7,316,274.81, to which NNPC asserted that it was entitled from IPCO in respect of its counterclaim, notwithstanding that the tribunal had in fact only awarded to NNPC the sum of US$1,348,015 in respect of the counterclaim. NNPC has not in its RRAM challenged the dismissal of the balance of its counterclaim over and above the amount awarded. In the absence of a response to its solicitors’ letter of 16 August 2007 IPCO applied for and obtained from this court an order directing NNPC to provide the relevant information. That was done by letter from NNPC’s solicitors Messrs Stephenson Harwood dated 12 October 2007. I must set it out in full.

As at 22 February 2008 the total sum unpaid and owing to IPCO under the Dollar award, giving credit for US$13,102,361.72 paid in May 2005, is US$204,757,175.52, with interest accruing thereon at US$53,359.42 per day.

Leaving aside the general challenges to the integrity of the entire award, NNPC has not in its RRAM challenged the award of US$1,641,234 under Head of Claim No. 2 “Non-payment” which relates to late payment of approved invoices. Interest on that sum to 22 February 2008 is US$762,971.47, giving a total due of US$2,404,205.47.

Furthermore as I indicated above NNPC has not in its RRAM challenged the dismissal of the balance of its counterclaim over and above the sum awarded, US$1,348,015. Save in so far as the award is challenged in its entirety, no evidence or argument has been directed towards seeking to challenge that part of the award which dismisses the balance of the counterclaim. It follows that the amount “indisputably due” must be taken to have been understated by US$5,968,259.81. Interest on that sum to 22 February 2008 is US$2,774,505.

The amount attributed to the Variations claim in Stephenson Harwood’s letter of 12 October 2007 is US$11,991,111.55, which is 58.7% of the larger sum US$20,418,636.55 admitted to be due before set-off of the counterclaim. Applying the same percentage to the actual payment of US$13,102,361.72, the outstanding unpaid principal sum in respect of the amount awarded under the heading “Variations” is thus US$50,830,163.22. Interest on that sum from 12 May 2005 to 22 February 2008 is US$19,827,941.48, giving a total due of US$70,658,104.70.

The amount paid, US$13,102,361.72, contained no element of interest. Interest on that sum from the date of the award to the earlier of the two dates of payment, 9 May 2005, payment having been made in two tranches, is US$985,010.43.

It follows from the above that as at 22 February 2008 there was due and owing from NNPC to IPCO under the award a total of at least US$82,790,084 in respect of which there is no credible challenge.

Before turning to the exercise of discretion under section 103(5) I must finally draw attention to one further feature of the award. Gross J noted at paragraph 34 of his judgment that in calculating finance charges in respect of escalation the tribunal applied what it found to be the appropriate percentage to the amount claimed for escalation, US$22,998,113, rather than to the amount ultimately awarded under the escalation head, which was US$618,116. It seems possible if not likely on a fair reading of paragraphs 19.1-19.6 of the award that when the tribunal came, in paragraph 29 thereof, to summarise the amounts awarded a simple error was made in transposing the figure of US$618,116 which appears at the end of paragraph 19.5 as if it were the amount intended to be awarded at paragraph 19.6. Paragraph 19.6 itself includes no figure. The figure in paragraph 19.5 is simply one constituent part of the overall claim under this head which, it seems likely, the tribunal intended to allow in its entirety. Certainly no reasoning emerges on the basis of which one part of the claim under this head succeeds but the rest fails. However that may be, IPCO has made no application in Nigeria with a view to the award being corrected, assuming that to be possible. In view of that, an award of financing charges referable to the full amount claimed cannot be regarded as consistent and must as explained by Gross J be regarded as arguably open to challenge.

I propose to deal with this aspect quite shortly. It is obvious that any company is seriously prejudiced by the continued non-receipt of a sum of the order of US$82 million the principal (as opposed to interest) component of which has been due and owing to it for many years. The non-receipt of an even greater sum is an a fortiori case. In the light of that, I find it unnecessary to make detailed findings as to the manner in which that prejudice currently manifests itself. It is unnecessary to consider to what extent IPCO could or would have undertaken further work in Nigeria or West Africa following the completion of the Bonny Export Terminal Project. I would find it difficult to reach any reliable conclusion as to IPCO’s relationship with its parent and other group companies. There is no evidence as to the beneficial ownership of 95% of IPCO’s parent, IPCO (WA) Holdings Limited of Hong Kong. I make no findings therefore as to IPCO’s indebtedness to other group companies. I do however accept that there is credible evidence to the effect that IPCO has incurred substantial indebtedness to third party creditors arising out of this project. That is as one would expect. The indebtedness is of the order of US$60 million.

I accept that were NNPC now to pay IPCO a sum of the order of US$80 million, or were IPCO permitted to enforce the award up to that amount, it is likely that 75% thereof would immediately be utilised in paying off third party creditors. I am in any event prepared to proceed upon the basis that whatever sum is now paid by NNPC to IPCO, or recovered by IPCO from NNPC, NNPC would have no realistic prospect of any recovery from IPCO in the event that it ultimately transpires that IPCO had received payment of sums to which it is not entitled.

There thus arises the question whether the court has power to permit partial enforcement of the award. Although Gross J imposed without challenge from NNPC as one of the terms upon which he adjourned the decision on enforcement payment of the sum indisputably due, before me the court’s power in that regard was indeed challenged. The requirement of payment of an amount indisputably due is tantamount to partial enforcement of the award. Before hearing argument on the point I was myself dubious as to the court’s jurisdiction to permit partial enforcement of the award, simply on the basis of the wording of section 101(3) of the Act which talks of judgment being entered “in terms of the award”. My concern was whether entering judgment in respect of part of the award amounts to entering judgment in terms of the award.

The wording in section 101(3) is not derived from the New York Convention itself. Article III thereof provides:

the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognised and enforced…”

However Mr Lyndon-Stanford referred me to a decision of the Austrian Supreme Court, the Oberster Gerichtshof, of 26 January 2005 in which partial enforcement of a Convention Award was permitted and directed. The case is reported anonymously under No. 3Ob221/046 at Yearbook Commercial Arbitration XXX (2005) page 421. The significance of this case is that the Austrian court permitted partial enforcement in a context other than Article V.1(c). The case concerned the sale of mushrooms by a Yugoslav seller to an Austrian buyer. The contract contained an arbitration clause. The buyer failed to pay part of the sale price for a delivery of mushrooms. The seller commenced arbitration at the Foreign Trade Arbitration at the Chamber of Commerce and Industry of Serbia in Belgrade. On 3 April 2002 the tribunal rendered an award in favour of the seller in the sum of DM22,500. Interest for late payment at 0.2% per day, capitalised daily, was ordered from 15 March 2000 until 29 December 2000, amounting to DM18,625.47, together with further interest of 0.2% per day, capitalised daily, on the main sum plus interest, i.e. on DM41,125.47 from 29 December 2000 until the day of final payment. The seller sought enforcement of the award in Austria. Amongst other challenges the buyer objected that an annual rate of interest of 73% violated Austrian public policy. The Feldkirchen District Court granted enforcement of the award only with regard to the main sum, holding that an annual rate of interest of 73% did indeed violate Austrian public policy and could not be enforced. Although that decision was reversed by the Court of Appeal of Klagenfurt, finding that a rate of interest of 73% per annum resulting from a daily capitalisation of interest, was “usual practice” among merchants, it was reinstated by the Supreme Court. The reasoning of the Supreme Court is instructive. At paragraphs 44 and 45 under the rubric “Partial Enforcement” the following was said:

Parity of reasoning in the present case would lead to enforcement of the sums awarded for Variations and Non-payment together with the interest awarded thereon. “Uniformity is the purpose to be served by most international conventions” – see per Lord Wilberforce in Fothergill v. Monarch Airlines [1981] AC 251 at 293. As Lord Wilberforce also said:

Finally Mr Lyndon-Stanford referred me to TTMI Limited v. ASM Shipping [2006] 1 Lloyd’s Rep. 401, a decision of Christopher Clarke J which arose in the context of section 66 of the Arbitration Act. As appears from the report, the matter had at an earlier stage been before Aikens J. It is unclear to what extent if at all the point may have been argued, but both Aikens J and Christopher Clarke J seem to have assumed that section 66 gives to the court a power of partial enforcement of an award. Mr Lyndon-Stanford naturally urged me to follow the same approach.

Mr Nash for his part first reminded me of the decision of Gross J in Norsk Hydro A/S v. State Property Fund of Ukraine [2002] EWHC 2120 (Comm). That was a case in which on the ex parte application Morison J had permitted an award made against a single party to be enforced as a judgment against two distinct parties. In holding that the court had exceeded its jurisdiction to enter judgment in terms of the award, Gross J said, at paragraphs 17 and 18:

It was not in dispute before me that the Nigerian court has power on the substantive challenge to the award to sever it, so as to preserve the good part or parts of the award whilst setting aside that part or those parts which is or are in the opinion of the Nigerian court unsupportable. Relying on the decision of Belgore CJ in Baker Marine Nigeria Limited v. Danos & Curoly Marine Contractors Inc. [1997] 1 FHCLR 734 Mr Nash nonetheless submitted that I should not countenance partial enforcement because the Nigerian court might, whilst concluding that certain parts of the award are incapable of challenge, nonetheless regard the award as a whole as such a poor piece of work that in consequence it must be set aside in its entirety. In the Baker Marine case relied upon by Mr Nash there were ten heads of claim. Four were rejected by the tribunal. On appeal Belgore CJ held that the award under four further heads of claim must be set aside for lack of evidence, acceptance of the claims in such circumstances amounting to misconduct. Belgore CJ then said this, at page 748:

In a subsequent case, Baker Marine (NIG) Limited v. Chevron (NIG) Limited [2000] 12 NWLR (Pt 681) 393 the Nigerian Court of Appeal questioned this reasoning and the conclusion derived from it. On the substantive appeal from Belgore CJ in Baker Marine v. Danos [2001] 78 NWLR (Pt 712) 337 the Court of Appeal, differently constituted, castigated the Chief Justice as having made two “very contradictory” findings. The Court of Appeal expressly concluded that the Nigerian court has no jurisdiction to set aside an award or any part thereof on the basis of reasons extraneous to the Arbitration and Conciliation Act and in particular not on the ground that “the award has been battered”. It is true that the Court of Appeal went on to set aside the entirety of the Chief Justice’s judgment in any event on the ground that “lack of evidence can never be a ground for setting aside an award nor can that tantamount to a misconduct on the part of the arbitrator.” The court’s conclusion on the first point was therefore strictly unnecessary to its decision. Nonetheless, in the light of the clear conclusion of the Nigerian Court of Appeal it seems to me most unlikely that the Nigerian court would, on hearing the substantive challenge to this award, countenance the possibility that even parts of the award which are in themselves incapable of challenge should nonetheless be struck down in consequence of the successful challenge to other parts of the award.

I have already recorded my conclusion at paragraph 86 above that the challenge to the adequacy of the reasoning in the award is most unlikely to lead to the setting aside of the award under the heading “Variations”, and the same must be true of the award under the heading “Non-payment” which is not specifically challenged in the RRAM.

My conclusion overall is that the appropriate course now meeting the justice of the case is that I should vary the order of David Steel J by substituting therefor an order which will allow judgment to be entered in terms of the awards made under Head of Claim No. 2, Non-payment, and Head of Claim No. 3, Variations. In so doing credit must obviously be given for the amounts referable to these heads already paid on 12 May 2005. No amount was paid referable to Head of Claim No. 2. As set out in Paragraph 92 above, the amount referable to Head of Claim No. 3 should be regarded as US$7,691,086.33.

I do not consider it appropriate to give credit for the balance of the payment made by NNPC on 12 May 2005. That was made in respect of different parts of the award reflecting amounts indisputably due thereunder. However just as I shall not permit that amount to be credited against the amount for which judgment is entered, so too I draw back from following through the logic of NNPC’s admission and requiring the payment of a further amount representing the unpursued counterclaim, which is obviously incapable of set-off, and, yet further, requiring the payment of interest on the sum paid referable to heads of claim other than No’s 2 and 3.

At paragraphs 90 and 92 above I recorded the interest directed to be paid under the award as accrued as at 22 February 2008. There is however no reason why judgment should not be entered in an amount inclusive of interest accrued as at the date of judgment, and I so order.

I will of course hear counsel further on the form of the order but I believe that the effect of the foregoing is that there must be judgment for:

US$1,641,234, together with interest thereon as directed by the award until the date of judgment;

Interest on US$58,521,249.55 as directed by the award until 12 May 2005;

US$50,830,163.22, together with interest thereon as directed by the award from 12 May 2005 until the date of judgment.

Subject to any further argument which either party may wish to present I am currently minded to order and confirm (in accordance with paragraph 1 of the guarantee) that the money secured by the guarantee provided pursuant to paragraph 2(2) of the order of Gross J dated 19 April 2005 be paid out to IPCO in partial satisfaction of the judgment.

Save as set out above, I propose to adjourn the decision on the enforcement of the award. Although it is inherent, I will give liberty to apply.