Summary

A paradigm situation in which the court, exercising its jurisdiction under the Arbitration Act 1996 s.103(5), had to reconsider its earlier decision to adjourn the decision on enforcement of an arbitration award was where there had been a significant relevant development in the proceedings before the supervisory court.

Facts

The applicant (C) applied to enforce a New York Convention arbitration award issued in Nigeria against the respondent (D). D was the state oil corporation of Nigeria. C had agreed to design and construct a petroleum export terminal for D. Completion of the contract was followed by an arbitration between the parties in Nigeria. The tribunal issued an award in favour of C against D for more than $150 million under six heads. N applied to the Nigerian court to set aside the award. C made an application without notice to the English court for enforcement of the award and David Steel J made an order for enforcement. D applied for that order to be set aside or for enforcement to be adjourned and C applied for security if enforcement was adjourned. Gross J dismissed the application to set aside the order of David Steel J. He granted D's application for the decision on enforcement to be adjourned under the Arbitration Act 1996 s.103(5) and C's cross-application for such adjournment to be on terms. He required D to pay C a sum of $13.1 million which would remain indisputably due to C even if D's challenge to the award was successful and required D to provide security in the sum of $50 million on the basis that even though some of N's grounds of challenge had a real prospect of success the award was likely to be upheld for at least $58.5 million. When Gross J gave judgment it was thought that a decision would soon be given in Nigeria on a preliminary application by C to strike out D's application to set aside the award. C submitted that the court should consider whether the continuation of Gross J's order met the justice of the case in the different circumstances which prevailed, namely that the challenge to the validity of the award in the Nigerian court was taking very much longer than was first expected, and since the court had been inadvertently misled on the earlier occasion in a manner material to its evaluation of the strength of the challenge. D contended that there had been no change of circumstances sufficient to justify a reconsideration of the decision of Gross J to adjourn the enforcement decision and that the prospects of success of the challenge to the award were the same as they had been when the matter was before Gross J.

Held

An adjournment granted pursuant to s.103(5) of the 1996 Act was by its nature a temporary holding measure. The appropriateness of maintaining such a measure in place would be dependent on developments before the supervisory court. A paradigm situation in which the court might have to reconsider its earlier decision under s.103(5) was where there had been a significant relevant development in the proceedings before the supervisory court, the pendency of which was the prerequisite to the court having jurisdiction to consider adjourning the decision to enforce. It was clear that, given the course taken by the various Nigerian proceedings since the matter was before Gross J three years previously, resolution of C's preliminary objection to D's motion to set aside the award was no closer than it was then and was in fact very much further away. It was apparent that even a decision at first instance on the preliminary objection might be many years away, and time for the appeal process had to be added to the timescale for achieving a ruling at first instance on the preliminary objection. The revision of the likely timescale within which there would be a determination of the preliminary objection was a development of sufficient significance to justify the court considering afresh whether the decision on enforcement of the award should be further adjourned. That was in no sense a disguised appeal against Gross J's decision. (2) D's challenge to the substantive jurisdiction of the arbitral tribunal was not seriously arguable. (3) Gross J had been innocently misled into reaching the conclusion that D had a realistic prospect of reducing the award by up to some $88 million on the ground of duplication alone. However there was no justification for revisiting the rest of Gross J's conclusions as to the strength of the challenge to the award. D had no realistic prospect of reducing the award below $58.5 million together with interest and some proportion of the costs. In all the circumstances there was due and owing from D to C under the award a total of at least US$82,790,084 in respect of which there was no credible challenge. (4) The court had power to permit partial enforcement of the award. Immediate enforcement of discrete parts of the award would go with the grain of the award, not undermine it or second guess it. The Nigerian court would have power on the substantive challenge to the award to sever it. The court would therefore enter judgment in terms of the awards made under heads two and three in the sums of $1,641,234 and $50,830,163 together with interest and otherwise adjourn the decision on enforcement.

Judgment accordingly