REUTERS | Aly Song

Adjourning the enforcement of an arbitration award: AIC Ltd v The Federal Airports Authority of Nigeria and adjourning decisions on New York Convention awards

The Technology and Construction Court (TCC) recently considered the question on whether it could and, properly, should adjourn its decision on the recognition or enforcement of a New York Convention award, in the case of AIC Limited v The Federal Airports Authority of Nigeria.

Section 103 of the Arbitration Act 1996 (AA 1996) sets out the circumstances in which recognition or enforcement of an arbitration award may be refused by the courts of England and Wales. It includes, under subsection 103(2)(f), circumstances where the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, the award was made. Furthermore, section 103(5) of the AA 1996 provides power to the courts (in this case the TCC) to adjourn its own decision on the recognition or enforcement of the arbitration award if the foreign application for the set aside or suspension of the arbitration award, contemplated by section 103(2)(f), had been made.

In AIC, the claimant applied to the TCC to enforce a Nigerian arbitration award of significant sum in its favour (over US $160 million including accrued interest). The defendant applied for the adjournment of the enforcement decision pursuant to section 103. The award constituted a New York Convention award for the purposes of section 103. AIC argued that the court did not have jurisdiction to adjourn its own decision on the question of enforcement of the award pursuant to the power in section 103(5), since the application to set aside had been determined by the Nigerian Court of Appeal on technicality. The TCC rejected that submission because it held that the question for the TCC was whether the outcome of the set aside application in Nigeria (and not the application itself) was still pending before the Nigerian courts. In considering that question, the TCC confirmed that it should be decided not by the principles of Nigerian law (on, for example, whether an appeal is considered a continuation of an application under Nigerian law), but instead by those principles of English construction of section 103(5) and whether the outcome of the foreign application was still “pending”. The TCC held that the outcome of the application in Nigeria was still pending. The Nigerian Court of Appeal’s ruling, to the effect that the Federal High Court of Lagos State did not have the requisite jurisdiction to decide a set aside application, was itself the subject of an appeal to the Nigerian Supreme Court. Accordingly, the TCC considered that section 103(5) was engaged, giving it the requisite power and jurisdiction to adjourn its decision on the recognition or enforcement of the arbitration award.

Having established that it had jurisdiction to adjourn its own decision on enforcement under section 103(5), the TCC then went on to consider whether it should so adjourn. The test for such an adjournment is set out in IPCO (Nigeria) Ltd v Nigerian National Petroleum Corp. Of particular interest in that test, as applied to AIC, was the question of whether the Nigerian application to set aside the award had at least a real prospect of success. The TCC considered that the set aside application in Nigeria did not have a real prospect of success on appeal, not least because the TCC considered that the reasons for the first instance Nigerian decision to set aside the award were not well-founded. However, the TCC recognised that the only time that the set aside application had come before the Nigerian courts, the Nigerian courts had (contrary to the TCC’s own views of the merits of the application) decided to set aside the award.

This is an interesting point for practitioners to note. Although the test to apply on an adjournment under section 103(5) is a familiar English one (most commonly seen in summary judgments), whether it is satisfied may be considered (in part) by reference to the decisions of the foreign court, even if that foreign conclusion is the opposite to the English court’s view. AIC underlines the English court’s desire to avoid producing a decision on enforcement that conflicts with a decision from the foreign court. This is so, even though in this case the adjournment by the TCC of the decision to enforce the award was held to be causing yet further delay and prejudice to the claimant, and even though the TCC considered the award to be manifestly valid.

The salve available to the court to offer the claimant in such a situation is to make the adjournment conditional on the award of security. Upon considering the delay between the making of the award and its enforcement, the prejudice to AIC, the apparent validity of the award, and the feature that the defendant itself had been a principal cause of the delay in enforcement, the TCC exercised its wide discretion in ordering 50% of the award as security as a condition of the adjournment. The condition of requiring security therefore squares, as best it can, a somewhat difficult circle for the English courts, in balancing the competing needs to give due deference to the courts of the country of the award, while at the same time supporting the arbitration process and giving voice to its own view of the merits.

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