Procedural Posture

This document is a judgment of the United Kingdom Court of Appeal (Civil Division) concerning a rolled-up application for permission to appeal, and the substantive appeal itself, regarding a costs order made by the High Court. The underlying High Court decision set aside two arbitral awards totaling US$6.6 billion in favor of Process & Industrial Developments Limited (P&ID) against the Federal Republic of Nigeria under Section 68 of the Arbitration Act 1996, on the grounds that the awards were procured by fraud and contrary to public policy. Following the set-aside, the High Court ordered P&ID to pay Nigeria's costs in sterling and subsequently refused P&ID permission to appeal that costs order.

Principal Legal Issues and Parties' Positions

The appeal raised two primary legal issues. First, whether Section 68(4) of the Arbitration Act 1996, which requires the leave of the first-instance court for any appeal from a decision "under this section," deprived the Court of Appeal of jurisdiction to hear P&ID's appeal against the costs order. Second, if jurisdiction existed, whether the High Court erred in ordering costs to be paid in sterling rather than Nigerian naira. Nigeria argued that Section 68(4) barred the appeal and that the costs order in sterling was correct under the indemnity principle, as it had been invoiced by and paid its English solicitors in sterling. P&ID contended that the costs order was a discrete point of law not caught by Section 68(4) and that Nigeria's true economic loss was suffered in naira, as it funded the payments by exchanging naira from its consolidated revenue fund.

Court's Analysis and Reasoning

The Court of Appeal held that it possessed jurisdiction to hear the appeal. Analyzing the statutory framework and prior jurisprudence, the Court determined that a consequential costs order made under Section 51 of the Senior Courts Act 1981 and CPR Part 44 is not a decision "under" Section 68 of the Arbitration Act. The Court emphasized that the policy underlying Section 68(4)—to avoid delay and expense in the arbitral process—is not frustrated by an appeal against a final costs order made after the substantive challenge has been determined and the awards set aside.

On the merits of the currency issue, the Court rejected P&ID's reliance on the approach taken in contract and tort cases, which seeks to identify the currency in which the loss was actually felt. The Court clarified that an award of costs is a statutory indemnity against the liability the receiving party has incurred to its own lawyers, not a mechanism to compensate for underlying economic loss. Because Nigeria was invoiced in sterling, incurred its liability in sterling, and paid its bills in sterling, the High Court correctly exercised its discretion to make the costs order in sterling.

Decision

The Court of Appeal granted P&ID permission to appeal the costs order but ultimately dismissed the appeal, upholding the High Court's decision to award Nigeria's costs in sterling.