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Summary
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IPCO (Nigeria) Ltd (“IPCO”) was the Nigerian subsidiary of a Hong Kong company. It agreed to construct a petroleum export terminal for the State-owned Nigerian National Petroleum Corp. (“NNPC”). The contract contained a clause providing for arbitration in Nigeria under Nigerian law. Disputes arose under the contract and were referred to arbitration. The tribunal made an award in favour of IPCO. NNPC applied to the Nigerian courts to have the award set aside. Meanwhile, IPCO sought enforcement of the award in the English High Court. The Court ordered enforcement under section 101(2) of the Arbitration Act 1996 (U.K.) (“the Act”) (providing for enforcement as a judgment or order of the court of an NYC award, as defined by the Act). NNPC then applied to the Court to set aside the enforcement order pursuant to section 103(2)(f) of the Act (incorporating Article V(1)(e) NYC regarding refusal to recognise or enforce an award where, inter alia, the award has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made) and section 103(3) of the Act (incorporating Article V(2) NYC regarding refusal to recognise or enforce an award where, inter alia, it would be contrary to public policy to do so). In the alternative, NNPC sought to adjourn enforcement pursuant to section 103(5) of the Act (incorporating Article VI NYC regarding adjournment of the decision on the recognition or enforcement of the award where an application for the setting aside or suspension of the award has been made to a competent authority of the country in which, or under the law of which, it was made). IPCO applied for security in the event that enforcement be adjourned.
The Court dismissed NNPC’s application to have the enforcement order set aside, but agreed to adjourn enforcement on condition that NNPC pay a sum indisputably due to IPCO under the contract, in addition to U.S. $50 million by way of security. In so ruling, the Court expounded six broad principles. First, it noted that section 103 of the Act was pro-enforcement, reflecting the purpose of the NYC itself. It remarked that even where a ground for refusing enforcement was made out, the Court retained discretion to enforce the award. Second, it stated that section 103(2)(f) was only applicable where the award had been set aside or suspended by a court in the country of origin; its application was not triggered automatically by a challenge being brought before a court in the country of origin. Third, it reasoned that considerations of public policy, if relied on to resist enforcement, should be approached with extreme caution. In its view, the public policy exception in section 103(3) was not intended to furnish an open-ended escape route for refusing enforcement of NYC awards, but was confined to the public policy of England. Fourth, it considered that section 103(5) achieved a compromise between, on the one hand, ensuring that enforcement was not frustrated by proceedings being brought in the country of origin and, on the other hand, ensuring that proceedings in the country of origin not be pre-empted by rapid enforcement of the award in another jurisdiction. In the Court’s view, pro-enforcement assumptions were sometimes outweighed by respect due to the courts in the country of origin. Fifth, the Court noted that the Act did not furnish a threshold test in respect of the exercise of the court’s wide discretion pursuant to section 103(5) (which reflected Article VI NYC). The Court identified a number of factors which were relevant to the exercise of that discretion, including, inter alia, whether the proceedings in the country of origin had a realistic prospect of success. Sixth, the Court emphasised that the NYC contained no nationality condition and was thus applicable where, as in the present case, an award was made abroad in an arbitration between two parties of the same nationality. It noted that, while the NYC was primarily intended to facilitate international arbitration, its benefits were equally available to a party seeking enforcement in a foreign country of a domestic arbitration award. As such, the Court reasoned that it would be wrong to introduce a nationality condition into the NYC “by the backdoor”, by imposing such a condition for the purpose of an application for enforcement (or non-enforcement) under the Act. In light of all the above, the Court decided against proceeding with immediate enforcement of the award, thereby pre-empting the decision of the Nigerian court on the challenge of the award (which, in the Court’s view, was bona fide and had a realistic prospect of success in certain respects). Nor was it minded to merely adjourn the order, thus giving too little weight to the importance of enforcement. Instead, it was satisfied that justice would be done by adjourning enforcement of the order on the terms outlined above.
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United Kingdom / 27 April 2005 / England and Wales, High Court / IPCO v. Nigeria (NNPC) / 2004 1031
