IPCO (Nigeria) LTD v Nigerian National Petroleum Corporation
2014
COMMERCIAL COURT
United Kingdom
CORAM
- MR JUSTICE FIELD
Areas of Law
- Commercial Law
- Civil Procedure
- Alternative Dispute Resolution
2014
COMMERCIAL COURT
United Kingdom
CORAM
AI Generated Summary
IPCO Nigeria Ltd sought to enforce a 2004 arbitral award against NNPC under the Arbitration Act 1996. The court considered whether changes in circumstances justified reconsidering enforcement and whether fraud allegations affected the award. Gross J had previously adjourned enforcement pending Nigerian proceedings, and Tomlinson J reconsidered this due to delays. Ultimately, the court held that IPCO had not shown significant changes to warrant altering the enforcement order, leaving the matter to be decided in Nigeria.
Judgment
Mr Justice Field:
Introduction
This is an application by IPCO Nigeria Limited (“IPCO”) to enforce an arbitral award dated 28 October 2004 (“the Award”) under s.101 (2) of the Arbitration Act 1996 (“ the Act ”). It is the third such application by IPCO whose first task is to satisfy the Court that there has been a sufficient change in circumstances since the Court ordered (by consent) on 13 May 2008 to adjourn enforcement of the Award under s. 103 (5) of the Act to warrant a re-exercise of the discretion vested in the Court to enforce the Award under ss. 101 and 103 of the Act .
The factual background
IPCO is a Nigerian subsidiary of a Hong Kong company. It was incorporated in 1990 to carry on business as a turnkey contractor specialising in the construction of on-shore and off-shore oil and gas facilities. It is now effectively a shell company kept in existence for the purpose of enforcing the Award. By a contract dated 14 March 1994, IPCO agreed for a lump sum price to design and construct for the Defendant (“NNPC”) a petroleum export terminal in the Port Harcourt area of Nigeria to be known as the Bonny Export Terminal (“BET”). The contract was governed by Nigerian law and contained an arbitration clause under which disputes between the parties were to be referred to arbitration in accordance with the Nigerian Arbitration and Conciliation Act 1990 (“the Nigerian Act”).
There were disputes between the parties, particularly over a claim by IPCO for the cost of Variations which it said were responsible for a 22 month delay in completing the project. There followed a lengthy arbitration culminating in the Award under which IPCO was awarded the following sums:
(1) Head of Claim No. 2 – Non-payment [of invoices]: US$1,641,234.00.
(2) Head of Claim No. 3 – Variations: US$58,521,249.55.
(3) Head of Claim No. 4 – Phase II Prolongation: US$53,563,352.00.
(4) Head of Claim No. 5 – Standby: US$3,870,679.00.
(5) Head of Claim No. 6 – Escalation of Contract Price: US$618,116.00.
(6) Head of Claim No. 7 – Financing Charges: US$34,514,356.00.
On 15 November 2004, NNPC issued an Originating Motion in the Federal High Court in Lagos seeking to have the Award set aside under the Nigerian Act on the grounds that the arbitral Tribunal (“the Tribunal”) lacked jurisdiction and had misconducted itself. Under Nigerian law, an error on the face of the award can amount to “misconduct”, although the mere fact that the supervisory Court would have decided a q