No jurisdiction to order security for an award as a condition for aparty to be allowed to resist enforcement

The Supreme Court [2017] UKSC 16 has now had its say in the latest incarnation of the long-running saga of IPCO v NNPC, in which IPCO has spent the last 13 years trying to enforce a Nigerian award which, including interest, is now in the order US$350million.

The Supreme Court had before it a narrow, but important question: whether an English Court (as an enforcing court) has jurisdiction to order that a party seeking to resist enforcement of an award on public policy grounds in the enforcing court pursuant to s. 103(3) of the Arbitration Act 1996 (Article V of the New York Convention) can only do so if it provides security for some or all of the award.

The question arose because the Court of Appeal had ordered that NNPC put up security for US$100million as a condition for resisting the enforcement of the award in England on the basis that IPCO had obtained it by fraud (the CA having found that the allegation was made bona fide and that NNPC had a good prima facie case).

Lord Mance (with whom the rest of the Justices agreed) explained that the jurisdiction to order security pursuant to s. 103(5) of the 1996 Act (Article VI of the New York Convention) only extends to ordering security as the price of adjourning enforcement proceedings because there is an extant challenge to the award in the court of the seat. It does not extend to imposing security as the price for a substantive challenge to enforcement being heard and decided by the enforcing court.

The Court also rejected the application of r.3.1(3) of the Civil Procedure Rules in this context. That power is aimed at the imposition of a condition as a price for obtaining a discretionary relief or a concession from the Court, not as a price for exercising a right to raise a properly arguable challenge to enforcement.

The judgment raises a further factor to consider when determining how and where to seek enforcement, and how best to resist the enforcement of an award.

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