Supreme Court decision on New York Convention: Nigerian National Petroleum Corporation v IPCO (Nigeria) Ltd

3 March, 2017

The Supreme Court has today handed down an important decision on the interpretation of the New York Convention and the Arbitration Act 1996.  The Supreme Court’s decision is the latest in a series of important appellate judgments arising out of the long-running dispute concerning the enforcement of a Nigerian arbitral award between NNPC, the Nigerian state-owned oil company, and IPCO.

In a unanimous decision, overturning the Court of Appeal, the Supreme Court concluded that there is no power to require security as a condition of resisting recognition or enforcement of a New York Convention arbitral award.  The decision has been identified by commentators as having major consequences for the relationship between the New York Convention and national laws.

Lord Mance (with whom the other Justices agreed) held that articles V and VI of the New York Convention (to which s. 103 of the 1996 Act gives effect) constitute a complete code intended to establish a common international approach.  The Convention does not contain any power by which an enforcing court can require security as the price of advancing a properly arguable challenge to enforcement, and its provisions were not aimed at improving award creditors’ prospects of laying hands on assets to satisfy awards.  In the absence of any such power in the New York Convention, it was impermissible to use an English procedural rule to impose a condition which would have the effect of fettering a defendant’s right to raise a properly arguable challenge to recognition or enforcement.

The Supreme Court accordingly allowed NNPC’s appeal, removing the condition that NNPC provide additional security of US$100 million as a condition of being entitled to advance a good prima facie defence that enforcement should be refused because the award had been procured by IPCO’s fraud.

Toby Landau QC and James Willan represented the successful appellant, NNPC, instructed by a team led by Kamal Shah at Stephenson Harwood LLP.

The judgment can be found here.