Supreme Court hands down judgment in AIC Ltd v Federal Airports Authority of Nigeria appeal

1 July, 2022

On 15 June 2022, the Supreme Court handed down judgment in the appeal in AIC Ltd v Federal Airports Authority of Nigeria. The decision gives important guidance on the principles applicable to the Court’s power to re-open a judgment or order in the period between pronouncement of its judgment or order in open court and the sealing of the ultimate order.

The decision arose in the context of enforcement of an arbitral award worth approximately US$140m by the date of judgment. The Appellant (“FAAN”) issued proceedings in the seat of the arbitration (Nigeria) to challenge the award. In the meantime, the Respondent (“AIC”) brought a claim to enforce the award in England.

The High Court adjourned the enforcement claim pending the outcome of the Nigerian proceedings on condition that FAAN provide security in the form of a guarantee of approximately US$24m. The guarantee was not provided by FAAN by the deadline specified, and AIC applied for permission to enforce the Award.

Permission was given on 6 December 2019. Later that same day, and prior to the Court’s enforcement order being sealed, FAAN provided the guarantee and subsequently applied to re-open the judgment and order given on 6 December 2019, coupled with an application for relief from sanctions. Both applications succeeded in the High Court but were reversed in the Court of Appeal.  Following the Court of Appeal judgment and order, AIC obtained full payment under the guarantee from FAAN’s bank and thereby obtained approximately $24m in partial discharge of the Award debt.

Lord Briggs and Lord Sales gave judgment for the Supreme Court, finding that the Court of Appeal had erred in its reasons for setting aside the exercise of the High Court’s discretion but that the High Court’s exercise was also vitiated because of the undervaluation of the finality principle and an erroneous assessment of the reasons given by FAAN for the delay in providing the guarantee ([49]).

The Supreme Court accordingly re-exercised the discretion afresh.  It concluded that, although the matter was not clear cut, on balance AIC should retain the right to the sums which it had obtained under the guarantee but that enforcement beyond that should await the result of the set aside application in Nigeria ([63]-[64]).  The Court regarded this as “a result which serves the Overriding Objective in its modern form” ([64]).

In so deciding, the Supreme Court provided important guidance on the exercise of the discretion to re-open a judgment or order before sealing of the order:

  • The task of a judge is to do justice in accordance with the relevant Overriding Objective. In the CPR, the Overriding Objective emphasises the importance of the finality principle in litigation ([30]).
  • A judge should not start from anything like neutrality. It will often be a useful mental discipline, reflective of the strength of the finality principle, for the judge to ask themselves whether the application should even be entertained at all before troubling the other party with it or giving directions for a hearing ([32]). That is not, however, a rule of law or practice ([33]).
  • The finality principle will always be a weighty matter in the balance, though the weight to be given to it will vary depending, in particular, upon the nature of the order already made, the type of hearing at the end of which it was made and the type of proceedings in which it was made ([35]).
  • The question is whether the factors favouring re-opening the order are, in combination, sufficient to overcome the deadweight of the finality principle and any other factors pointing towards leaving the original order in place ([36]).

The Respondent (AIC) was represented by Paul Key QC, instructed by McDermott Will & Emery UK LLP.

A copy of the Judgment can be found here.