AIC Ltd v Federal Airports Authority of Nigeria – reopening judgments and orders
In AIC Ltd v Federal Airports Authority of Nigeria the Supreme Court considered the principles applicable when a judge receives an application to reopen a judgment and order after it has been given but before the formal order has been sealed by the court. The case concerned an arbitration between AIC and the Federal Airports Authority of Nigeria (“FAAN”) in which the former obtained a substantial award against the latter. A chain of appeals was then brought by FAAN in Nigeria while AIC sought to enforce the award in England. FAAN sought to adjourn any application to enforce in England on the basis that appeals in Nigeria were ongoing; AIC sought security for the award if any such adjournment were to occur.
Background
The applications were heard by Veronique Buehrlen QC sitting as a deputy judge of the High Court. She set aside the enforcement order on condition that FAAN provide security by way of bank guarantee. However, following two applications for an extension of time to obtain the guarantee (the second of which failed), AIC sought to enforce the award and the judge granted the order. That order was given following an ex tempore judgment. In the meantime, FAAN successfully obtained a guarantee following receipt of various permissions from Nigerian government departments and the Central Bank of Nigeria. Thus after the ex tempore judgment, but before sealing of the order, FAAN applied to the judge to reopen the judgment and order. It should be noted that the applications for permissions were late, and in particular the application to the Central Bank of Nigeria only came a few days before the second application for an extension of time.
The judge gave a further ex tempore judgment in which she extended time for provision of the Guarantee, granted relief from sanctions, and adjourned the application for enforcement until after the Nigerian set-aside proceedings. AIC appealed this to the Court of Appeal, which found the judge had applied the wrong test and overturned her order. The matter was then appealed to the Supreme Court.
Judgment of the Supreme Court
Lord Briggs and Lord Sales gave the judgment of the Court. They began by relating the application to an application of the overriding objective (“OO”). In doing so they noted that the OO had been amended to include the objective of enforcing compliance with court orders and rules, and explained that this emphasised the importance of finality in proceedings. Indeed, this is a feature that runs throughout much of the case law on civil procedure. Thus, when considering this type of application, the judge should not consider the issue from a position of neutrality. If a judge receives such an application, they should first consider whether the application should be considered at all before troubling the other party or giving directions for a hearing. However, this does not mean there is a two stage test.
In considering the application, it is impossible to disentangle all the factors involved. However, finality is a weighty matter. The weight will be dependent on the stage of proceedings: an order following a trial is likely to place the highest importance on finality; a case management decision or interim order at the lower end. It is not feasible to state a bright line test as an evaluative judgment has to be made. In Manchester CC v Pinnock [2010] UKSC 45 the court spoke of the principle requiring that ‘in the absence of evidence to the contrary, […] a strong factor in support [of making such an order]… in the overwhelming majority of cases’ and a matter ‘of real weight’ constituting ‘a very strong case’ for making the order. Lord Briggs and Lord Sales thought such formulae were appropriate here. Finality was described as a ‘deadweight’ to be considered with other factors pointing to leaving the order in place.
The Supreme Court also considered whether the case constituted a relief from sanctions application. On the facts, the enforcement of the award was in substance a sanction for non-provision of the guarantee. Thus setting aside the order would be either substantively or analogous to a r3.9 application. However, whether or not technically a relief from sanctions application, the determination was going to be similar because of the parallel between a relief from sanctions application and the application of the OO. Thus those factors in Denton v TH White Ltd [2014] EWCA Civ 906 were relevant to the overall analysis.
On the facts, the Supreme Court allowed the appeal in part. It re-exercised the discretion and found on stage (i) of Denton that there was a very serious breach. On stage (ii) there was no good reason for the failure to comply. Thus, the case turned on stage (iii) and whether there should be relief in any event. Overall, Lord Briggs and Lord Sales concluded that FAAN should be successful only in part: they held the enforcement should be set aside, the application for leave to enforce be adjourned, but AIC permitted to retain the proceeds it had received from enforcement of the guarantee that it had already received.
In determining the case, considerable weight was placed on finality, and it was noted that FAAN delayed in obtaining the guarantee when it had extensive notice of its requirement. On the other hand, the provision of the guarantee was an important change of circumstances. The judge at first instance placed weight on the fact that, in obtaining and enforcing the guarantee, AIC obtained more than it would have if it had merely received an order to enforce the award unopposed. The guarantee was intended as security; not as a ready means of enforcement. Put another way, the guarantee was the price, belatedly paid, for adjournment. The judge was of the view that the enforcement against the guarantee was essentially a windfall. The Supreme Court noted the weight the judge placed on the idea of a windfall, but instead was of the view that part enforcement against the guarantee was an appropriate reflection of FAAN’s failure to comply with the court order.
The facts of this case are unusual and practitioners should seek to avoid relying on this principle as a practical way of addressing delays in the management of a case. While successful in this instance, the tenor of the Supreme Court’s judgment will make it a very unusual case in which a practitioner will feel comfortable in advising a high prospect of success in similar cases. However, the exposition of the principle by the Supreme Court is useful, and in a pinch may assist practitioners in pulling a victory from the jaws of defeat.