Summary

The issue on this appeal is whether Mr Justice Robin Knowles ('the judge') was wrong to stay an application by the Federal Republic of Nigeria for a third party costs order until after the conclusion of proceedings for the detailed assessment of Nigeria's costs. The issue arises in what has been heavy and high profile litigation arising out of arbitration awards made in favour of Process & Industrial Developments Limited ('P&ID') against Nigeria for a total of some US $6.6 billion together with interest.

On 21st December 2023, after a trial lasting 29 days, the judge ordered that the arbitration awards be set aside for serious irregularity pursuant to section 68 of the Arbitration Act 1996. By this time the amount of the awards had increased to some US $11 billion as a result of interest.

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Conclusion

As I said at the outset, the judge's reasoning was brief and could usefully have been more fully expressed. If it had been, it may be that this appeal would have been unnecessary. But I would not criticise the judge unduly and would point out that his ruling was given after relatively brief oral argument, while this court has had the benefit of submissions lasting most of a day. Litigation in the Commercial Court could not be conducted efficiently if that kind of time was devoted to every application of this nature. The judge was right to give an extempore ruling in such an application and it is apparent that he did so under some time pressure, whereas we have had the luxury of being able to reserve judgment for a short time.

The judge's ruling was sufficient to enable the parties and this court to understand the reasons for his decision once the background is understood. Another judge might have reached a different conclusion, but the judge's conclusion was within the wide ambit of his discretion in making a case management decision of this nature. I would therefore dismiss the appeal.

The assessment process

Before leaving this appeal, I wish to comment on the process which should be followed in order to ensure that the detailed assessment is conducted in accordance with the overriding objective.

I am dismayed to be told that the assessment process will require at least 50 days of court time and will involve the expenditure of millions of pounds. That would mean a series of hearings potentially lasting in total almost twice as long as the trial of the substantive challenge to the award. Even if this is time and expense which these well-resourced parties are willing to devote to the exercise, it seems to me that it would be the worst kind of satellite litigation, which will prejudice the many other court users who need to have their costs assessed with reasonable promptness, and that it should not be countenanced.

The judge expressed 'the hope that the length of time being discussed for argument in the detailed assessment will be borne down on by the Costs Judge so as to ensure that there is no element of disproportionality in the amount of court time used' (para 4). I would go further. If the preliminary issues which are due to be determined at the hearing fixed for April and May of this year do not resolve matters, the costs judge must adopt a firm approach, limiting the parties to a reasonable allocation of further court time. If necessary, a sampling approach should be adopted. For example, each party could select a number of items from the bill and any reduction applied to those items could be applied to the bill as a whole. That seems to me to be as likely to produce a fair and reasonable result as detailed scrutiny in oral argument of every item in the bill in addition to the thousands of pages of written submissions which have already been served. As I have already said, both parties have access to high quality legal advice and will be well able to form a view of the likely outcome. It is time for them to adopt a realistic approach.

LADY JUSTICE ANDREWS:

I agree. I wish to expressly associate myself with the views expressed by Lord Justice Males in paragraphs 44 to 46. The level of costs claimed is eye-watering even by Commercial Court standards. It is possible that the resolution of the preliminary issues will significantly truncate the time required to carry out the remainder of the costs assessment, but the history of this litigation does not give rise to grounds for any optimism on that score. The sampling approach seems to me to be a very good idea.

LORD JUSTICE LEWIS:

I agree that this appeal should be dismissed for the reasons given by Lord Justice Males.