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On appeal from [2020] EWCA Civ 1585

The appeal concerns the court’s discretion to reconsider a judgment and order after it has been given but before the formal order has been sealed by the court.

The Respondent was the successful claimant in a Nigeria–based arbitration with the Appellant. FAAN was ordered to pay US$48.13m to the respondent, plus interest at 18% per annum (“the Award”). FAAN continues to challenge the Award in the Nigerian courts (“the Nigerian Proceedings”).

The respondent sought permission from the High Court to enforce the Award in England and Wales. This was initially granted, however the High Court set this order aside and adjourned the claim pending developments in the Nigerian Proceedings. This was on the condition, however, that the appellant provide security of around US$24m by way of a bank guarantee.

The Guarantee was not provided on time. The High Court judge gave an oral judgment and made an order permitting the respondent to enforce the Award. However, the Enforcement Order was not sealed immediately.

The appellant obtained the Guarantee later the same day, provided it to the respondent and applied to re–open the judgment and set aside the Enforcement Order. The judge set aside the Enforcement Order and retrospectively extended time for the provision of the Guarantee.

The Court of Appeal allowed the appeal against the judge’s revised decision and reinstated the Enforcement Order. As a result, the respondent had both an unlimited right to enforce the Award and the benefit of the Guarantee as an asset against which to enforce. The respondent accordingly called on the Guarantee, which was paid in full by the appellant’s bank.

HELD – The Supreme Court unanimously allowed the appeal, although only in part.

The judge said that the application of the overriding objective in the context of deciding whether to re–consider an order not yet sealed was a question of balance. The Court of Appeal disagreed, ruling that a two–stage analysis was required: (1) whether it was right to entertain the application to re–consider at all; and, if it was, (2) consider the application on its merits.

The Supreme Court considers that both the judge and the Court of Appeal were only partly right. Previous caselaw shows that the task of a judge faced with an application to reconsider a judgment and/or order prior to sealing is to do justice in accordance with the overriding objective and the principle of finality. This principle holds that parties should not ordinarily be able to raise new arguments after an order has been made which it should have raised at the relevant hearing.

Therefore, when determining an application to reconsider a final judgment and/or order before the order has been sealed, a judge should not start from evenly–balanced scales as the judge did but should give great weight to the finality principle. However, although it will often be a useful mental discipline for a judge to ask whether the application should be entertained at all, there is no rule of law or practice that such an application must always be addressed by a two-stage process as held by the Court of Appeal. The finality principle is better reflected by recognition that it will always be a weighty matter in the balance against making a different order, rather than always requiring a two–stage process of analysis.

The Supreme Court accordingly rejects the Court of Appeal’s two–stage approach, but also finds that the judge did not give the finality principle the central importance which it deserved. It therefore falls to the Supreme Court to re-exercise the discretion afresh as to whether to re–open the High Court’s judgment and Enforcement Order. In doing so the Supreme Court also assesses whether the appellant satisfies the test to be granted relief from sanctions, despite its failure to comply with the timetable set by the High Court for provision of the Guarantee.

The Supreme Court concludes that the appeal should succeed, but only in part. The Enforcement Order as re-made by the Court of Appeal should be set aside, and the respondent’s application for leave to enforce the Award should be adjourned to await the outcome of the Nigerian Proceedings.

Two large factors weigh in the scales against the re–opening of the Enforcement Order: (1) the finality principle and (2) the delay in providing the Guarantee for which no good reason has been provided. Nonetheless, the fact that the Guarantee was provided to the respondent was an important change in circumstances. The respondent had therefore got the benefit of both the Enforcement Order as well as the Guarantee against which the Award could be enforced in part. In the circumstances, the judge’s view that justice demanded that this windfall should be undone commanded real respect.

Although not clear cut, the Supreme Court is persuaded on balance that the respondent should not retain the right to enforce the Award, pending the outcome of the Nigerian Proceedings. The Supreme Court therefore set aside the Enforcement Order and confirms the judge’s extension of time for the provision of the Guarantee.

Watch hearing
1 March 2022 Morning session Afternoon session

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