In what could be termed an end to a prolonged legal tussle, the UK Supreme Court has unanimously found that P&ID, a small offshore company that attempted to use arbitration proceedings to extort over $11 billion from Nigeria, must pay a hefty costs order of up to £44 million.
The court further ordered that the sum, which arose from the 2023 trial in the Commercial Court which found that P&ID paid bribes in the process of procuring gas contracts with Nigeria, must be paid in pounds sterling, rather than Nigerian naira.
The UK’s apex court rejected P&ID’s argument that the legal costs claimed by Nigeria, which could be up to £44.2 million excluding interest, should be paid in Naira to avoid the West African country making a windfall from advantageous conversion rates.
The judgment draws to a close the fallout from the extraordinary events which preceded it, following years of arbitration in which P&ID sought to claim over $ 11 billion from Africa’s most populous nation, a development that could have completely ruined the country’s economy.
It also highlighted the role played by certain individuals in government at the time, to save the country from bankruptcy. In 2019, P&ID won an award against Nigeria in the UK court in the sum of $9.6 billion. Upon the pronouncement of the judgement, Nigeria’s assets abroad and its FX reserves were under threat of seizure.
But concerned by this threat on the Country’s FX reserves the then Central Bank Governor, Godwin Emefiele, approached President Muhammadu Buhari, requesting for approval for the apex bank to take over the appeal of the case and for the CBN to pay all legal costs on behalf of the federal government.
THISDAY learnt that Buhari approved the request and directed the office of the Attorney General of the Federation to work with the CBN.
The then AGF, Abubakar Malami, and CBN subsequently headed to the UK to seek advice from various UK legal experts.
Most of these experts refused to take on the matter given that the time limit allowed for appeal to be heard had expired. However, it was gathered that only Mishcon firm accepted to help Nigeria prosecute the matter by relying on Section 68 of the UK Law which says that an appeal against an award may be granted if fraud is adduced.
The case commenced in 2020 and in August 2023, Nigeria won the case and got the award reversed, thus saving the country from losing over $11 billion, plus the accumulated interest.
A source close to the deliberations and decision process after the judgement revealed to THISDAY the role played by Emefiele in the battle to reverse the judgement. “The judgement shook the country to its core, but the former CBN governor rose to the occasion, declaring that Nigeria didn’t the money to pay such colossal sums, choosing to fight instead to save the country from fraudsters who were determined to impose such liability on generations of Nigerians.” the source who pleaded anonymity stated.
In its landmark 2023 ruling, the High Court found that Trevor Burke KC and Seamus Andrews, two London-based lawyers who acted for P&ID, made an “indefensible decision” to retain Nigeria’s internal documents, which they knew included privileged documents that they were not entitled to see.
The judge highlighted the sums of up to £850 million and £3 billion that they were respectively due to receive personally in the event of P&ID’s success which, he stated, informed their behaviour. A copy of this judgment was referred by the judge to the Bar Standards Board and Solicitors Regulation Authority in the case of both legal professionals.
Finally, a court document seen by THISDAY showed that the United Kingdom Supreme Court on October 22, dismissed the appeal by P&ID, affirming that Nigeria is entitled to recover its legal costs in sterling (GBP) rather than in naira (NGN) following its successful challenge to a multi-billion-dollar arbitral award.
Delivering judgment, a panel led by Lord Reed, President of the Supreme Court, unanimously upheld earlier rulings of the Commercial Court and the Court of Appeal that costs should be paid in the same currency in which Nigeria’s legal obligations were incurred.
The case arose after Nigeria successfully overturned two arbitral awards granted to P&ID worth over $11 billion including interest on grounds of fraud and public policy violations.
The Commercial Court, in 2023, found that the awards had been “procured by fraud” and were therefore void.
In pursuing the challenge, Nigeria incurred legal expenses amounting to £44.2 million, billed and paid in sterling through 116 invoices between November 2019 and November 2024. P&ID had argued that the costs order should be made in naira, claiming that paying in pounds would give Nigeria a “windfall” due to the sharp depreciation of the naira since 2023, when it was allowed to float freely.
However, the Supreme Court rejected that argument. In a joint judgment delivered by Lord Hodge and Lady Simler, with the concurrence of Lords Reed, Stephens, and Richards, the Court held that an order for costs “is not intended to compensate for loss” but rather represents a statutory indemnity for expenses incurred in litigation.
“As Nigeria had incurred liability and made payments in sterling, the court ought to make a costs order in sterling,” the Justices ruled.
The Court further emphasised that costs awards are discretionary and not compensatory in nature, distinguishing them from damages in tort or contract cases. It warned that adopting P&ID’s approach requiring inquiries into how litigants fund their legal fees would create “disproportionate and expensive satellite litigation.”
It reaffirmed the principle that costs are to be awarded in the currency in which the legal services were billed and paid, unless there are exceptional or abusive circumstances, dismissing P&ID’s appeal and ordering the company to pay Nigeria’s costs on the standard basis.
On reasons for the judgment, a summary of the case given by the court said: “ First, an order for costs is not intended to provide compensation for loss in the same way as awards of damages in tort or for breach of contract.
“Secondly, an order for costs is a discretionary remedy determined by reference to all the circumstances. While a party cannot recover more in costs than it has paid in legal fees, the costs award is not an attempt to restore a party to the position it would have been in without the litigation.”
Instead, the court stated that its task in making a costs award is to identify the reasonable amount which the paying party should pay as a contribution to the receiving party’s costs, affirming that a costs order is therefore very different from an award of damages.
“Thirdly, the court does not usually know how the litigant obtained the funds used to pay its legal fees and does not investigate those arrangements in order to ascertain that party’s loss.
“Fourthly, there are pragmatic reasons why the court should not inquire into how the litigant has funded an action. Making such inquiries would risk collateral disputes of fact which may require a separate trial. The courts should be very slow to adopt a principle which would encourage disproportionate or expensive additional litigation.
“The dispute in this case as to how Nigeria funded the sterling payments it made to its solicitors is an example of the kind of additional issues that might arise if the courts were to embark on the inquiry suggested by P&ID.
“There is no requirement in the Senior Courts Act 1981 or the Civil Procedure Rules 1998 that costs orders be made only in sterling . A general rule that an order for costs is made in sterling or in the currency in which the solicitor has billed the client and in which the client has paid or is liable to pay is consistent with the nature of the court’s costs jurisdiction and with legal certainty,” part of the judgement read.
Emmanuel Addeh
