It is not unusual for parties to Nigerian disputes to face proceedings in Nigeria in parallel to any arbitration or enforcement proceedings elsewhere. In this case, the Judge had to assess the consequences of parallel proceedings in Nigeria on enforcement of an arbitral award in England against the Federal Republic. The Judge also examined the effect of a failure to draw the Nigerian proceedings to the English Court’s attention when applying to enforce without notice.
The Facts
Under a Share Sale Agreement dated 21 February 2013 ("the Agreement"), the State of Nigeria ("the Applicants") agreed to sell the entire shareholding in a company called Saple Power Plc to Eurafric Power Limited ("Eurafric"), together with assets, including unencumbered land and buildings.
The dispute between the parties was whether a specific piece of land ("the Land") on which a power plant was located, owned by a separate entity, Niger Delta Power Holding Company ("NDPHC") formed part of the assets transferred under the Agreement.
The Arbitration
The Agreement envisaged any disputes to be resolved through arbitration, the place of arbitration being London, England. Accordingly, once a dispute regarding the Land had crystallised, Eurafric issued a Notice of Arbitration to the Applicants. Both Eurafric and the Applicants participated throughout the arbitration, at no point disputing the arbitral tribunal's jurisdiction.
On 28 September 2017, an award was made by the tribunal in favour of Eurafric ("the Award"), declaring, amongst other things, that Eurafric was entitled to "full, undisturbed and unencumbered right of ownership of" the Land and restraining the Applicants from "transferring, pledging, alienating or encumbering" the Land. The Applicants did not challenge the Award.
The Recognition Order
To enforce the Award, on 20 December 2017, Eurafric made a without notice application on paper for a recognition order.
A recognition order allows an arbitral award to be enforced in the same way as a judgment or order of court and for a judgment to be entered into the terms of the award. However, a recognition order would not be granted where the other party can show the arbitral tribunal lacked jurisdiction to make the award; the right to argue the tribunal's jurisdiction may be lost if a party continues to take part in the arbitration.
On 15 January 2018, the recognition order was granted on paper, allowing Eurafric, amongst other things, leave to enforce the Award in the same manner as a judgment and entering a judgment against the Applicants in the terms of the Award ("the Recognition Order").
It was after the grant of the Recognition Order that this firm was instructed by Eurafric, who were previously represented by a different firm of solicitors when making the application for a recognition order.
On 28 February 2022, the Applicants made an application to set aside the Recognition Order on the basis that there had been a failure to give full and frank disclosure of two separate Nigerian proceedings by Eurafric; they did not challenge the tribunal's jurisdiction.
Full and Frank Disclosure
There is a duty on an applicant making a without notice application to disclosure all material facts, including facts that may be detrimental to its own application. However, non-disclosure in itself is not fatal to the application. Even if the duty to make full and frank disclosure has been breached, the court retains discretion to continue or re-grant the order if it is just to do so. This would depend on the materiality of the fact which has been withheld. Generally, a fact is material if it would have influenced the judge's decision to make the order or its terms.
The Nigerian Proceedings
First Nigerian Proceedings
On 21 December 2017, NDPHC, filed an application in Nigeria seeking to set aside the Award on the basis that it adversely affected NDPHC's proprietary interest.
Second Nigerian Proceedings
On 22 December 2017, the Applicants issued a motion in Nigeria seeking to set aside the Award as well as an injunction restraining enforcement pending hearing and determination of the application in Nigeria. The Applicants also challenged jurisdiction of the arbitral tribunal to determine issues in relation to land and forgery, which they notably did not do at any point during their participation in the London-based arbitration.
The Decision
In deciding whether Eurafric had failed to comply with its duty of full and frank disclosure, the court found that in relation to the First Nigerian Proceedings, it had not. This was because the Recognition Application was in respect of an Award between Eurafric and the Applicants only, and NDPHC was not party to the Award. The impact of the Recognition Order on third parties is a matter to be dealt with by the jurisdiction where enforcement proceedings are brought. As such, the First Nigerian Proceedings would not have been material enough to influence the Judge to decide against granting the Recognition Order.
The court found similarly in respect of non-disclosure of the Second Nigerian Proceedings, concluding that the Applicants' participation in the arbitration with no dispute regarding the tribunal's jurisdiction implied their agreement to be bound by any award made. Furthermore, bringing proceedings in another state in relation to an arbitration with a London seat was itself a breach of the arbitration agreement. In fact, the court went as far as to say that the Applicants' conduct could have strengthened the argument to grant a recognition order so as to uphold the agreement between the parties before the proceedings in Nigeria progressed.
The Implications
There are clear lessons in this case regarding full and frank disclosure for both sides of a without notice application. For an applicant, although non-disclosure of a fact may not be fatal to their application, it remains important to make sufficient enquiries and disclose all relevant facts. However, respondents are not to use parallel proceedings in another state to halt enforcement of an arbitral award, challenging the arbitral tribunal's jurisdiction simply because the outcome was unfavourable to them.
In a wider context, this case also demonstrates the value of arbitration clauses within agreements. Particularly in cross-border agreements, arbitration provides a neutral ground for parties to resolve disputes. It is possible that in absence of an arbitration agreement in this case, proceedings would have had to be commenced in Nigerian court, leading to a different outcome for Eurafric.
This article has been co-written by Duncan Bagshaw (Partner) and Sanchita Agrawal (Solicitor).
Want to hear more from us? 
