Stephenson Harwood secures judgment in favour of NNPC after 10-year dispute

Stephenson Harwood has secured judgment in favour of the state-owned Nigerian National Petroleum Corporation (NNPC) after a 10-year, $310m (£186m) dispute in London with IPCO (Nigeria), part of the IPCO Group, an international developer, turnkey contractor and investor in energy infrastructure projects. The dispute related to IPCO’s contract to build an oil terminal in Port Harcourt, Nigeria.

The initial dispute arose following IPCO’s claim that NNPC should bear the cost of variations (an alteration to the scope of works in the original construction contract), which caused a 22-month delay to the works. Following arbitration proceedings in Nigeria, IPCO was awarded $150m in 2004, together with annual interest running at 14 per cent.

NNPC promptly challenged the award in the Nigerian courts. However, since then, IPCO has repeatedly sought to enforce the award in England before the proceedings in Nigeria have been concluded, resulting in three reported judgments in the case: IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2005] EWHC 726 (Comm); IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2008] EWHC 797(Comm); Nigerian National Petroleum Corporation v IPCO (Nigeria) Ltd [2008] EWCA Civ 1157.

During IPCO’s previous attempt to enforce the award, NNPC discovered evidence that IPCO had forged documents relating to the claim and the related arbitration in Nigeria, and as a result the parties agreed in 2009 to adjourn the enforcement proceedings and await the outcome of the challenge in Nigeria. However, IPCO again sought to enforce the award in England in 2012. The current judgment further closes the door on IPCO’s attempts to seek enforcement in England.

Mr Justice Field concluded that IPCO failed to establish any change of circumstances justifying a further application to enforce the award in whole or part in England, and that it is in Nigeria where the enforceability of the award must be decided. Mr Justice Field also said (obiter) that even if he had been persuaded that it were appropriate to consider enforcement afresh, he would still have refused to enforce any part of the award because NNPC has a good prima facie case that IPCO practised a fraud on the arbitral tribunal that undermines the validity of the whole award.

The long-running dispute has also highlighted important issues regarding the interpretation by the English Courts of the New York Convention 1958 and the Arbitration Act 1996 in the context of enforcement of an arbitration award when a challenge is pending against it in the home country where the award was made (Nigeria in this particular case).

Kamal Shah worked on this case, over the 10-year period, with associate Stephen Ashley playing a leading role in the latest round. Counsel for NNPC was Jonathan Nash QC of 3 Verulam Buildings and James Willan and Catherine Jung of Essex Court Chambers.