Pro-Enforcement Stance Of English Courts Is Put To Test In S103(5) Application For Adjournment Of Enforcement

In the recent case of AIC Limited v. The Federal Airports Authority of Nigeria, the English High Court revisited the difficult question of whether to exercise its discretion under s103(5) of the Arbitration Act 1996 (the "1996 Act") to stay enforcement proceedings in England in favour of pending set aside proceedings in a foreign court, and to order the party resisting enforcement to provide security for the award.

Background

The Defendant (FAAN) had, by a 1998 Deed of Lease, leased parcels of land at the Murtala Mohammed Airport in Lagos to the Claimant (AIC) for 50 years with the possibility of renewal for a further 25-year term. The sole purpose of the lease was the development of a flightpath hotel and resort complex.

AIC commenced work on the hotel and resort complex. However, in 2000, FAAN directed AIC to cease work on the project. The resulting dispute was referred to arbitration seated in Nigeria under the Nigerian Arbitration and Conciliation Act pursuant to the arbitration clause in the Deed of Lease. The late Hon. Justice Kayode Eso was appointed as arbitrator and issued an Award on 1 June 2010 awarding AIC a sum of US$48,124,000 (together with administrative costs of approximately US$10,000) plus interest at 18% per annum.

The Nigerian proceedings

Upon issuance of the Award, both parties commenced proceedings before the Nigerian courts. The proceedings which are described in the judgment as "lengthy and convoluted" are summarised as follows:

FAAN applied on 23 July 2010 to set aside the Award (the set-aside application); AIC applied on 30 August 2010 to remit the Award to the Arbitrator on the ground that the Arbitrator ought to have ordered specific performance of the Deed of Lease to facilitate completion of the project; AIC applied on 30 August 2010 to enforce the monetary aspect of the Award; and AIC also objected to the set-aside application on the ground that FAAN failed to first seek and obtain leave to serve the originating process outside Lagos State (the preliminary objection). The various proceedings were heard together by Hon. Justice Buba of the Nigerian Federal High Court (FHC). Justice Buba rejected AIC's preliminary objection and set aside the Award while dismissing AIC's applications. AIC filed 3 appeals to the Nigerian Court of Appeal. The Court of Appeal allowed AIC's appeal on the preliminary objection and held that the issuance and service of the set-aside application was invalid. The Court of Appeal...