In its 14 year history the continuing saga of IPCO v NNPC has produced a number of important decisions concerning the application of the New York Convention in the English courts. Those decisions have also been influential in shaping the jurisprudence of other jurisdictions. In a judgment handed down today (1 March 2017), the highest court yet to consider the case, the UK Supreme Court, looked at whether the English Court of Appeal was correct to require a party challenging the enforcement and recognition of a Convention award on public policy grounds to provide security for its challenge.
In a unanimous judgment delivered by Lord Mance, the Court held that it was not.
- The conditions for recognition and enforcement set out in articles V and VI of the Convention constitute a code. Just as article V codifies the grounds of challenge, so the combination of articles V and VI must have been intended to establish a common international approach, within the field which they cover. They contemplate that a challenge under Article V may only be made conditional upon the provision of security in one situation falling within their scope. Had it been contemplated that the right to have a decision of a properly arguable challenge, on a ground mentioned in Article V, might be made conditional upon provision of security in the amount of the award, that could and would have been said. The Convention reflects a balancing of interests, with a prima facie right to enforce being countered by rights of challenge. Apart from the second paragraph of Article VI, its provisions were not aimed at improving award creditors’ prospects of laying hands on assets to satisfy awards.
- Domestic analogies are unlikely to illuminate the operation of the internationally-based provisions of sections 100-104 of the Arbitration Act 1996.
- Article III of the Convention may serve as a caution against interpreting or applying English procedural provisions in a sense which discriminates against Convention awards by imposing substantially more onerous rules of procedure. But this is only so long as “the conditions laid down in” the following articles of the Convention do not otherwise provide and Articles V and VI constitute a code that excludes requiring security for an award in the face of a properly arguable challenge under Article V, except in so far as Article VI provides. Even if that were not so, it is doubted whether an inability to order security on a challenge to an overseas award could constitute a “substantially more onerous” rule of procedure in relation to recognition or enforcement than a rule allowing such security in the case of an English award. Third, be that as it may be, the fact is that the Arbitration Act 1996 contains in relation to Convention awards no equivalent to section 70(7) in relation to English awards. Whatever Article III might require in that respect (if anything), it is not found in the Arbitration Act 1996, and no amount of consistent interpretation can alter the Act in that respect. Fourth, there is first instance authority, which accurately reflects what would be expected as a matter of principle in relation to the provision of security for the amount of an award in issue, that the power under section 70(7) will only be exercised if the challenge appears “flimsy or otherwise lacks substance”.
- CPR 3.1(3) cannot authorise the imposition, on a person exercising its right to raise a properly arguable challenge to recognition or enforcement, of a condition requiring security for all or any part of the amount of the award in issue. CPR 3.1(3) or the court’s other general procedural powers may however become relevant in the context of an issue being decided under section 103(2) or (3) – the court may in the course of such a challenge make procedural orders, and back them where necessary with sanctions.
The full text of the judgment may be found here.
NNPC was represented by Toby Landau QC and James Willan, both of Essex Court Chambers, instructed by Stephenson Harwood LLP