The UK Supreme Court has unanimously ruled in favour of Nigeria in a long-standing legal dispute with Process and Industrial Developments Limited (P and ID) over £44 million in legal costs.
The court’s decision, delivered on October 22 by Lord Reed (President), Lord Hodge (Deputy President), Lord Stephens, Lord Richards and Lady Simler, affirms that Nigeria is entitled to recover its legal costs in sterling (GBP) rather than naira (NGN).
The dispute arose from a contract between P and ID and the Federal Republic of Nigeria for the construction of a gas processing facility in Nigeria.
P and ID commenced arbitration proceedings against Nigeria, resulting in two awards totalling US$6.6 billion plus interest at seven per cent in 2015 and 2017.
However, Nigeria successfully challenged the awards under section 68 of the Arbitration Act 1996, citing fraud and public policy violations.
The UK Supreme 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.
Since Nigeria incurred liability and made payments in sterling, the court ruled that a costs order in sterling was appropriate.
The court’s decision reaffirms 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.
This ruling marks another significant legal victory for Nigeria in the long-running dispute with P and ID, following the country’s landmark success in overturning the US$11 billion arbitration award in 2023.
The decision also provides clarity on the currency in which costs should be awarded in international arbitration cases.