In IPCO (Nigeria) Ltd v Nigeria National Petroleum Corporation [2017] UKSC 16, the Supreme Court unanimously found that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the Convention) does not allow UK courts to require one party to provide security as a condition to it being able to stay the enforcement of an arbitral award pending resolution of proceedings challenging the award.

The dispute concerned a contract for the design and construction of a petroleum export terminal. The contract was subject to Nigerian law and contained an arbitration agreement with the arbitral seat in Nigeria. In 2004, IPCO obtained an arbitral award of $152 million (plus interest) in its favour and, in doing so, kicked off more than a decade's worth of litigation in both Nigeria and the United Kingdom (and which is still ongoing).

NNPC challenged the award in Nigeria (initially with respect to quantum and later on the ground that the award had been procured by fraud). Meanwhile, IPCO sought enforcement in the UK. The enforcement proceedings were stayed and reignited on three separate occasions. Each time, the proceedings were stayed pending resolution of the challenge in Nigeria. Over the course of the proceedings, NNPC paid security totalling $80 million. On the third occasion, IPCO sought another $100 million in security. The Court of Appeal then ruled that unless NNPC paid the security sought, IPCO was entitled to enforce the whole award immediately. Unsurprisingly, NNPC appealed this decision.

In reaching its decision, the Supreme Court considered sections 100 – 104 of the Act, which give effect to the UK's obligations under the Convention. In short, it was held that UK courts do not have jurisdiction to require security as a pre-condition to staying enforcement of an award under the Act. The primary issue taken by the Supreme Court was the requirement for payment of security being viewed as the price for "further adjournment", when in fact the need for further security was the price "of the decision of an issue".

The Supreme Court also made comment as to the Convention, and in particular Articles V and VI. In effect, those articles set out a code which is intended to create a common approach to the recognition of international arbitral awards. It was held that these articles did not create any contingency on the payment of security from the party challenging the decision, as had that been intended it could have and would have been written into the articles. As such there was no basis in the Convention for such a requirement and the Court of Appeal had erred in concluding there was.

IPCO also sought in its second head of appeal, to argue that despite no express provision in the Arbitration Act or the Convention, within English procedural rules the Courts were authorised to require such security. In particular, IPCO focussed on CPR rule 3.1(3) which they noted allowed English courts to make conditional orders and in this instance asked the court they could make an order requiring additional security to be paid for adjournment. The Supreme Court disagreed, holding that the courts general power of case management could not extend to making orders for security as a price for adjournment.

This judgement is significant for a number of reasons, partly as one of the first appellate court decisions to consider these sections of the UK's Arbitration Act, but also in providing clarity as to the enforcement regime and the fact there is no price to be paid for adjournment, only for a challenge.