Supreme Court rules that defendant did not have to put up security when challenging enforcement of a Nigerian arbitral award

The defendant is seeking to challenge the enforcement of a Nigerian arbitration award, which was made in 2004 and is still being challenged before the Nigerian courts. The Court of Appeal ordered the defendant to put up security as a condition for remission of the proceedings to the Commercial Court to determine if the award should be enforced. The defendant appealed against that decision and the Supreme Court has now upheld that appeal.

It held that the Court of Appeal fell into error when it held that security could be ordered in a situation where the English court is deciding whether to refuse recognition or enforcement of the award. The Supreme Court clarified that the power to order security is only given to the English court where the (in this case) Nigerian courts will hear the challenge to the award and the English courts have therefore adjourned their proceedings. Here, the case was to be remitted to the English Commercial Court to hear the challenges to the award. Accordingly, an order for security had not been within the scope of the jurisdiction conferred on the English courts by section 103 of the Arbitration Act 1996. Nor did the ordinary procedural rules of the English courts give them the power to order security in these circumstances.