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

Last Updated: 5 September 2019
Article by Craig Tevendale and Marco De Sousa
Most Read Contributor in UK, October 2019

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.


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 remitted the proceedings to the FHC for hearing by a different Judge of the FHC but did not determine the question of whether the Award should be set aside or enforced. It was however common ground between the parties that the effect of the Court of Appeal's decisions is that the FHC's order setting aside the Award no longer stands.

Both parties appealed to the Nigerian Supreme Court. The issue of when those appeals would be heard (on which the parties did not agree) was a key point in the English proceedings.

The English proceedings

In February 2019, AIC obtained an order of O'Farrell J for enforcement of the Award without notice. FAAN subsequently applied to set aside the order and sought adjournment of the enforcement proceedings pursuant to s103(5) of the 1996 Act. AIC sought an order that FAAN should give suitable security for the Award under the same provision in the event that an adjournment is granted in favour of FAAN. The applications were heard by Veronique Buehrlen QC, sitting as Deputy High Court Judge.

The relevant legal principles

S103(2)(f) of the 1996 Act provides that recognition or enforcement of an award may be refused if it is proved that "the award has not yet become binding on the parties or has been set aside or suspended by a competent authority of the country in which, or under the law of which, it was made." In this regard, s103(5), in identical terms to Article VI of the New York Convention, provides that:

"Where an application for the setting aside or suspension of the award has been made to such a competent authority as is mentioned in (2)(f), the court before which the award is sought to be relied upon may, if it considers it proper, adjourn the decision on the recognition or enforcement of the award.

It may also on the application of the party claiming recognition or enforcement of the award order the other party to give suitable security."

The application of s103(5) is a well-trodden path for the English Court in view of the foundational cases of Soleh Boneh v Uganda Government [1993] 2 L1 Rep 208 and IPCO (Nigeria) Limited v Nigerian National Petroleum Corporation [2005]1 CLC 613. These cases established the test for the exercise of the court's discretion to grant adjournment and/or require provision of security under s103(5) as follows:

  • Whether the application before the foreign court is bona fide and not a delay tactic;
  • Whether the application before the foreign court has at least a realistic prospect of success;
  • The extent of the delay occasioned by an adjournment and any resulting prejudice.

Jurisdiction to adjourn the enforcement application

The first issue before the court was whether the court had jurisdiction to adjourn AIC's enforcement application under s103(5). The Court accepted jurisdiction on the basis that the outcome of the set-aside application is still pending before the Nigerian courts, given that the Court of Appeal had remitted the set-aside application to the FHC.

Exercise of discretion to adjourn enforcement under s103(5)

In considering whether to adjourn AIC's enforcement application under s103(5), the Court distilled the following propositions from Gross J's judgment in IPCO:

  • The discretion to adjourn an enforcement application is wide and unfettered under s103(5);
  • The questions of bona fide, realistic prospect of success and extent of resulting delay or prejudice are relevant but not exhaustive;
  • In considering the merits of the set-aside application before a foreign court, the enforcing court is to undertake a "brief consideration" rather than a detailed examination of the foreign proceedings, and determine where on a "sliding scale" the particular facts fall as between an award that is manifestly invalid and one that is manifestly valid;
  • The stronger the merits of the application before a foreign court appear, the stronger the case for an adjournment and the weaker any corresponding application for security (and vice versa);
  • Where enforcement will be rendered more difficult as a result of delay, the stronger the case for security;
  • The weaker the risk of prejudice to the enforcing party caused by an adjournment, the weaker the corresponding application for security;
  • Soleh Boneh is not authority for the proposition that security should always be ordered;
  • When considering the risk of prejudice, the comparison is between the position of the enforcing party if it were allowed to enforce immediately and its position if enforcement is delayed. The amount of security to be ordered ought to reflect the degree of prejudice.

Applying these principles, the Court concluded that it was appropriate to adjourn the application for enforcement.

The Court preferred AIC's evidence that the pending appeals at the Nigerian Supreme Court will not be heard until 2023/2024 and found that an adjournment would therefore cause "potentially considerable" delay to enforcement.

However, the delay had to be balanced against FAAN's prospect of success in the set aside application. The Court was satisfied that FAAN's set-aside application was bona fide but held that Justice Buba's grounds for setting aside the Award were "not at all well founded". However, the Court was particularly swayed by the fact that "on the one occasion [that] the Set Aside Application has come before the Nigerian Courts...the application was allowed and the Award was set aside." The Court also had regard to the fact that AIC had also sought to challenge the Arbitrator's refusal to order specific performance of the Deed of Lease.

The Court was also swayed by the fact that FAAN had assets in England against which the Award could be enforced.

In light of the above, particularly the fact that the Award was set aside on the only occasion on which the merits of the set aside application were considered by a Nigerian court, the Court concluded that an adjournment was appropriate and that the factors pointing the other way could be addressed by way of security.

Exercise of discretion to order security

In considering whether security should be provided, the Court noted all of the factors militating against adjournment of enforcement. This included that the Award lay at the "manifestly valid" end of the sliding scale, the value of the Award sum, and the prejudice that AIC was suffering from being continuously deprived of such significant sums.

The Court also found FAAN responsible for the delays in the Nigerian proceedings and considered that an order for security would "have an added bonus of encouraging FAAN to get on with pursuing the Nigerian proceedings more diligently".

AIC had requested security in the sum of US$161,978,132 being the full amount of Award plus interest until 2023. The Court found that amount inappropriate in view of the location of the case on the sliding scale and the other factors militating against the adjournment. The Court consequently fixed security at US$24,062,000 representing 50% of the Award or just under three years' worth of interest on the Award.


This case highlights most of the factors that tend to arise in consideration of a s103(5) application for adjournment of enforcement and an application for security. Significantly, the case demonstrates the increasing prominence of delay as a determinant factor in applications of this nature. Evidence of delay in set aside proceedings at the seat was equally decisive in IPCO which also involved proceedings in Nigeria.

This case also demonstrates that it is not always straightforward to secure immediate enforcement of foreign awards in English courts in circumstances where set aside proceedings are pending at the seat. This difficulty is however balanced by the willingness of the English courts to order appropriate security as a condition for adjournment of enforcement, which will often motivate the party seeking set aside to prosecute those proceedings diligently.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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