In the recent case of AIC Ltd v Federal Airports Authority of Nigeria  UKSC 16, the UKSC considered an issue of wide-ranging relevance in civil proceedings: by what process and in accordance with what principles should a judge decide whether or not to exercise the power to re-open a judgment or order delivered in open court, but before the formal written minute of the order has been sealed? The case is of considerable significance because the question may arise at all stages of civil litigation, from interim and case management hearings, to final orders made at the end of a trial and even to orders made (but not yet sealed) on appeal. Read our case comment below to see whether the UKSC adopted the two-stage approach formulated by the Court of Appeal in the case.
This case raised an issue of wide-ranging relevance in civil proceedings: by what process and in accordance with what principles should a judge decide whether or not to exercise the power to re-open a judgment or order delivered in open court, but before the formal written minute of the order has been sealed?
The underlying context in which the issue arose was an application to enforce a Nigerian arbitral award of US$48.13 million plus interest dated 1 June 2010 ('the Award') under ss 66 and 101 of the Arbitration Act 1996. The Respondent ('AIC') issued its application on 10 January 2019 ex parte, and an Order was made on 28 February 2019 without a hearing granting AIC permission to enforce the Award, with permission to the Appellant ('FAAN') to apply to set it aside within 22 days after service ('the Without Notice Order').
FAAN did so apply on the basis that its long-running challenge to the award in the Nigerian courts remained pending, and AIC made a cross-application for security. Accordingly, Veronique Buehrlen QC ('the Judge') set aside the Without Notice Order and adjourned AIC's enforcement claim pending the outcome of the Nigerian proceedings on condition that FAAN provide security in the sum of US$24.06 million in a form to be agreed. AIC obtained a further Order on 17 September 2018 that the security should be provided by bank guarantee ("the Guarantee") with permission to AIC to apply to enforce the Award if the Guarantee was not forthcoming by 29 October 2019.
FAAN subsequently applied for and obtained extensions of time for the provision of the Guarantee. The present appeal arose from FAAN's application of 14 November 2019 for a further extension of time until 5 December 2019 and AIC's cross-application for permission to enforce the Award.
At the time of the hearing before the Judge in the early afternoon of 6 December 2019, the Guarantee was still not forthcoming; leading counsel for FAAN had therefore conceded he could not properly seek a further extension of time nor oppose the grant of permission for the enforcement of the Award. Accordingly, at about 14.20 on 6 December, the Judge gave an immediate oral judgment and made an order permitting AIC to enforce the Award ("the Enforcement Order"). The Enforcement Order was not sealed at this stage.
Some three hours later, at 17.17, FAAN emailed to AIC a copy of the Guarantee issued by Standard Chartered Bank ("SCB") later that afternoon, and AIC promptly called upon it upon receipt. FAAN further stated in its email its intention to apply to the Judge to re-open her judgment and the Enforcement Order given earlier that afternoon. That application was made on 8 December 2019, together with an application for relief from sanctions imposed for the late provision of the Guarantee.
The Courts Below
The Judge set aside the Enforcement Order, concluding, in outline, that:
- the provision of the Guarantee just after the 6 December hearing amounted to a sufficiently important change of circumstances to justify re-consideration of the Enforcement Order;
- there was sufficiently good reason for the delay in the provision of the Guarantee to justify relief from sanctions; and
- it was just to set aside AIC's permission to enforce the Award because it now had the Guarantee, which had been intended to be the price for an adjournment of AIC's application to enforce the Award, whereas to leave the Enforcement Order in place would be to give AIC the benefit of both the Guarantee and permission to proceed to enforce the Award at the same time. That would be to give AIC the unintended benefit of a procedural windfall.
The Court of Appeal (Flaux, Coulson and Carr LJJ) allowed AIC's appeal and re-instated the Enforcement Order, concluding that:
- (i) the Judge should have conducted a two-stage process, considering at the first stage whether in principle the re-consideration application should be entertained at all, and proceeding to the second stage of considering the application on its merits if the first stage had produced an affirmative answer;
- (ii) had the Judge done so, she should have concluded that the late provision of the Guarantee was not a sufficiently compelling reason for re-considering the Enforcement Order; and
- (iii) there was no sufficient explanation for the delay in providing the Guarantee either to justify relief from sanctions or to make it just to set aside the Enforcement Order.
The Supreme Court
Lord Briggs and Lord Sales, with whom Lord Hodge, Lord Hamblen, and Lord Leggatt agreed, considered that both the Judge and Court of Appeal were only partly correct in their respective approaches. Given that the leading authority on the issue, In re L (Children) (Preliminary Finding: Power to Reverse)  UKSC 8, had been a case brought under the Family Procedure Rules, their Lordships considered it appropriate to re-state the applicable principles more fully, not least because the Overriding Objective of the Civil Procedure Rules ('CPR') differs and has been subject to change since 2013.
Lord Briggs and Lord Sales identified a strong public interest in the finality of civil and commercial litigation, a long-standing principle of English procedural law that is "firmly underwritten by and inherent in the overriding objective [of the CPR]" (Sainsbury Supermarkets Ltd v MasterCard Inc  UKSC 24, , cited at ). Their Lordships further agreed at  with the Court of Appeal, contrary to the Judge (cited at ), that the finality principle applies when an Order is made, not merely when it is sealed; recognising, nevertheless, that the principle applies in a "more absolute way" once the order has been sealed.
Accordingly, in the context of an application to reconsider a final judgment or order, such as that made by FAAN in respect of the Enforcement Order of 6 December 2019, the judge "should not start from anything like neutrality or evenly-based scales" (). Reflecting the finality principle, their Lordships considered it would often be a useful mental exercise for the judge to consider whether the application should be entertained at all, refusing it in limine if, for example, it had no real prospect of success. Such approach, however, fell "well short" of any supposed rule of law or practice such that an application must always be approached in a two-stage process, as the Court of Appeal had held, which their Lordships considered would impose a "straitjacket upon the judicial exercise of a discretionary jurisdiction" ().
Instead, Lord Briggs and Lord Sales considered at  that the importance of the finality factor would be better reflected by recognising that it will always be a weighty matter in the balance against the making of a different order, the weight of which would inevitably vary, depending "in particular upon the nature of the order already made, the type of hearing at the end of which it was made and the type of proceedings in which it was made."
Lord Briggs and Lord Sales further considered at  that it was not feasible to state a test in defined terms to reflect the weight attributable to the finality principle, nor to the weight of the countervailing factors required to prevail over it. Terms such as 'exceptional circumstances' or 'very exceptional case' fail to encapsulate anything other than 'unusual' with useful precision; terms such as 'strong,' 'weighty' or 'compelling,' whilst somewhat better, did not provide any definitive test. Nor would it be worth attempting to identify a list of factors prima facie qualifying for consideration as in principle being sufficient to displace the finality principle, because subsequent cases will inevitably reveal that the list is inadequate.
On the facts of the present case, Lord Briggs and Lord Sales considered that the Judge, although she had correctly directed herself as to the law and principles to apply, failed to give the finality principle the "central importance" it deserved, especially given that the order under consideration was a final judgment on AIC's claim for enforcement, subject only to appeal. In their Lordships' view, the observation that finality is achieved only when the order is sealed, whilst literally true, missed the point that finality "should ordinarily follow the giving of judgment and the making of an order in open court, whereupon it becomes immediately enforceable." Lord Briggs and Lord Sales also agreed with the Court of Appeal that the Judge had been wrong to find there was good reason for the delay in providing the Guarantee.
Lord Briggs and Lord Sales, however, agreed with the Judge that the provision of the Guarantee on 6 December 2019 constituted a material change of circumstances. The change had to be measured by reference to what the Judge had been told at the hearing some hours before, and the Judge had been correct to give due consideration to the fact that this meant that AIC had obtained a windfall: having both the benefit of a Guarantee it was entitled to call upon, which it duly did, as well as an order to enforce the Award. This had not been the original intention of the Judge in making the order for security, who had fairly described the Guarantee as the price payable by FAAN for the adjournment.
Furthermore, since the decision of the Court of Appeal, the sum of some US$24 million had been paid to AIC upon its calling upon the Guarantee in full, with limited progress made in the Nigerian courts on FAAN's challenge to the Award. Lord Briggs and Lord Sales noted that FAAN now had belatedly paid the price for adjournment, obtained no adjournment, and exposed itself to immediate enforcement which had already been executed in part.
Accordingly, Lord Briggs and Lord Sales concluded that the appeal should succeed in part: AIC's application to enforce the Award was adjourned pending the proceedings in Nigeria with liberty to apply if they did not progress; but AIC was also entitled to retain the proceeds of the enforcement of the Guarantee as an appropriate reflection of FAAN's failure to comply with the deadlines imposed by the court in its orders.
This case reminds those practising and advising in respect of civil litigation of the importance of the finality principle, which has been an objective of civil procedure for at least 175 years. Where the court is faced with an application to reconsider a final judgment and/or order before the order has been sealed, the starting point is not one of neutrality; the first question will often be whether or not the application should even be entertained at all, before parties are put to expense and court resources used in giving directions for a hearing. Finality will always be a weighty matter in the balance of making a different order.
However, the weight given will inevitably vary depending on the nature of the order made, the type of hearing from which it arose and type of proceedings in which it was made. Finality will likely be at its highest importance in the context of an order at the end of a full trial, with case management and interim orders lying towards the other end of the scale. Whilst the principle bites as soon as the order is made, it will apply in a more absolute way once the order is sealed, after which it will be beyond challenge in the court which made it, subject to any liberty to apply, the application of the power under CPR 3.1(7) to vary or revoke and the slip rule.
It is noteworthy that the Supreme Court was careful to emphasise that orders made on appeal were outwith the scope of the matter before it, attracting their own jurisprudence (see, in particular, Taylor v Lawrence  EWCA Civ 90;  QB 528, and what is now CPR 52.30).
AIC v FAAN does not furnish practitioners with an exhaustive list of factors which in theory are sufficient to displace the finality principle. It does, however, offer some insight into the essentially flexible nature of a judge's task when allocating weight to competing considerations of significant variety. The Supreme Court emphasised the need for open-ended judicial discretion in the context of applications to reconsider a final judgment or order, without the "straitjacket" of a definitive test but nonetheless anchored in the conceptual necessity of finality.
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.