From Victor Osula, Abuja
The United Kingdom Supreme Court has dismissed an appeal filed by Process and Industrial Developments Limited (P&ID) against a costs order in favour of the Federal Republic of Nigeria, affirming that the award should be paid in pound sterling rather than in naira.
In a unanimous judgment delivered on Wednesday, a five-member panel of justices led by Lord Reed, President of the Supreme Court, upheld earlier rulings of both the Commercial Court and the Court of Appeal. The court held that there was no error in the lower courts’ findings that Nigeria’s litigation costs should be recovered in the same currency in which they were incurred — pound sterling.
The case stemmed from Nigeria’s successful bid to overturn two arbitration awards previously granted to P&ID. .
The awards, worth over $11bn, were found to have been fraudulently obtained. In the course of challenging the awards before the English courts, Nigeria incurred legal expenses exceeding £44m.
P&ID had argued that the costs should be paid in naira, contending that payment in pound sterling would grant Nigeria an unfair “windfall” given the sharp depreciation of the naira since 2023, when the currency was floated.
The Supreme Court rejected this argument, ruling that a costs order is not intended to compensate for loss but to provide a fair contribution towards litigation expenses.
“The court’s task is to identify the reasonable amount which the paying party should bear. An award of costs is not an indemnity or compensation for loss in the same sense as damages,” the court stated.
Delivering the joint lead opinion, Lord Hodge and Lady Simler stressed that courts are not required to investigate how parties fund their legal fees, warning that such an approach could lead to “disproportionate or expensive satellite litigation.”
They added that under the Senior Courts Act 1981 and the Civil Procedure Rules, English courts have broad discretion to determine the currency of costs orders, which typically aligns with the currency in which the legal liabilities were incurred.
The panel further reaffirmed that costs awards are discretionary and not compensatory, distinguishing them from damages in tort or contract cases.
It cautioned that adopting P&ID’s proposal would result in unnecessary and costly legal battles over how litigants finance their cases.
Rejecting P&ID’s claim that Nigeria would gain an unfair advantage, the court noted that the sharp decline of the naira since 2019 had eroded its value, meaning Nigeria did not benefit unduly from exchange rate fluctuations.
The Supreme Court also ordered P&ID to pay Nigeria’s costs for the appeal on a standard basis.
