UK Supreme Court rules that judges can reverse orders before they are sealed

Out-Law News | 01 Jul 2022 | 1:07 pm | 2 min. read

A ruling by the UK Supreme Court on whether judges can reverse orders they have given before they are formally sealed by the court could have important implications for future cases, according to one legal expert.

Richard Dickman of Pinsent Masons said the Supreme Court had “given useful guidance” on the circumstances in which a court can change its judgment, finding that judges “retain the discretion to take changing circumstances into account when it is appropriate”.

The ruling (23-page / 247KB PDF) comes after a long-running dispute between AIC Ltd, a construction company, and the Federal Airport Authority of Nigeria (FAAN) after the collapse of a 1998 deal to develop a hotel and resort complex on land next to Lagos Airport. In 2010, AIC won $48 million in damages from FAAN in a Nigeria-seated arbitration, but the High Court in England and Wales later blocked the firm from enforcing the award until FAAN’s appeal had been heard in Nigeria.

Justice Veronique Buehrlen QC did, however, order FAAN to provide a bank guarantee of roughly $24m to AIC. FAAN missed the deadline to produce the guarantee, and the High Court then allowed AIC to enforce the full $48m award. The court’s enforcement order, however, was not immediately sealed, and FAAN managed to obtain a $24m bank guarantee later the same day. The change in circumstances prompted Justice Buehrlen to agree to set aside AIC’s enforcement order once again.

She said that the application of the ‘finality principle’ in litigation, which holds that parties should not ordinarily be able to raise new arguments after an order has been made, was a question of balance. The Court of Appeal, however, disagreed, finding in 2020 that Justice Buehrlen should have applied a two–stage analysis – considering first whether it was right to entertain the application to re-consider at all, before then weighing the application on its merits.

AIC then began enforcing the $48m award, starting by calling on the $24m bank guarantee, which was paid in full by FAAN’s bank. Further enforcement was stayed when FAAN appealed to the UK Supreme Court. Handing down the court’s unanimous decision, Lord Briggs and Lord Sales backed FAAN’s appeal but held that both the High Court and the Court of Appeal were partly right.

The court found that Judge Buehrlen did not give the finality principle the “central importance” which it deserved when considering FAAN’s application – but held that there was no reason why such an application must always be addressed by the Court of Appeal’s two-stage process.

Lord Briggs and Lord Sales said the fact that the guarantee had been provided to AIC, albeit late, was ultimately an important enough change in circumstances to override the application of the finality principle. The court ruled that the enforcement order, as re-made by the Court of Appeal, should be set aside while both parties awaited the outcome of proceedings in Nigeria, but allowed AIC to retain the $24m it had received via FAAN’s bank guarantee.

Dickman said: “The Supreme Court emphasised the importance of finality in litigation, an important element of the overriding objective of the Civil Procedure Rules (CPR), which is to deal with case expeditiously, justly and fairly, at proportionate cost and using an appropriate share of the court’s resources, but was prepared to depart from the principle in this case.”

“The case also raises an interesting application of the principle of relief from sanctions. All three courts treated enforcement of the award as effectively a sanction for non-provision of the guarantee on time, so the principles for relief from sanctions under the CPR applied to whether the enforcement order should be set aside,” said Dickman.

He added: “The Supreme Court left open the question of what would happen to the guarantee proceeds in the event that the Nigerian court overturns the award. In those circumstances, FAAN might have to bring fresh proceedings to recover the guarantee sums.”