UK court clears NNPC of 10-year dispute over $310m contract

By Etuka Sunday

The United Kingdom Commercial Court in London has cleared the Nigerian National Petroleum Corporation (NNPC) of 10-year dispute over $310 million contract.

This was in respect of the suit filed by IPCO Nigeria, a subsidiary of the IPCO Group, a turnkey contractor and investor in energy infrastructure projects, over a dispute that arose from a contract to build an oil terminal in Port Harcourt.

A statement by the Group General Manager, Group Public Affairs Division of the Corporation, Dr. Omar Farouk Ibrahim explained that the case which stretched for a decade initially arose from a dispute following IPCO’s claim that NNPC should bear the cost of variations (alterations to the scope of works in the original construction contract), which caused a 22-month delay to the works.

“Following arbitration proceedings in Nigeria, IPCO was awarded $150m in 2004, together with annual interest running at 14%, a ruling which was challenged by NNPC in the Nigerian courts.

However, since then, IPCO repeatedly sought to enforce the award in England before the conclusion of the proceedings in Nigeria resulting in three reported judgments in the case: IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2005] EWHC 726 (Comm); IPCO (Nigeria) Ltd v Nigerian National Petroleum Corporation [2008] EWHC 797(Comm); Nigerian National Petroleum Corporation v IPCO (Nigeria) Ltd [2008] EWCA Civ 1157,” the NNPC stated.

The Judge, Mr. Justice Field of the UK Commercial Court, ruled in his judgement that IPCO failed to establish any change of circumstances justifying a further application to enforce the award in whole or part in England, and that it is in Nigeria where the enforceability of the award must be decided.

The long-running dispute has also highlighted important issues regarding the interpretation by the English Courts of the New York Convention 1958 and the Arbitration Act 1996 in the context of enforcement of an arbitration award when a challenge is pending against it in the home country where the award was made (Nigeria in this particular case).