Legal briefing | 29 Jul 2022 |

Final Orders: Are they final?

In AIC Ltd v Federal Airports Authority of Nigeria [2022] UKSC 16 the Supreme Court has re-stated the principles to be applied when a judge is asked to revisit a judgment or final order before it has been sealed by the Court, where there has been a change in relevant circumstances in the meantime.

As the Supreme Court noted, this issue can arise at all levels of civil litigation, from interim or case management orders to final orders made at the end of a trial. The Supreme Court held that the fundamental principle of finality in English litigation weighs heavily against the re-opening of final orders by the Court; however, factors may exist in individual cases sufficient to outweigh this fundamental principle, justifying the Court, in its inherent jurisdiction, re-opening a final order.

The Facts

AIC concerned an application to enforce a Nigerian arbitration award under the New York Convention[1]. Under the award issued in June 2010, the Federal Airports Authority of Nigeria ("FAAN") was ordered to make a payment of US$48.13 million (plus interest) to AIC ("Award"). FAAN challenged the Award in the Nigerian courts in June 2013, prompting a number of appeals and cross-appeals by the parties, ultimately resulting in the Supreme Court of Nigeria, in January 2022, remitting FAAN's challenge back to the Nigerian High Court for consideration.

In the meantime, in January 2019, AIC issued proceedings in England to enforce the Award against FAAN. An order permitting enforcement was granted in February 2019 ("February Order"). FAAN applied for the enforcement to be adjourned since its challenge to the Award was still pending in the Nigerian courts. AIC cross-applied, asking that any adjournment should be on condition that FAAN provided security.

In August 2019, the High Court set aside the February Order. It adjourned enforcement of the Award pending the outcome of the Nigerian proceedings on condition that FAAN provided security of just over US$24 million. FAAN unsuccessfully tried to appeal that order. In the meantime, the High Court ordered FAAN to provide the security in the form of a bank guarantee by 5 December 2019[2]. At a short hearing on 6 December 2019, as FAAN had not provided a bank guarantee, the High Court gave AIC permission to enforce the Award against FAAN ("6 December Order").

Later that day, after the Court hearing, a guarantee issued by Standard Chartered Bank ("SCB") in favour of FAAN was emailed to AIC by FAAN. FAAN advised AIC that as the security which it had previously been ordered to provide by the Court had now been provided, it intended to ask the Judge to re-open the 6 December Order whereupon the Judge directed that the 6 December Order should not be sealed in the meantime.

At a further hearing on 13 December 2019, the Judge set aside the 6 December Order, extended time for provision of the guarantee until 9 December 2019[3], and adjourned AIC's application to enforce the Award pending the outcome of the Nigerian proceedings. AIC appealed, seeking reinstatement of the 6 December Order.

The Court of Appeal allowed AIC's appeal, and reinstated the 6 December Order, enabling AIC to enforce and receive payment under the bank guarantee of US$24 million. Enforcement of the balance of the Award was stayed pending FAAN's appeal to the Supreme Court.

Legal Analysis

The questions for consideration by the Supreme Court were the process, and principles to be applied by a Judge when faced with a request from a party to reconsider an order or judgment.

Under the Court's inherent powers, a Judge has the power to re-open a judgment or order at any time until the order has been sealed by the Court. When the issue was last considered by the Supreme Court in 2013, in the context of family proceedings[4], Baroness Hale said that this power should be exercised by doing justice in accordance with the overriding objective which in that case involved having regard to any welfare issues involved. Here, the Supreme Court noted, the situation was different as AIC concerned a commercial dispute, governed by the Civil Procedure Rules[5] ("CPR"). The overriding objective of the CPR is to enable "the court to deal with cases justly and at proportionate cost". This includes "enforcing compliance with rules, practice directions and orders"[6].

In considering how to apply the overriding objective under the CPR in AIC, the Judge at first instance had viewed it as a question of balance. The Court of Appeal said this was wrong and that a two-stage analysis should be applied instead: (i) is it right in principle to entertain the application to re-consider at all, and if so, (ii) should the application be granted on the merits. The Supreme Court considered that the Judge and the Court of Appeal were both partly right.

The Supreme Court said that the key starting point is the strong public interest in having finality in litigation, a long-standing principle in the English Courts[7]. This principle had been recognised by Baroness Hale in Re L. However, in that case, the desire to have finality had needed to be balanced against the welfare issues involved[8]. Here, where the Court was dealing with a final order in a commercial dispute, different considerations applied. Enforcing compliance with the Court's rules as part of the CPR's overriding objective affirmed and reinforced the principle of finality. The Court observed that litigation cannot be conducted at proportionate cost, with expedition, incurring an appropriate share of the Court's resources and with due regard to the rules of procedure unless it is undertaken on the basis that a party brings their whole and best case to a hearing when a matter is to be finally decided[9].

As noted by Lewison J in FAGE UK Ltd v Chobhani UK Ltd [2014] EWCA Civ 5 at [114]:

"The trial is not a dress rehearsal. It is the first and last night of the show."

The Supreme Court said that it fully agreed with Coulson LJ in the Court of Appeal that:

"…the successful party should not have to worry that something will subsequently come along to deprive [them] of the fruits of victory. The unsuccessful party cannot treat the judgment that has been handed down as some kind of rehearsal, and hurry away to come up with some new evidence or a better legal argument."

Whilst technically an order was not final until it was sealed by the Court, the sealing of the order by the Court was merely an administrative function, and it would be wrong in principle to allow parties to take advantage of this administrative delay to re-open orders made by the Courts. Consequently, the Court's jurisdiction to re-open an order had to be carefully patrolled.

The Supreme Court said that the Judge should not have started from a position of neutrality (evenly-balanced scales) but with the scales firmly weighed against making a different order given the importance of the finality principle. It said that a useful starting point for a Judge considering an application to re-open an order was to ask whether the application to re-open should be considered at all or just dismissed outright on the papers on the basis that it had no real prospects of success. It said that this approach fell well short of the Court of Appeal's two-stage process which would impose a straight-jacket on the exercise of the Court's discretionary jurisdiction. As to the factors which the Court should weigh against the heavy weight of the finality principle if it proceeded to consider an application to reconsider an order, the Supreme Court stepped back from producing a definitive list, commenting that such a list would always prove to be non-exhaustive given the wide variety of factors which the Courts are asked to consider on a daily basis.

Applying this approach to AIC, the Supreme Court said that the finality principle and the serious failure by FAAN to comply with the Court's order to provide security weighed heavily against re-opening the 6 December Order. However, the Supreme Court recognised that obtaining and providing the bank guarantee to AIC shortly after the 6 December Order had been made, was an important change in circumstances, which AIC had been able to take advantage of by immediately calling on the guarantee, and subsequently receiving payment from SCB following the Court of Appeal's judgment. In the circumstances, the Supreme Court considered that FAAN's appeal should succeed in part in that justice required that AIC's application to enforce the Award should be adjourned to await the outcome of the Nigerian proceedings but that AIC should, in the meantime, be able to retain the full amount of the security which it had received under the guarantee.

Comment

As the Supreme Court noted, finality in the litigation process has been a fundamental principle of English law since the mid-19^th century. Without it, there would be chaos and uncertainty, with parties never knowing whether a dispute was ever truly at an end, never mind the undue burden such a situation would place on an already busy court system. Therefore any departure from the standard position needs to be strictly controlled. This is what the Supreme Court has sought to do in AIC. It recognises that very exceptionally situations may arise where the interests of justice require that a judgment or final order should be revisited. However, rather than prescribing a rigid test for the Courts to follow when considering an application to re-open an order, the Supreme Court has recognised the wide range of commercial disputes which come before the English Courts, and the broad range of orders which the Courts make in consequence, and has indicated that it expects the Courts to exercise judicial common sense when considering such an application, taking into account the heavy weight of the finality principle against the success of any application. In practice, the occasions when a Court finds itself having to re-open an order, particularly following the conclusion of a trial, are likely to be rare.

[1] Convention on the Recognition and Enforcement of Foreign Arbitral Awards adopted by the United Nations Conference on International Commercial Arbitration in New York on 10 June 1958.

[2] The date for FAAN to provide the bank guarantee was originally set at 29 October 2019, then extended to 14 November 2019, and then further extended until 5 December 2019.

[3] By which time the bank guarantee had been provided to AIC.

[4]In re L (Children) (Preliminary Finding: Power to Reverse) [2013] UKSC 8 (a case concerning the care arrangements of two small children).

[5] As a case in family proceedings, Re L was subject to different procedural rules – the Family Procedure Rules.

[6] CPR 1.1(2)(f).

[7] Henderson v Henderson (1843) 3 Hare 100 – a party is precluded from raising in subsequent proceedings matters which were not but could and should have been raised in earlier proceedings.

[8] Also the order in question was a case management decision which the Court had power to revoke under the Family Procedure Rules.

[9] And subject only to any right of appeal.