ReSolution Issue 25, June 2020 | Page 16

Resolution November 2019

Court confirms arbitral tribunal's construction of an arbitration agreement as to the correct seat of the arbitration

By Richard Bamforth & Emily Hudson

In Process and Industrial Developments Ltd v Federal Republic of Nigeria [2019] EWHC 2241 (Comm) the court granted an application to enforce a US$6 billion arbitral award against the Federal Republic of Nigeria. A key issue underlying the application related to the jurisdiction of the arbitral tribunal and its decision as to the seat of the arbitration. The judgment provides a helpful overview of these issues and confirms the prevailing view that the English court will seek, where possible, to uphold parties’ agreements to arbitrate as well as arbitration awards themselves.

Background
The parties entered into an agreement for the construction and operation of a gas processing facility through which Process and Industrial Developments Ltd (“PID”) would supply gas to the Federal Republic of Nigeria (“Nigeria”). The agreement was governed by Nigerian law and contained an arbitration agreement, which set out the process for the commencement of arbitration and constitution of the tribunal. Importantly, the arbitration agreement stated that “the venue of the arbitration shall be London, England or otherwise as agreed by the Parties”.
When a dispute arose in relation to the agreement, PID commenced arbitration. The procedural history continued as follows:
• The tribunal was appointed and made an interim award on certain preliminary issues. The interim award referred to the seat of the arbitration as being England and ended with the words “place of arbitration: London, United Kingdom”.
• Hearings subsequently took place in London and resulted in an award on liability, which included the same wording as the interim award in relation to the place of arbitration.
• Nigeria issued proceedings before the English court seeking for the award on liability to be set aside: this claim was later dismissed.
• Nigeria commenced proceedings in Nigeria, again seeking to set aside the award on liability. One of the grounds relied upon was that the parties had effectively agreed that the seat of arbitration was Nigeria. This was the first time that an issue as to the arbitral seat had arisen.
• Correspondence then ensued before the tribunal as to whether the seat of arbitration was London or Nigeria. Nigeria contended that the mention of venue within the arbitration agreement did not designate the seat of arbitration. PID’s position was that the parties had agreed to London as the seat of arbitration through the arbitration agreement or, alternatively, that this had been determined by the tribunal without objection from Nigeria, as confirmed in the interim award and award on liability. The tribunal did not hear any submissions on this issue but stated that they would make a finding on the point.

www.nzdrc.co.nz