Arbitration

UK Court of Appeal Dismisses Nigeria's Appeal Over Third-Party Costs in Set-Aside Arbitration Case

Published 2026-04-30 1 source Arbitration Case Management Costs Assessment Third Party Funding United Kingdom

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TL;DR

  • The Court of Appeal upheld a stay on Nigeria's application for a third-party costs order against arbitration funders.
  • The case is linked to the setting aside of P&ID's $11bn arbitration awards due to fraud.
  • The court emphasized proportionality and efficient use of judicial resources in costs proceedings.

Overview

In Federal Republic of Nigeria v VR Global Partners LP & others [2026] EWCA Civ 25, the UK Court of Appeal considered whether a first-instance judge erred by delaying (staying) Nigeria's third-party costs application against funders of P&ID, after the underlying $11bn arbitration awards had been set aside for fraud and abuse of process.

What Happened

P&ID, seeking $11bn from Nigeria via arbitration, was funded by VR Capital Group (VRC). The awards in its favor were later set aside for fraud and serious process abuse.

Following the set-aside, P&ID was ordered to pay Nigeria's costs. Nigeria claimed £44.2m in costs; P&ID had paid £23.7m on account and argued the total claim was excessive.

Nigeria also sought a third-party costs order under s.51 of the Senior Courts Act 1981 against VRC and its founder, proposing both the detailed costs assessment and third-party application proceed together.

At first instance, the judge required a detailed assessment of P&ID's liability to complete before considering third-party costs, citing proportionality and efficient resource use. Nigeria appealed on the grounds of insufficient reasoning and alleged prejudice from the delay.

The Court of Appeal dismissed the appeal, noting the case management decision was reasoned and within the judge's discretion. The court held there is no presumption against staying third-party costs applications, and that case management priorities, particularly proportionality, can justify deferring such issues.

Context

P&ID's only significant asset was its claim against Nigeria, funded by VRC in exchange for a share of any recovery. The setting aside of the original arbitration awards was due to findings of fraud and serious abuse of the arbitral process.

The case drew particular attention due to the large sums in dispute and the involvement of third-party funders, raising questions about their possible liability for costs under English law.

Why It Matters

  • The ruling clarifies that English courts have wide discretion over the sequencing of detailed costs assessments and third-party costs applications.
  • It highlights that proportionality and the efficient use of court resources are key factors guiding such decisions, especially when recoverable costs remain uncertain.
  • This may influence how parties and funders approach future cost liability in complex, high-value arbitral enforcement cases.

Sources

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