The Supreme Court of the United Kingdom holds that when determining an application to reconsider a final judgment and/or order before the order has been sealed, a court should not start from evenly–balanced scales but should give great weight to the finality principle
Federal Airports Authority of Nigeria v AIC Ltd
 UKSC 16
The Supreme Court of the United Kingdom
Lord Hodge, DP and SCJ; Lord Briggs, Lord Sales, Lord Hamblen & Lord Leggatt, SCJJ
June 15, 2022
Reported by Faith Wanjiku and Bonface Nyamweya
Civil practice and procedure -judgements- judgement and enforcement orders- sealing of judgement and enforcement orders- a court’s discretion to reconsider a judgment and order after it had been given but before the formal order had been sealed by the court- where the appellant had been ordered by court to pay US$48.13m to the respondent, plus interest at 18% per annum (the award)- where the enforcement order was not sealed immediately- where the appellant obtained the guarantee later the same day, provided it to the respondent and applied to the court to re–open the judgment and set aside the enforcement order- where the court set aside the enforcement order and retrospectively extended time for the provision of the guarantee- what should a court do, if, after delivering a judgment in open court and making an appropriate order, a few hours, or days, later, but before the formal written minute of the order had been sealed by the court, the court received a request from one of the parties to re-consider both the judgment and the order- what process, and in accordance with what principles, should the court decide whether or not to exercise the power to re-open the judgment and order at any time until the order had been sealed- Civil Procedure Rules, 2013, parts 1.1 and 3.9(1)(b).
Civil practice and procedure-judgments-finality principle- what was the scope and nature of the finality principle.
The appeal concerned the court’s discretion to reconsider a judgment and order after it had been given but before the formal order had been sealed by the court. The respondent was the successful claimant in a Nigeria–based arbitration with the appellant. The appellant was ordered to pay US$48.13m to the respondent, plus interest at 18% per annum (the award). The appellant continued to challenge the Award in the Nigerian courts (the Nigerian Proceedings).
The respondent sought permission from the High Court to enforce the award in England and Wales. That was initially granted, however the High Court set that order aside and adjourned the claim pending developments in the Nigerian Proceedings. That was on the condition, however, that the appellant provided security of around US$24m by way of a bank guarantee (the guarantee).
Despite the appellant being granted an extension, the guarantee was not provided on time. The High Court gave an oral judgment and made an order permitting the respondent to enforce the award (the enforcement order). However, the enforcement order was not sealed immediately. The appellant obtained the guarantee later the same day, provided it to the respondent and applied to the court to re–open the judgment and set aside the enforcement order. The court set aside the enforcement order and retrospectively extended time for the provision of the guarantee.
The Court of Appeal allowed the respondent’s appeal against the High Court’s revised decision and reinstated the enforcement order. As a result, the respondent had both an unlimited right to enforce the award and the benefit of the guarantee as an asset against which to enforce. The respondent accordingly called on the guarantee, which was paid in full by the appellant’s bank. The appellant appealed to the Supreme Court, pursuant to which further enforcement of the award was stayed pending the appeal’s outcome.
- What should a court do, if, after delivering a judgment in open court and making an appropriate order, a few hours, or days, later, but before the formal written minute of the order had been sealed by the court, the court received a request from one of the parties to re-consider both the judgment and the order?
- What process, and in accordance with what principles, should the court decide whether or not to exercise the power to re-open the judgment and order at any time until the order had been sealed?
- What was the scope and nature of the finality principle?
Relevant provisions of the law
Civil Procedure Rules, 2013
(1) These Rules are a procedural code with the overriding objective of enabling the court to deal with cases justly and at proportionate cost.
(2) Dealing with a case justly and at proportionate cost includes, so far as is practicable –
(a) ensuring that the parties are on an equal footing and can participate fully in proceedings, and that parties and witnesses can give their best evidence;
(b) saving expense;
(c) dealing with the case in ways which are proportionate-
(i) to the amount of money involved;
(ii) to the importance of the case;
(iii) to the complexity of the issues; and
(iv) to the financial position of each party;
(d) ensuring that it is dealt with expeditiously and fairly;
(e) allotting to it an appropriate share of the court’s resources, while taking into account the need to allot resources to other cases; and
(f) enforcing compliance with rules, practice directions and orders.
- On receipt of an application by a party to reconsider a final judgment and/or order before the order had been sealed, a court should not start from anything like neutrality or evenly-balanced scales. It would often be a useful mental discipline, reflective of the strength of the finality principle, for the court to ask itself whether the application should even be entertained at all before troubling the other party with it or giving directions for a hearing. It could be a perfectly appropriate judicial response just to refuse the application in limine after it had been received and read, if there was no real prospect that the application could succeed.
- The court should not re-open proceedings just to allow debate on the point if it was already clear that the judgment or order should not be re-opened. That would defeat the overriding objective in the Civil Procedure Rules that cases be decided justly and at proportionate cost. But that fell well short of any supposed rule of law or practice that such an application had to always be addressed by a two-stage process, as the Court of Appeal decided.
- There could be cases where the court could not reliably gauge the weight of the factors put forward for the exercise of the discretion to depart from adherence to the finality principle without hearing submissions from both sides. There could be cases where (since the order already made was already enforceable) urgency required an immediate inter partes hearing with notice to both sides for a decision to be taken, rather than a protective stay pending the conduct of a two-stage process.
- It could be impossible to disentangle the factors for and against departing from finality from those for and against the re-making of the order on the merits. The court would in the end be faced with a single decision whether to set aside the order which it had already made and replace it with a different order. The importance of the finality principle was better reflected in recognising that it would always (and especially in the case of a final order) be a weighty matter in the balance against making a different order than in requiring slavish adherence to a two-stage process of analysis.
- The weight to be given to the finality principle would inevitably vary, depending in particular upon the nature of the order already made, the type of hearing at the end of which it was made and the type of proceedings in which it was made. Leaving aside orders made on appeal, which lay outside the scope of the appeal and had already attracted their own jurisprudence, finality was likely to be at its highest importance in relation to orders made at the end of a full trial. But other kinds of final order, which ended the proceedings at first instance, would attract the finality principle to almost as great a degree.
- Case management and interim orders lay towards the other end of the scale, and indeed many reserved liberty to the parties to apply to vary or discharge the order, even after it had been sealed. But the finality principle cut in when the order was made, not merely when it was sealed. After the order was sealed, the finality principle applied in a more absolute way, to put it beyond challenge in the court which made it, subject to any liberty to apply in the order, the application of the power in Civil Procedure Rules, 2013, part 3.1(7) to vary or revoke it and the slip rule.
- An evaluative judgment had to be made, but it had to reflect and respect the importance in the context of the principle of finality. Structured forms of discretion, where a general discretionary power existed but the exercise of the discretion was governed by principles which accorded priority and greater weight to some factors over others, arose quite often in the law. A court exercising such a discretion would err in law if it did not act in accordance with the principles which governed that exercise. In other contexts, by contrast, a discretion could be more open-ended, such as in relation to ordinary case management decisions, and left greater choice to the court to decide the weight to be given to each factor.
- It would be wrong to attempt to identify a list of factors prima facie qualifying for inclusion as being in principle sufficient to displace the finality principle. Subsequent cases would always reveal that the list had proved to be inadequate, and the peculiarities of the present case could hardly have been imagined in advance. Some, such as judicial change of mind, had already been the subject of analysis in the authorities, but even they were of widely variable weight. It was perhaps easier to advance factors that would have no significant weight, such as a desire by counsel to re-argue a point lost at trial in a different way.
- The Supreme Court rejected the criticism of the Court of Appeal that the court did not apply a two-stage process to the question before her. There was no such legal or procedural requirement to do so, and it was clear that, from the outset, the court regarded the windfall factor, where the respondent received both a right to enforce the award and the guarantee, as a strong reason for reopening the enforcement order.
- A fair, even generous, reading of the judgment revealed that the court did not give the finality principle the central importance which it deserved, all the more so because the enforcement order constituted a final judgment for the respondent on the claim which it had brought by its proceedings, subject only to appeal. The claim was for leave to enforce the award, and that was exactly what the enforcement order provided. The court’s observation that finality was only achieved when an order was sealed, while literally true, rather missed the point, which was that finality should ordinarily follow the giving of judgment and the making of an order in open court, whereupon it became immediately enforceable.
- Sealing was only an administrative tail-piece, albeit it could also have the effect of excluding a discretion to review altogether. Equally the Court of Appeal’s observation that every exercise of the jurisdiction involved an erosion of the finality principle, while also true, belied the importance of guarding against that erosion, as did its view that the erosion was only to a very limited extent. Finally, its observation about balance suggested that it wrongly regarded the starting point, on an application to re-open, as consisting of an even balance, rather than one heavily loaded from the outset against the applicant.
- The Court of Appeal’s criticism of the court’s assessment of the important issue of delay was correct. The respondent cross-applied for security, in response to the appellant’s application to set aside the without notice order for enforcement, on June 28, 2019. The appellant should have appreciated that there was a risk that it would have to provide security at that stage, and started making the necessary preparations to provide it, if ordered, then.
- On August 13, 2019 the court specified that the guarantee was required if the appellant was to resist an order for enforcement of the award. In its comments on the issue of delay in the judgment of December 13, 2019, either the court was saying that it was satisfied that there was good reason for the delay in early December 2019 (in which case it failed to have regard to the earlier relevant period of delay) or it was saying that good reasons existed to explain the whole period of delay on the appellant’s part from June and in particular from August 2019 (which was not an assessment reasonably open to her on the evidence).
- The Supreme Court respectfully disagreed with the Court of Appeal about change of circumstances. The change fell to be measured by reference to what the court had been told at the hearing on December 6, 2019, namely that despite earlier evidence to the contrary, the guarantee had not been provided and that, in the circumstances, counsel for the appellant did not consider that he could properly pursue an application for further time in which to provide it. And yet, a couple of hours later, no doubt to the considerable surprise of the appellant’s counsel, the guarantee had arrived, and a copy had been handed over to the respondent, so that the respondent had already demanded payment by the time of the hearing on December 13.
- The fact that there had been a failure to comply with the condition in the earlier order to provide the guarantee was no part of any change of circumstances, since that breach had occurred long before December 6, and the court knew all about it. What had changed was that the earlier order for provision of the guarantee had, late on December 6, been complied with, albeit belatedly.
- Ordinarily a conclusion that the reasons for the setting aside by the Court of Appeal of the exercise of a court’s discretion were wrong would lead to the court’s order being reinstated. However, the Supreme Court had also concluded that the court’s exercise of discretion was vitiated, essentially because of:
- her serious undervaluation of the finality principle as a factor pointing against re-opening the enforcement order; and
- her erroneous assessment of the reasons for delay.
- The Court of Appeal approached the re-exercise of the discretion on the basis of two errors of its own, first the need for a two-stage approach and secondly on the issue as to change of circumstances. The result was that it fell to the court to re-exercise the discretion afresh, unless uncertainties as to relevant facts required it to be remitted.
- The court’s earlier order for the provision of the guarantee, made on September 17, 2019, provided at paragraph 4 that if the guarantee was not forthcoming by October 29, 2019, the respondent should have liberty to apply to enforce the award. It did not provide for an automatic right to enforce. The application made (successfully as it turned out) by the respondent, heard on December 6, 2019, was an application to enforce the award, made under that liberty to apply, because the guarantee had not been provided by October 29.
- The appellant’s application, heard on the same day but effectively abandoned, was for an extension of time until December 5, to provide the guarantee, a deadline which had already expired when the application came to be heard. Its application to set aside the enforcement order, in the form which succeeded before the court on December 13, 2019, extended the time for the provision of the guarantee until December 9, (by which time it had been provided) and sought relief from sanctions, which was granted.
- Regardless of form, it could be said that enforcement of the award was in substance a sanction for non-provision of the guarantee on time, as the Court of Appeal held. Although enforcement of the award had since been made the subject of a final order on an application for leave to enforce, to set it aside after late provision of the guarantee would therefore involve, at least in substance or by way of close analogy, giving relief from sanctions.
- It was not necessary to decide the question whether that was a relief from sanctions case for the resolution of the appeal. That was because, on any view, the main circumstance which caused the appellant to seek to set aside the enforcement order was its late provision of the guarantee, thereby failing to comply with the condition in the court’s order as to the time when it should have been provided. The result was that, because the need to enforce compliance with orders was a matter expressly required to be taken into account under Civil Procedure Rules, 2013, part 3.9(1)(b) and, moreover, securing compliance with court orders was part of the overriding objective in part 1.1.
- In applying the Civil Procedure Rules, 2013, part 3.9(1) directly or by analogy, regard had to be put to the nature of the result or sanction against which relief was sought. The enforcement order was a final order pronounced at the final hearing held on December 6, 2019, on full and fair notice to the appellant, to determine whether there were any grounds on which the respondent should be denied the right to enforce the award. The court having correctly determined that there were none and having given judgment for the respondent and pronounced the enforcement order, the principle of finality applied with particular weight. The court was not involved with trying to regulate matters at an interim stage in the domestic proceedings, looking forward to a future trial.
- The three stages of the analysis laid down by the Court of Appeal in Denton v TH White Ltd (De Laval Ltd, Part 20 defendant) (Practice Note)  EWCA Civ 906;  1 WLR 3926 (the Denton case) were very well known:
- examine the seriousness of the breach or failure to comply with the order;
- consider why it occurred and, in particular, whether there was good reason for the breach or failure to comply; and
- consider whether in all the relevant circumstances relief should be granted.
- The failure of the appellant to produce the guarantee as an answer to the respondent’s claim at the final stage of the domestic proceedings, with the result that a final judgment and final order were pronounced in the respondent’s favour, meant that at stage (a) under the Denton approach, the failure to comply was very serious. At stage (b), having regard to the appellant’s failure from June 2019 to take effective steps to arrange for the guarantee to be available in good time, there was no good reason for the failure to comply. The question, then, was whether at stage (c), the circumstances were nonetheless such that the appellant should be granted relief in respect of the enforcement order.
- It was axiomatic that a discretion of that kind had, if it called to be re-exercised on appeal, be undertaken by reference to the facts as they were then rather than, if significantly different, as they were at the time when the discretion was originally (or last) exercised. It was originally exercised by the court in December 2019, and re-exercised with the opposite result by the Court of Appeal in November 2020. In the meantime, there had been one important change in the relevant circumstances. The guarantee had been called and paid, so that the respondent had then received US$24m odd by way of partial enforcement of the award. Meanwhile, there had been limited progress in the Nigerian set-aside proceedings, and their final outcome remained uncertain, both in terms of time and content. If successful on the appeal the appellant sought repayment of the guarantee amount as reconstituted security.
- The enforcement order as re-made by the Court of Appeal should be set aside, that the respondent’s application for leave to enforce the award should be again adjourned to await the outcome of the proceedings in Nigeria, with liberty to apply if they did not progress, but that the respondent should be entitled to retain the proceeds of the enforcement of the guarantee in the meantime.
- There were two large factors weighing in the scales against the re-opening of the enforcement order. The first was the finality principle and the second was the delay in providing the guarantee in breach of the court’s order. As to the first the Supreme Court had already concluded that the enforcement order was a final judgment to which, although there had not been a full trial or even serious opposition on December 6, 2019 to it being made, the finality principle applied with almost full force. It was true that the appellant communicated its intention to seek to reopen the enforcement order during working hours on the same day as it had been made, but since that came after the conclusion of the final hearing to decide whether the respondent should be granted the relief which it sought in its arbitration claim form and the pronouncement of the enforcement order in the respondent’s favour, the derogation from the finality principle which the appellant was seeking was already serious.
- The appellant’s evidence about the seeking of the guarantee failed to explain why nothing had been done during the period from June until the end of September, or why a process which, once the Finance Ministry initiated it took only four days, had not been set in motion weeks, if not months, earlier. All in all, the delay amounted to a serious failure to comply with the court’s order for the provision of the guarantee for which no good reason had been provided.
- Even though the Supreme Court had disagreed with the Court of Appeal’s underrating of the finality factor and its view that there had been good reason for the delay, the Supreme Court considered that its trenchant view that justice demanded that the windfall thereby conferred upon the respondent be undone commanded real respect. It had presided over all the first instance hearings of the respondent’s enforcement application apart from the original without notice order, and was well placed to assess the justice of the matter. The respondent was, by the end of December 6, in substance in a better position than if its application to enforce the award had simply been unopposed.
- The Supreme Court had not found the answer to the question whether to set aside the enforcement order nearly as clear cut as it seemed to have appeared to the court. The combined effect of the finality principle and the appellant’s culpable delay in providing the guarantee added up to a very serious obstacle in the way of doing so. But the court was persuaded on balance that the respondent should not retain the right to enforce the award, pending the outcome of the Nigerian proceedings, beyond the significant enforcement which it had already lawfully achieved by calling on the guarantee. The fact that that outcome was less favourable to the appellant than the order that would have applied if the guarantee had been provided on time was an appropriate reflection of appellant’s failure to comply with the deadline imposed by the court by its orders. It was a result which served the overriding objective in its modern form.
Appeal partly allowed.
Relevance to the Kenyan jurisprudence
The Civil Procedure Code in section 99 notes that clerical or arithmetical mistakes in judgments, decrees or orders, or errors arising therein from any accidental slip or omission, may at any time be corrected by the court either of its own motion or on the application of any of the parties. Section 100 emphasizes that the court may at any time, and on such terms as to costs or otherwise as it may think fit, amend any defect or error in any proceeding in a suit; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on the proceeding.
In Kennedy Mokua Ongiri v John Nyasende Mosioma & Florence Nyamoita Nyasende  eKLR, the High Court upheld the appeal and held that the trial magistrate erred in that the law did not allow the trial magistrate to reopen the case by way of entertaining a similar application when the predecessor in the station had already dealt with the matter conclusively. The earlier ruling would only have been overturned on appeal or by way of review.
Furthermore, in Njangu v Wambugu and another Nairobi HCCC No. 2340 of 1991, the court held that: If parties were allowed to go on litigating forever over the same opponent before courts of competent jurisdiction merely because he gives his case some cosmetic face lift on every occasion he comes to court, then I do not see the use of the doctrine of res judicata. Therefore, this case is no doubt crucial in the Kenyan jurisprudence for it elaborates on the finality principle when determining an application to reconsider a final judgment and/or order before the order has been sealed.