AIC Ltd. v. The Federal Airports Authority of Nigeria

AIC Ltd. v. The Federal Airports Authority of Nigeria

McDermott Will & Emery successfully represented AIC Ltd in a significant arbitration award in the UK Court of Appeal.

An appeals court overturned an order that prevented a construction company, which is seeking damages over an abandoned hotel commission in Nigeria, from enforcing parts of a $48 million arbitration award against the African country’s federal airports authority.

The Court of Appeal has allowed an appeal by AIC Ltd., after finding that the lower court judge did not take into account the role of the Federal Airports Authority of Nigeria in slowing the proceedings when she reversed an earlier decision to enforce the award, which was won in 2010.

The Technology and Construction Court had agreed to enforce the award on Dec. 6 last year. But the court reconsidered, reversing the order a week later, after the authority filed fresh evidence of a bank guarantee worth $24 million, which was a condition of a ruling in September.

The long-running dispute stems from a 1998 arrangement under which FAAN leased land at Lagos airport to AIC for the development of a hotel and resort complex. AIC started work on the project but FAAN told the company to stop building in May 2000, a move that was later held to be a breach of contract.

AIC, which has not been permitted to continue with the construction, won a $48.1 million arbitration award plus interest in Nigeria in June 2010. The award had increased to $160 million by December.

Thursday’s ruling cited the period between a High Court order on Aug. 13, 2019, which “made plain” that FAAN had to provide $24 million in security, and the next hearing a month later, which formalized the order. FAAN knew during that time that it would have to find the money or a guarantee, but there was no evidence that it had taken any steps to comply until late October, when it wrote to Nigeria’s minister of aviation and finance minister, Justice Coulson said.

The initial arbitration proceedings were delayed for six years because the authority refused to appoint an arbitrator, and the proceedings were held up in several courts in Nigeria. The case is now with the Supreme Court of that country, but the two sides are at a stalemate over the procedural steps that need to be taken and it is unlikely to be resolved for years.

The construction and development company had argued in its appeal that the lower court should not have changed its initial order on Dec. 6 that allowed enforcement. The airport authority had not applied for an extension of time on the $24 million security it was ordered to pay up, AIC said. It had also not opposed the enforcement order and agreed that enforcement should automatically follow if it did not get a bank guarantee on the security by Dec. 5.

Meanwhile, FAAN had argued that the trial judge was right to use her discretion to continue the adjournment of the enforcement application. The authority claimed that the first order had not been sealed when it was able to lodge new evidence proving it had a guarantee in place.

The authority argued that the fact that it could pay the guarantee was a material change in circumstances and that therefore the legal test for reconsideration was met.

AIC Ltd. is represented by Paul Key QC of Essex Court Chambers, instructed by partner Andrew Savage and associate Edward Perkins of McDermott Will & Emery (UK) LLP.

FAAN is represented by Riaz Hussain QC of Atkin Chambers, instructed by Curtis Mallet-Prevost Colt & Mosle LLP.

Involved fees earner: Edward Perkins – McDermott Will & Emery; Andrew Savage – McDermott Will & Emery;

Law Firms: McDermott Will & Emery;

Clients: AIC Limited;

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Author: Ambrogio Visconti