The United Kingdom Supreme Court has dismissed an appeal by Process & Industrial Developments Limited (P&ID), confirming that the Federal Republic of Nigeria is entitled to recover its legal costs in sterling (GBP) rather than in naira (NGN) following its successful challenge to a multi-billion-dollar arbitral award.
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Delivering judgment on 22 October 2025 during Michaelmas Term ([2025] UKSC 36), a panel led by Lord Reed, President of the Supreme Court, unanimously upheld the earlier rulings of the Commercial Court and the Court of Appeal. The courts agreed that costs should be paid in the same currency in which Nigeria incurred its legal obligations.
The case stems from Nigeria’s successful challenge to two arbitral awards granted to P&ID—worth over US$11 billion including interest—which the courts later found to be procured by fraud and in violation of public policy. In 2023, the Commercial Court ruled that the awards were void due to these irregularities.
In pursuing the legal challenge, Nigeria incurred £44.2 million in legal fees, billed and paid in sterling across 116 invoices between November 2019 and November 2024. P&ID argued that the costs should instead be calculated in naira, claiming that paying in pounds would give Nigeria a “windfall” due to the sharp depreciation of the naira since 2023.
The Supreme Court rejected P&ID’s argument, emphasizing that an award of costs is a statutory indemnity for expenses incurred in litigation and is not intended to compensate for loss. In a joint judgment delivered by Lord Hodge and Lady Simler, with the agreement of Lords Reed, Stephens, and Richards, the Court stated:
“As Nigeria had incurred liability and made payments in sterling, the court ought to make a costs order in sterling.”
The Justices further explained that costs awards are discretionary, distinct from damages in tort or contract cases. They noted that inquiries into how litigants fund their legal fees could result in “disproportionate and expensive satellite litigation,” reinforcing the principle that costs should generally be awarded in the currency in which the legal services were billed and paid.
P&ID’s appeal relied on precedents relating to foreign currency awards in damages cases, arguing that costs awards should reflect the litigant’s “true loss.” The Supreme Court dismissed these claims, clarifying that an award of costs is not compensatory but a contribution toward legal expenses. The Court highlighted that Nigeria’s legal team, comprised of English solicitors and counsel, billed and received payment in sterling, making the award in naira unnecessary and inappropriate.
The ruling also confirmed that Nigeria does not gain a financial windfall, as the naira’s international depreciation has diminished its domestic purchasing power since 2019, particularly after 2023 when it was allowed to float freely.
uksc_2024_0117_judgment_87dad5b653The Supreme Court’s decision reinforces legal certainty and confirms a critical principle in international litigation: costs are to be awarded in the currency in which legal services are billed and paid unless there is an exceptional reason to do otherwise.
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