*Orders Detailed Assessment First
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The Court of Appeal in England has dismissed an appeal by the Federal Republic of Nigeria seeking to have its third-party costs application against the funders of Process & Industrial Developments Ltd (P&ID) heard alongside the detailed costs assessment proceedings, ruling that the assessment of costs should be completed first before engaging in potentially complex litigation over third-party liability.
According to Whitecase.com, the judgment, delivered on January 23, 2026, in The Federal Republic of Nigeria v VR Global Partners LP & Ors, reaffirmed the English courts’ robust approach to case management in complex, high-value litigation and provides guidance for litigants, funders and practitioners on the cost ramifications of high-value disputes.
In 2023, following a 29-day trial, the Commercial Court set aside two arbitral awards totalling approximately $11 billion obtained by P&ID against Nigeria, finding that the awards had been procured through fraud and serious irregularity.
P&ID was ordered to pay Nigeria’s costs in relation to these court proceedings on the standard basis, together with an interim payment of £20 million on account of costs, which was ultimately funded by entities within the VR Capital group — the respondents in the present proceedings.
P&ID’s subsequent appeal concerning the currency of the interim costs order was unsuccessful.
Nigeria’s detailed bill of costs claimed approximately £44 million (excluding interest), spanning some 3,000 pages and comprising over 95,000 discrete entries.
P&ID has challenged almost every item, contending that the costs claimed were “vastly in excess of what could ever be reasonable and proportionate.”
The parties estimated that a full detailed assessment could require at least 50 days of court time, potentially extending over 18 months or more and incurring millions of pounds in additional costs.
A hearing of preliminary issues of the costs assessment was fixed for seven days from April 27 to May 6, 2026, and the first assessment hearing was fixed for 15 days from July 13 to July 31, 2026, with further hearings yet to be fixed.
On August 29, 2024, Nigeria applied under Section 51 of the Senior Courts Act 1981 and Rule 46.2 of the Civil Procedure Rules for a third-party cost order against entities within the VR Capital group, which had provided financing to P&ID, and the group’s founder and president Mr Richard Deitz.
Nigeria’s case was that the funders, having financed P&ID’s resistance to the set-aside proceedings and related litigation, should be held directly liable for the resulting costs.
Nigeria argued that its third-party costs application should proceed in tandem with the detailed costs assessment process, contending that “delaying the application for a third party costs order in circumstances where P&ID has no possibility of paying whatever is due without funding from the respondents is unjust.”
The funders took the opposite view, submitting that the detailed assessment should first be completed so that the quantum of any liability would be known, which could potentially obviate the need for further satellite litigation if the assessment concluded that no additional sums beyond the £20 million already paid were recoverable.
The Commercial Court accepted the funders’ approach and stayed the third-party costs application until after the conclusion of proceedings for the detailed assessment of Nigeria’s costs, emphasising the genuine possibility that no further sums beyond the interim payment would ultimately be found payable.
The Court of Appeal unanimously dismissed Nigeria’s appeal and approved the Commercial Court’s case management approach.
The Court held that: “the judge was therefore entitled to conclude, and in my judgment clearly did conclude, that there is at any rate a real prospect that nothing further would be payable to Nigeria or that any further sum due would be relatively modest and much less than the (additional) £24.2 million plus interest which Nigeria is claiming.”
No Presumption For Immediate Hearing: The Court rejected any suggestion that there is a presumption in favour of third-party costs applications being heard immediately or in parallel with a detailed assessment.
Judicial Discretion: Sequencing is not governed by rigid rules but is a matter of judicial discretion, to be exercised in accordance with the interests of justice, applying the overriding objective in the particular circumstances of the case.
Wide Case Management Discretion: The Court emphasised the breadth of first-instance case management discretion. According to the Court: “the court’s case management powers expressly include deciding the order in which issues are to be resolved…When exercising these powers in the interest of justice, a judge has a wide discretion.”
The Court made clear that another judge might reasonably have taken a different view, but that did not justify interference where the decision fell within the wide ambit of discretion.
The Court expressed concern at the projected scale of the detailed assessment, describing it as “breathtaking” and warning against the dangers of runaway satellite litigation.
The Court expressly encouraged the costs judge to use pragmatic mechanisms — such as sampling — to control the scope and duration of assessment proceedings.
It affirmed that the Commercial Court was entitled (indeed required) to consider the position of other court users, particularly in light of the parties’ own estimate that Nigeria’s detailed assessment could consume at least 50 days of court time and potentially occupy the costs judge for up to 18 months.
The Court reinforced its view that the quantum of any recoverable costs could not be assumed in advance and emphasised proportionality in costs recovery.
The Court observed that “even for a case of this magnitude and importance… costs of over £44 million represent a staggering amount” and that it remained an open question whether such costs would ultimately be recoverable on a standard basis.
The Court highlighted concrete areas of potential vulnerability in Nigeria’s bill, including:
- The “extraordinarily high” fees charged by leading counsel
- Solicitor hourly rates “well in excess of applicable guideline rates”
- Approximately “£5.25 million said to have been incurred on overseas litigation and public relations”
The Court found no unfair prejudice arising from the sequencing adopted. Nigeria had already received substantial interim payments, and as held by the Court, “there was no suggestion that the respondents would not be good for whatever they might ultimately be held liable to pay and in the meanwhile interest was accruing at 8 per cent.”
The Court dismissed Nigeria’s complaint that the Commercial Court’s reasoning was inadequate. While accepting that the judge’s extempore ruling “could have been more fully expressed,” the Court held that it was nonetheless sufficient to enable the parties and the public to understand the basis of the decision.
In the context of busy Commercial Court lists, efficiency would be undermined if fully reasoned judgments were required for every interlocutory case management ruling.
The judgment provides several practical takeaways:
- Appellate intervention in sequencing decisions will be rare: once framed as a case management decision grounded in the overriding objective, the threshold for reversal is high.
- Where the quantum of recoverable costs remains uncertain, courts are likely to prefer that the costs be assessed first before engaging in potentially complex and expensive litigation over third-party liability.
- English courts are increasingly vigilant in controlling the scale and cost of litigation and are prepared to endorse pragmatic techniques — such as sampling and imposing limits on hearing time — to prevent costs disputes from eclipsing the substantive litigation.
- While third-party funders may remain exposed to adverse costs orders, such exposure will typically crystallise only once the underlying costs have been assessed.
Overall, this decision underscores the English courts’ commitment to effective case management and proportionality in costs disputes. It sends a clear signal that ancillary costs battles will not be permitted to spiral into disproportionate satellite proceedings, and that third-party costs applications will be subject to careful, measured oversight.
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