Nigeria’s effort to recover an estimated £50 million in legal costs arising from its landmark victory against Process & Industrial Developments Ltd (P&ID) has suffered a fresh setback, after the Court of Appeal in England and Wales rejected Abuja’s attempt to fast-track payment from third-party litigation funders. In a unanimous ruling delivered last Friday, the appellate court upheld an earlier High Court decision ordering that Nigeria must wait for a full and detailed assessment of its legal bill before pursuing VR Advisory Services and other entities linked to VR Capital Group, which financed P&ID’s enforcement campaign. The decision delays what Nigerian officials hoped would be swift reimbursement following the dramatic collapse of P&ID’s $11 billion arbitration award in 2023, one of the largest fraud-tainted claims in international arbitration history.
Court Calls Nigeria’s Claim “Eye-Watering”
Delivering the lead judgment, Lord Justice Stephen Males described Nigeria’s costs claim as “staggering” and “eye-watering even by Commercial Court standards,” warning that the assessment process itself could last up to 50 hearing days and take more than 18 months to complete. Nigeria’s submitted bill runs to more than 3,000 pages, contains over 95,000 individual cost items, and totals approximately £50 million including interest.
The court noted concerns over senior counsel fees, elevated solicitor rates, overseas expenses, and roughly £5.25 million reportedly spent on public relations services. Justice Males cautioned that Nigeria might ultimately be entitled to no more than the £23.7 million already received, making it premature to impose liability on third-party funders. As a result, Nigeria’s attempt to compel VR Capital-linked entities to commit immediately to paying whatever sum emerges from the assessment was dismissed.
Background: From $11 Billion Award to Fraud Collapse
The ruling marks the latest chapter in the long-running P&ID arbitration scandal, which has haunted Nigeria for more than a decade. P&ID, a British Virgin Islands-registered shell company, secured a $6.6 billion arbitral award in 2017 over a failed gas processing contract signed in 2010. With interest, the award ballooned to nearly $11 billion, threatening to cripple Nigeria’s public finances. In October 2023, after a 29-day trial, the UK High Court set aside the award, finding it had been obtained through bribery, forged evidence and abuse of confidential government documents.
Justice Robin Knowles ruled that P&ID had “practiced the most severe abuses of the arbitral process,” including bribing Nigerian officials such as Grace Taiga, a former legal director at the Ministry of Petroleum Resources, to manipulate contract terms. The court ordered P&ID to pay Nigeria’s legal costs. Because P&ID had no meaningful assets, VR Capital Group, which had funded the litigation, provided an interim payment of approximately £20 million on account. Nigeria is now seeking to recover the balance by pursuing VR Capital and its affiliates under UK third-party costs rules.
Supreme Court Win, But Fresh Delay
Only months ago, Nigeria secured a significant procedural victory when the UK Supreme Court rejected P&ID’s attempt to force reimbursement in naira rather than pounds sterling. P&ID had argued that Nigeria would enjoy an unfair “windfall” due to naira devaluation. The Supreme Court ruled that because Nigeria paid its lawyers in sterling, it must be reimbursed in sterling; preserving the value of any eventual recovery. That momentum has now slowed. The Court of Appeal’s decision means Nigeria must first survive a painstaking and potentially contentious costs assessment, which could involve disputes over individual billing entries, rates and categories of expenditure.
Legal and Financial Implications
The ruling exposes the uncomfortable reality that winning the fraud case was only half the battle. Recovering the full financial cost of defending it may prove equally arduous. While interest on unpaid sums continues to accrue at 8% annually, Nigerian officials now face months, if not years of procedural litigation before any additional money is secured. The court was particularly critical of the escalating “satellite litigation” surrounding costs. Justice Males described the projected assessment process as “the worst kind of litigation detour,” warning that it risks consuming millions more in legal fees.
What Happens Next
The immediate next phase is the formal costs assessment, where an English court will scrutinize Nigeria’s legal bill line by line. Only after that process concludes; and if additional sums are confirmed as payable, can Nigeria revive its application to impose liability on VR Capital-linked entities. Legal experts say Nigeria still retains a strong position in principle, given the court’s fraud findings and the precedent allowing third-party funders to be held liable in exceptional cases. However, the procedural hurdles remain substantial.
For Abuja, the setback is not defeat, but it is a reminder that even after overturning one of the largest arbitration awards in history, the financial cleanup will be slow, expensive and legally complex.
As Nigeria continues to pursue accountability for the P&ID affair, the case now shifts from dramatic courtroom revelations to the less glamorous, but no less consequential, battle over pounds and pence.
