The issue before the Court of Appeal in Federal Republic of Nigeria v VR Global Partners LP and others [2026] EWCA Civ 25 was whether the judge at first instance was wrong, when exercising his case management powers, to stay an application by Nigeria for a third-party costs order until after the conclusion of proceedings for the detailed assessment of Nigeria’s costs. The appeal related to the judge’s 2023 decision to set aside P&ID’s $11bn arbitration awards against Nigeria due to fraud and serious abuse of process.
Background
P&ID, a special purpose vehicle with no assets other than its claim against Nigeria, was funded and partially owned by the VR Capital group (VRC) and its founder. VRC had financed the enforcement of P&DI’s $6.6bn arbitration awards in return for a share of any recovery. After the awards were set aside, P&ID was ordered to pay Nigeria’s costs, assessed on the standard basis, including £20m on account. Nigeria was paid £23.7m on account of the costs of the proceedings. Nigeria served a bill of costs claiming £44.2m. P&ID argued that the claimed costs were grossly disproportionate and that it was unlikely to be ordered to pay more than the £20m it had already paid to Nigeria. Nigeria also applied for a third-party costs order under section 51 of the Senior Courts Act 1981 against VRC and its founder, arguing that the application should proceed with the costs assessment.
Decision at first instance
The judge gave a brief oral ruling in which he described the extraordinary scale and duration of the costs hearing as ‘breathtaking’. The judge held that the detailed assessment of costs should proceed first and emphasised the importance of proportionality, efficient use of court resources and the need to determine whether any further sums were payable, before addressing issues of third-party costs liability. The judge also explained that P&ID’s undertaking to participate fully in the assessment removed any concerns about its non-participation if the third-party costs application were stayed.
Nigeria put forward two grounds of appeal. The first was that the judge gave insufficient reasons for staying Nigeria’s third-party costs application and relied on authorities on the duty to provide reasons even in short interim matters (Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377; Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413 [2019] 4 WLR 112; and GLAS SAS v European Topsoho Sarl [2025] EWCA Civ 933 [2025] 1 WLR 5343). The second ground of appeal was that the decision was perverse or plainly wrong. Nigeria argued that, absent a compelling reason, a judgment creditor should have its application determined, that P&ID cannot pay without VRC funding, and that the stay unjustly delayed Nigeria’s recovery. Nigeria also argued, inter alia, that the judge gave undue weight to court resource allocation and that it was prejudiced by uncertainty and delay in the detailed assessment process.
Court of Appeal decision
The Court of Appeal dismissed Nigeria’s appeal and held that the judgment at first instance was sufficient. As Lady Justice Falk put it in GLAS: ‘A judgment or ruling given…at a case management hearing where there may be a multiplicity of issues to address in a limited time, is unlikely to be, and need not be, a polished product like a reserved judgment.’ The court explained that there was no presumption against staying a third-party costs application which must be determined in the interests of justice under the overriding objective (CPR 1.1, 1.4) and the court’s case management powers (CPR 1.4(2)(d), 3.1(2)(k), Athena Capital Fund v Secretariat of State for the Holy See [2022] EWCA Civ 1051; Old Park Capital Maestro Fund Ltd v Old Park Capital Ltd [2024] EWHC 1482 (Ch); and Magomedov v TPG Holdings [2025] EWHC 1996 (Comm)). The court also explained that the judge was entitled to prioritise the detailed assessment first to avoid wasting court resources on an uncertain third-party costs application. Furthermore, the judge was also entitled to consider the position of other court users and to mitigate any delay to Nigeria while recognising that interest would accrue and any payable sums should be made promptly. Given the extraordinary circumstances, the court explained that the costs detailed assessment process should be conducted in line with the overriding objective and should avoid the disproportionate use of court resources. Furthermore, the court advised that the costs judge should adopt a firm and proportionate approach and should, if possible, use sampling to ensure a fair outcome without examining every item in detail.
The decision in P&ID serves as a clear reminder of the high threshold that must be met to successfully appeal case management decisions at first instance. Appellate courts are generally cautious about interfering with such decisions and will do so only if they are clearly wrong. When the amount of recoverable costs is uncertain, courts usually prefer to have the costs assessed first rather than engaging in costly and complicated disputes over third-party costs liability. This approach reflects a focus on proportionality and effective case management. The decision also serves as a reminder that the courts retain wide discretion in exercising their case management powers.
As the Court of Appeal observed in P&ID: ‘…this court has had the benefit of submissions lasting most of a day. Litigation in the Commercial Court could not be conducted efficiently if that kind of time was devoted to every application of this nature. The judge’s ruling was sufficient to enable the parties and this court to understand the reasons for his decision once the background is understood. Another judge might have reached a different conclusion, but the judge’s conclusion was within the wide ambit of his discretion in making a case management decision of this nature…’.
Masood Ahmed is an associate professor of law at the University of Leicester and co-author of Arbitration of Commercial Disputes: English and International Law and Practice (Oxford University Press 2025)
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