Process and Industrial Developments Limited v The Federal Republic of Nigeria [2025] UKSC 36; [2025] 10 WLUK 308

Judgment Date: 22 October 2025

Summary:

The appeal concerned the currency in which costs orders should be made. The appellant, Process & Industrial Developments Ltd (“P&ID”), appealed against an order requiring it to pay the Federal Republic of Nigeria’s costs in sterling, following Nigeria’s successful application to set aside two arbitration awards exceeding USD 11 billion.

Between 2019 and 2024, Nigeria incurred GBP 44.217 million in legal fees billed and paid in sterling to its London solicitors. During that period, the Nigerian naira depreciated sharply, particularly after 2023 when it was unpegged from the US dollar. P&ID argued that the costs should reflect Nigeria’s actual financial loss arising from currency conversion and that an award in naira or dollars would be more appropriate.

Relying on Cathay Pacific Airlines Ltd v Lufthansa Technik AG [2019] EWHC 715 (Ch), P&ID submitted that costs should be awarded in the currency most accurately reflecting the receiving party’s financial loss. The Commercial Court ([2023] EWHC 2638 (Comm); [2024] 1 Lloyd’s Rep 1) rejected this argument, holding that the court retained a discretion over the choice of currency. Since Nigeria’s legal liabilities were incurred and discharged in sterling, the costs award should also be made in sterling. The Court of Appeal affirmed that ruling, finding that costs orders were not compensatory in nature but a statutory indemnity for liabilities to lawyers and that an inquiry into the currency of a party’s underlying loss would be unnecessary and disproportionate.

Held:

The Supreme Court unanimously dismissed the appeal.

Nature of a Costs Order: A costs order does not compensate for loss like damages in tort or contract but represents a discretionary contribution toward the costs reasonably incurred (paragraphs 11–17). While a party may not recover more than it has paid, costs are not awarded to restore the party’s financial position had litigation not occurred. The indemnity principle restricts recovery to amounts actually incurred to legal representatives.

Funding Arrangements Irrelevant: The Court rejected the argument that currency losses from converting foreign funds to sterling should affect the award. Whether a litigant converts currency, sells assets, or liquidates other holdings to pay legal fees is immaterial. The courts will not investigate such arrangements to quantify a party’s loss (paragraph 19).
Avoiding Collateral Disputes: There are pragmatic reasons not to inquire into the funding arrangements of litigants. Doing so could give rise to factual disputes and satellite litigation that would be disproportionate to the purpose of costs proceedings (paragraph 20).
Application of Cathay Pacific: The Court clarified that Cathay Pacific was correctly decided only because, in that case, the solicitors had billed and been paid in euros. The general rule remains that costs should be awarded in sterling or in the currency in which the solicitors billed and were paid (paras 24–25). Exceptions may apply where the currency used was artificial, abusive, or lacked a genuine connection to the parties or the litigation.
Practical Guidance and Future Considerations: Should it become common for parties litigating in England and Wales to pay legal fees in other currencies, a practice direction may be introduced to maintain cost control and mitigate currency fluctuation risks. In this case, however, Nigeria’s lawyers had billed exclusively in sterling and all payments were made in sterling. The Court therefore found no basis to depart from that currency (paras 26–27).

Decision:

Appeal dismissed. Costs to be paid in sterling, reflecting the currency in which the legal fees were billed and paid.

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Case Law Digest Series

Process and Industrial Developments Limited v The Federal Republic of Nigeria [2025] UKSC 36; [2025] 10 WLUK 308

Summary:

Held:

Decision: