COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Lord Justice Rix (sitting as a High Court Judge)
London, WC2A 2LL
B e f o r e :
LORD JUSTICE TUCKEY
LADY JUSTICE HALE
| Compagnie Noga D'Importation Et D'Exportation SA
|- and -
Australia & New Zealand Banking Group Ltd & ors
Smith Bernal Reporting Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Gordon Pollock QC and Mr Paul Stanley (instructed by Messrs Dechert) for the Respondents
Mr Andrew Mitchell (instructed by Messrs D J Freeman) for the Federal Government of Nigeria
Crown Copyright ©
Lord Justice Waller:
"1. This trial has concerned the settlement of three actions brought in London but arising out of events in Nigeria. It has been conducted entirely by reference to English law, but the issues have been very largely ones of fact. Three settlement agreements are in issue. Are any of them binding, and if so which? In particular, was an oral agreement made for the payment of $100 million.
2. The trial has been complicated by the fact that there are three actions involved, and three parties interested in the disputed settlements, as well as by the circumstance that the principal documents are themselves the subject of controversy. With one exception, all the witnesses heard by the court have had their credit impugned by one or other of the opposing parties. Disclosure has continued during the trial. In the event, a trial which was fixed at short notice on the basis that it would be finished within some six to eight days has consumed, with some interruptions, a total of six months.
3. The three parties are: Compagnie Noga d'Importation at d'Exportation SA ("Noga"), a Geneva based trading company, which is claimant in two actions 1999 Folio No 404 and 1999 Folio No 405; the Federal Government of Nigeria ("FGN"), which is the claimant in the third action 1999 Folio No 831; and certain of the defendants in all three actions who have been known by the name of their original solicitors as the "SJ Berwin defendants". These are the personal representatives of the estate of a former ruler of Nigeria, General Sani Abacha, his second son, Mr Mohammed Sani Abacha, as well as the latter's business partner Mr Abubakar Bagudu and two of their companies, Mecosta Securities Inc ("Mecosta") and Standard Alliance Corporation. Noga is also a defendant to the FGN's action.
4. General Abacha presided over a military government as Head of State of the Federal Republic of Nigeria from November 1993 until his death on 8 June 1998. Following his death, successive military and democratic governments of Nigeria investigated allegations that during his regime he had pillaged Nigeria of billions of dollars. Members of his family were implicated in those allegations, foremost among them being Mohammed Abacha. Mohammed succeeded his elder brother, Ibrahim, as head of the family's business, following Ibrahim's death in a plane crash on 17 January 1996. Ibrahim and Mr Bagudu had begun to work together in late 1994. Mr Bagudu became a trusted business associate first of Ibrahim and then of Mohammed. He was treated as one of the family, and lived in a house which belonged to Mohammed Abacha and was next door to the latter's house.
5. Foremost among the matters investigated after General Abacha's death was the so called security funds scandal. It is alleged that more than $2 billion was taken from the Central Bank of Nigeria ("CBN") in cash (dollar, sterling and Nigerian naira banknotes), travellers' cheques and bank transfers under the guise of votes of money for security purposes. Mohammed Abacha and Mr Bagudu have accepted that they were personally involved in the receipt of some $700 million or so of such funds. This cash was delivered by the CBN to General Abacha, handed on by the General to his son Mohammed, and by Mohammed to Mr Bagudu. Mr Bagudu banked these monies with Nigerian banks and ultimately arranged for them to be exported abroad, through the CBN, where they were deposited in the bank accounts of various companies. Following the death of General Abacha and the setting up of a special investigatory panel ("SIP"), these sums were returned to the CBN. To what extent either of Mohammed Abacha or Mr Bagudu were involved beyond the sums returned is in dispute.
6. Among the matters conducted by General Abacha's government with his personal authority but which became subject to criticism and investigation following his death was the Ajaokuta bills of exchange buy-back transaction. These bills of exchange had been drawn by organs of the USSR, which had built and financed the construction of a steel plant at Ajaokuta in Nigeria for the Nigerian Steel Development Authority, to secure payment for the plant pursuant to a contract dated 13 July 1979. The bills were guaranteed by the FGN. Some of them had been paid over the years, but others, viz nos 8-15 and 20, remained outstanding, together with unpaid interest upon them. In 1996, after the succession of the Russian Federation to the former USSR's interests, the outstanding bills were sold by their Russian holders to a company called Parnar Shipping Corporation ("Parnar"), which sold them on to another company called Mecosta, one of the SJ Berwin defendants. Mecosta is a BVI company jointly owned by Mohammed Abacha and Mr Bagudu. It may be that Parnar is also in their ownership, but that is disputed. At any rate Mecosta resold the bills to the FGN for twice what it paid Parnar for them. Mecosta paid some 26% of the fact value of the notes, and the FGN paid 53% to Mecosta. The sums in question were of the order of DM 486 million by way of purchase and DM 972 million by way of resale. The gross profit was distributed into various accounts under the control of Mohammed Abacha and Mr Bagudu. The Nigerian buyer was the Federal Ministry of Finance, on whose behalf the CBN paid the first tranche of DM 486 million in May 1996 and the second tranche of the same amount in April 1997. The second tranche would have been paid in October 1996, had not the receiving bank, Merrill Lynch, refused to accept it, out of concern that Mecosta was involved in money-laundering. Mecosta'' accounts at Merrill Lynch were closed and transferred to another bank.
7. However, Noga claims to be entitled to the beneficial interest in these bills. Noga is a transliteration of the name of the Gaon family which founded it. The head of the family is Mr Nessim Gaon. Mr Gaon and Noga had long been involved in trading with both Nigeria and the USSR. On 22 July 1992 Noga and the Russian Federation had entered into a Swiss law contract for the purchase by Noga of the Ajaokuta bills, together with rights of accrued but unpaid interest on them. The purchase price was expressed to be 75% of the face value of the overdue bills and 62% of the face value of the non matured bills. The purchase was subject to a number of conditions precedent, inter alia the consent of the FGN. There is a dispute as to whether those conditions precedent failed, and with them Noga's contractual rights as a whole, or whether they must be deemed to have been fulfilled because, as Noga alleges, the Russian Federation prevented their performance in bad faith. If the contract has survived, then Noga claims that the bills are to be held for it in trust under a special clause of the contract. In any event the July 1992 contract was not consummated.
8. The following years were difficult ones for Noga. Its affairs in Nigeria did not prosper under General Abacha's regime, indeed Mr Gaon became persona non grata in Nigeria. Its large scale barter operations with Russia also ended in dispute, and heavy arbitration ensued. In the course of this period, Noga obtained information about the Ajaokuta buy-back transaction.
9. For some time Noga was preoccupied with its own financial difficulties, which caused it to enter a period of court controlled administration. In December 1998, however, it emerged from administration and turned to devote its energies to pursuing its claim to the beneficial interest in the Ajaokuta bills. In March 1999 it commenced two actions, Folios 404 and 405, which expressed different aspects of its claims. In Folio 404 it claimed to be entitled to trace its interest in the bills into the proceeds of the Ajaokuta buy-back. In Folio 405 it claimed to be entitled to a freezing order over the Ajaokuta buy-back proceeds in execution of an arbitration award in its favour against the Russian Federation as well as in anticipation of further claims against Russia still subject to arbitration.
10. On 18 March 1999 Noga obtained an ex parte Mareva injunction from Colman J against a number of defendants in the two actions who included the SJ Berwin defendants. The first named defendant in Folio 404 is Australia and New Zealand Banking Group Limited ("ANZ"), the bank through which the buy-back transaction had been broked. It would be more appropriate, however, to use the name of the second defendant, the estate of General Abacha deceased, in order to name this judgment, and that is what I have done. Similarly, the first named defendant in Folio 405 is the Government of the Russian Federation, but that has never put in an appearance, so that I have again named this second action after its second defendant, the estate of General Abacha.
11. On 25 June 1999 the FGN commenced its own action, Folio 831, against (inter alios) the SJ Berwin defendants. The basis of this third action is that the Ajaokuta buy-back transaction was a corrupt transaction obtained with the help and influence of General Abacha, whose profits were corruptly obtained by the SJ Berwin defendants. On 20 July 1999, freezing and disclosure orders very similar if not identical to those obtained by Noga in its two actions were made in favour of the FGN. It has subsequently emerged that Noga had taken pains to involve the FGN in its strategy and to encourage it to bring its own claims in respect of the Ajaokuta buy-back transaction."
" Those features highlight what have become the three central issues in the trial. (1) Was $100 million ever agreed between Noga and the SJ Berwin defendants? Indeed, was $100 million even discussed between them? (2) Even if $100 million had been agreed between Noga and the SJ Berwin defendants, was the tripartite agreement in any event a binding contract or was it merely an agreement to agree? If it was a binding contract, how is the 16 August agreement to be explained? If it was not a binding contract, what was the FGN doing in agreeing, even in a non-binding way, to give up its Ajaokuta claims without compensation? Did it ever really intend to do so, or was the FGN's signature to the tripartite agreement some kind of mistake? (3) Did the FGN really agree to grant the Abacha interests a global waiver, or was it tricked by Mr Bagudu into the signature of the 13 August agreement? If the 13 August agreement is effective, is it superseded by the 16 August agreement, or is that void for want of consideration?"
" In conclusion, the only binding settlement is that between the FGN and the SJ Berwin defendants in Folio 831. That action has been settled under the terms of the 16 August agreement.
 Apart from that, there is no settlement. The tripartite agreement is not an effective agreement, and the agreement of 13 August has been superseded by the agreement of 16 August.
 Although I find that Noga and the SJ Berwin defendants did agree on a settlement sum of $100 million, I have not been satisfied that that agreement was unconditional. On the contrary, I find that it was a conditional agreement, and that it, and the tripartite agreement of which it was a necessary and vital part, therefore never became effective as a final and binding and legal contract.
 It follows that the FGN's action, at any rate against the SJ Berwin defendants, is at an end, subject to its obsequies, but that Noga's two actions continue. What the consequences of this disposition of the preliminary issues are, must be a matter for further submissions."
Form of order judgment
"(1) A respondent may file and serve a respondent's notice.
(2) A respondent who
(a) is seeking permission to appeal from the appeal court; or
(b) wishes to ask the appeal court to uphold the order of the lower court for reasons different from or additional to those given by the lower court,
must file a respondent's notice."
"7.1 A respondent who wishes to ask the appeal court to vary the order of the lower court in any way must appeal and permission will be required on the same basis as for an appellant.
7.2 A respondent who wishes only to request that the appeal court upholds the judgment or order of the lower court whether for the reasons given in the lower court or otherwise does not make an appeal and does not therefore require permission to appeal in accordance with rule 52.3(1)."
"In these circumstances, an objective view of this issue in the light of the new regime for permission to appeal to the court of appeal would suggest that it is the very paradigm case where a court of first instance should consider carefully whether it was a fit matter for appeal. In my judgment it would turn that regime on its head if the SJ Berwin defendants should be entitled as of right to bring that complex issue of fact into an existing appeal on a comparatively short point of law. Noga's appeal, estimated to last two days, would be overwhelmed by the SJ Berwin defendants' respondent's notice. No doubt, the court of appeal would seek to use its case management powers to make the appeal hearing manageable and efficient. Of course, if it is a matter of right, so be it. But it does not fit with the new regime. If, therefore, it is legitimately a matter for the court's discretion as to how it moulds its own order, then I do not see why the questions of whether this issue should be within the regime which requires permission to appeal and whether it is ultimately fit for appeal should not figure among the court's concern."
"34. . . . .It seems to me that all these considerations bear on the relevance of reflecting in my order an issue of fact which was fundamental and by far the major issue at trial, both on account of its own merits and because of the bearing that a declaration about such an issue may have, depending on the question of permission to appeal, on any appeal. For instance I am entitled to have in mind that the financial resources available to the SJ Berwin defendants for the purpose of spending on their legal representation are for all practical purposes limitless, and that those resources have, on the information which has been put before me relating to the withdrawals from the frozen accounts for expenditure on these (among other) proceedings, been most liberally employed; whereas the resources available to Noga, while clearly adequate to sustain this litigation to date, are comparatively finite.
35. As for Mr Cohen's argument from custom, it seems to me that that is of limited assistance in the context of the new procedural code and of the new regime requiring permission to appeal. While it is true that the rules as to a respondent's notice may not have changed, and I accept for the purposes of the present argument that without a declaration as to the agreement of $100 million the SJ Berwin defendants would be entitled simply to raise the $100 million issue by way of respondent's notice on Noga's appeal, nevertheless that right ultimately depends on the form of my order, which has not yet been settled.
36. Mr Cohen also had arguments of practicality relating to the problems of identifying from a judgment of the complexity of my main judgment just what are the facts which are found. Those arguments were really addressed to Noga's alternative draft declarations (eg "On the facts found in the judgment. . ."). I do not have anything like that in mind. The only declaration I have in mind relating to the issue of whether $100 million was agreed is something along those lines:
"The SJ Berwin defendants have not entered into a binding settlement agreement with Noga and are not indebted to Noga in the sum of $100 million, although a figure of $100 million was agreed".
Only the words in italics are in dispute.
37. Such a declaration, it seems to me, fairly and accurately reflects my resolution of the dispute between Noga and the SJ Berwin defendants: see para 654 of my main judgment.
38. In the end, I am satisfied that I have the power to make such a declaration, and that I ought in my discretion to do so. I do so, in my judgment, not as a mere device to bring the SJ Berwin defendants within the permission to appeal regime in this respect, but because, and perhaps even primarily because, I believe that such a declaration best reflects the issues before me, both as pleaded and as presented in evidence and as argued, and the effect of my resolution of those issues; the purposes and role of a declaratory judgment; the overriding objective and the demands of justice; and the new regime requiring permission to appeal and the rationale behind that regime."
52.3 (1) An appellant or respondent requires permission to appeal
(a) where the appeal is from a decision of a judge in a county court of the High Court, except where the appeal is against
(i) a committal order
(ii) a refusal to grant habeas corpus; or
(iii) a secure accommodation order made under section 25 of the Children Act 1989; or
(b) as provided by the relevant practice direction.
(other enactments may provide that permission is required for particular appeals.)
(2) An application for permission to appeal may be made
(a) to the lower court at the hearing at which the decision to be appealed was made; or
(b) to the appeal court in an appeal notice
(Rule 52.4 sets out the time limits for filing an appellant's notice at the appeal court. Rule 52.5 sets out the time limits for filing a respondent's notice at the appeal court. Any application for permission to appeal to the appeal court must be made in the appeal notice (see rules 52.4(2) and 52.5(3).)
(Rule 52.13(1) provides that permission is required from the Court of Appeal for all appeals to that court from a decision of a county court or the High Court which was itself made on appeal.)
(3) Where the lower court refuses an application for permission to appeal, a further application for permission to appeal may be made to the appeal court.
(4) Where the appeal court, without a hearing, refuses permission to appeal, the person seeking permission may request the decision to be reconsidered at a hearing.
(5) A request under paragraph (4) must be filed within 7 days after service of the notice that permission has been refused.
(6) Permission to appeal will only be given where
(a) the court considers that the appeal would have a real prospect of success; or
(b) there is some other compelling reason why the appeal should be heard.
(7) An order giving permission may
(a) limit the issues to be heard; and
(b) be made subject to conditions.
(Rule 3.1(3) also provides that the court may make an order subject to conditions.)
(Rule 25.15 provides for the court to order security for costs of an appeal.)"
40.20 The court may make binding declarations whether or not any other remedy is claimed."
No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the Court may make binding declarations of right whether or not any consequential relief is or could be claimed."
The fact that the words "of right" has disappeared is referred to in the introduction of Zamir & Woolf 3rd edition where it says:
"We regard the changes made by the Civil Procedure Rules which affect declarations as being important. In the long run, the smallest change may prove to be the most significant. The Rules of the Supreme Court referred to a "declaration of right". The Civil Procedure Rules now refer to a "declaration". The words "of right" have been dispensed with. The change indicates that declarations are not restricted to declaring rights. They can be used when it would be inappropriate to talk of "rights"."
"The court must seek to give effect to the overriding objective when it
(a) exercises any power given to it by the Rules; or
(b) interprets any rule."
"In any such class of case as may be prescribed by Rules of Court, an appeal shall lie to the Court of Appeal only with the leave of the Court of Appeal or such court or tribunal as may be specified by the Rules in relation to that class."
Now section 54(1) of the Access to Justice Act provides as follows:
"54 Permission to appeal
(1) Rules of court may provide that any right of appeal to
(a) a county court
(b) the High Court, or
(c) the Court of Appeal
may be exercised only with permission."
6. (1) A respondent who, having been served with a notice of appeal, desires
(a) to contend on the appeal that the decision of the court below should be varied, either in any event or in the event of the appeal being allowed in whole or in part, or
(b) to contend that the decision of the court below should be affirmed on grounds other than those relied upon by that court, or
(c) to contend by way of cross-appeal that the decision of the court below was wrong in whole or in part
must give notice to that effect, specifying the grounds of his contention and, in a case to which paragraph (a) or (c) relates, the precise form of the order which he proposes to ask the Court to make."
"Section 1(7) provides:
"No appeal shall lie to the Court of Appeal from a decision of the High Court on an appeal under this section unless (a) the High Court of the Court of Appeal gives leave; and (b) it is certified by the High Court that the question of law to which its decision relates either is one of general public importance or is one which for some other special reason should be considered by the Court of Appeal."
It will be observed that the granting of a certificate is within the sole jurisdiction of the first instance judge. There is no appeal from his decision, nor may an alternative application be made to the Court of Appeal.
The question whether section 1(7) applies to a respondent must be considered on the basis that the respondent requires no leave to appeal in order to argue that the award ought to be upheld on a ground different from the ground on which the arbitrator made his award. Given that the respondent requires no leave to appeal, it seems wholly implausible that the legislation would seek to impose on him a procedural barrier of a section 1(7) certificate by way of a subsection introduced by the words "No appeal shall lie . . .". The contextual scene of section 1(7) further shows that no such procedural barrier was intended in the case of a respondent. Under the stated case procedure, which existed before the Act of 1979, a respondent who wished to argue that the award should be sustained for reasons not expressed or fully expressed in the award or not considered or upheld at first instance did not have to obtain a certificate of the type envisaged by section 1(7). The idea that in 1979 the legislature intended to make the position of a respondent, who had won an arbitration, more difficult by requiring him to obtain a certificate under section 1(7) before he would be permitted on appeal to the Court of Appeal to defend the award on other grounds is convincingly refuted by the history and policy of the Act of 1979. The primary purpose of the Act of 1979 was to reduce the extent of the court's supervisory jurisdiction over arbitration awards. It did so by substituting for the special case procedure a limited system of filtered appeals on questions of law. The change was intended to tilt the balance toward greater emphasis on the finality of arbitration awards. Now postulate a respondent in the Court of Appeal who at first instance won on the main point but lost on a sound alternative argument. He loses on the main point on appeal. If he requires a certificate to argue the alternative case there is a risk that he may not obtain a certificate. A perfectly good award may then be set aside. In a very relevant sense such a risk would imperil the finality of arbitration awards. It would also be a manifestly unfair consequence in cases when the respondent has a good alternative argument which does not pass the test of being a question of general public importance, e.g. the construction of a "one off" exception clause. And it is no answer to say that in some cases a judge may grant a certificate for some other special reasons. Recognising the force of these arguments counsel for the buyers said that the policy of section 1(7) was the improvement of English commercial law and that any injustice to a respondent was the price of the policy. I am reminded of irreverent observations of Lord Devlin about a similar argument. He said:
"So there must be an annual tribute of disputants to feed the minotaur. The next step would, I suppose, be a prohibition placed on the settlement of cases containing interesting points of law:" see Devlin, The Judge, (1979), p. 106.
The interpretation of the buyers is indefensible. It militates against the finality of arbitration awards, it would cause injustice and, if adopted, would be perceived to be a serious flaw in our arbitration system. On this point too the ruling of the Court of Appeal was wrong.
For the avoidance of doubt I would, however, emphasise that nothing I have said about a respondent's position on appeal is intended in any way to derogate from the importance of respondents, and their legal representative, complying at all stages with the provisions of the relevant practice direction and rules of court: see Practice Direction (Arbitration Award: Appeal)  1 W.L.R. 959; R.S.C., Ord. 59. R. 6(1)(b) and R.S.C., Ord. 73, r. 5(9)."
Lord Justice Tuckey:
Whether any claims had been settled and if so which of the claims had been settled and on what terms.
There were three agreements and various claims, one of which was Noga's claim against the SJ Berwin defendants which it said had been settled for $100 million. The SJ Berwin defendants denied that any such sum had been agreed (an issue of fact) and, even if it had, that the agreement was not binding (an issue of law). The issue of fact was complex and occupied the major part of the 6 month trial; Mr. Pollock was unable to estimate accurately how long an appeal on this issue would take beyond saying 12 to 28 days. The issue of law was relatively simple and the appeal on this issue is estimated to last 2 days.
(i) Was $100 million ever agreed between Noga and the SJ Berwin defendants? and
(ii) Even if $100 million had been agreed ... was the agreement in any event a binding contract?
If the preliminary issues to be tried had been formulated in this way and answered by the judge by the declaration which he actually made which was:
The SJ Berwin defendants have not entered into a binding settlement agreement with Noga ... although a figure of $100 million was agreed,
I do not think his order could possibly be criticised. It would be the natural answer to the preliminary issues which he was trying. I do not believe that it matters that the issues were not formulated with this precision from the outset. Judges trying preliminary issues often vary or refine their terms in the course of the trial.
Such a declaration fairly and accurately reflects my resolution of the dispute between Noga and the SJ Berwin defendants. In the end I am satisfied that I have the power to make such a declaration and that I ought in my discretion to do so. I do so ... not as a mere device to bring the SJ Berwin defendants within the permission to appeal regime in this respect, but because and perhaps even primarily because, I believe that such a declaration best reflects the issues before me, both as pleaded and as presented in evidence and as argued, and the effect of my resolution of those issues; [and] the purposes and role of the declaratory judgment; ....
the overriding objective and the demands of justice; and the new regime requiring permission to appeal and the rationale behind that regime.
Lady Justice Hale:PRIVATE