The Court of Appeal has strongly criticised a multi-million-pound costs claim arising from long-running arbitration proceedings involving the Federal Republic of Nigeria.
In The Federal Republic of Nigeria v VR Global Partners LP & others, the court described the claimed legal costs — currently around £44 million, potentially rising to £50 million with interest — as “staggering” and “eye-watering”, even by Commercial Court standards.
The costs dispute follows complex and high-profile litigation in which Nigeria successfully challenged two arbitration awards worth $11.1 billion that had been made in favour of Process & Industrial Developments Ltd (P&ID). An interim payment of £20 million on account of costs has already been ordered against P&ID.
Nigeria has now begun detailed assessment proceedings to recover its full costs and has also sought a third-party costs order against litigation funder VR Global Partners. This application was stayed pending the outcome of the costs assessment, a decision that the Court of Appeal has upheld.
Giving judgment, Lord Justice Males expressed concern about the scale and structure of the costs bill, which reportedly contains more than 95,000 individual items. He noted that some legal fees appeared exceptionally high, that hourly rates exceeded guideline levels, and that several million pounds had been incurred on overseas litigation and public relations work — areas where recoverability may be disputed.
The court was also critical of the time expected to be taken by the assessment process, which is estimated to require around 50 days of court time, exceeding the length of the substantive hearing itself. Lord Justice Males warned that such extensive satellite litigation risks placing an unreasonable burden on court resources and other litigants.
The court encouraged a robust and proportionate approach to the assessment, suggesting techniques such as sampling representative items from the bill rather than examining every entry individually.
Agreeing with these observations, Lady Justice Andrews commented that the scale of the costs claimed was extreme and that the history of the litigation offered limited confidence that the assessment would be straightforward.
Why this matters
This decision highlights the increasing judicial scrutiny of costs in high-value commercial litigation and arbitration, particularly where litigation funding and third-party costs orders are involved. It also serves as a reminder that even in complex international disputes, parties are expected to adopt a proportionate and realistic approach to costs recovery.
