Nigeria v VR Global Partners LP & Ors – English Court of Appeal reaffirms robust case management powers in third-party cost claim

On 23 January 2026, the Court of Appeal delivered an important judgment in The Federal Republic of Nigeria v VR Global Partners LP & Ors, reaffirming the English courts' robust and pragmatic approach to case management in complex, high-value litigation. The decision, which addresses the sequencing of third-party costs applications relative to detailed assessment proceedings, provides timely guidance for litigants, funders and practitioners on the cost ramifications of high-value disputes.

Background

In 2023, following a 29-day trial, the Commercial Court set aside two arbitral awards totalling approximately $11 billion obtained by Process & Industrial Developments Ltd (P&ID) against Nigeria, finding that the awards had been procured through fraud and serious irregularity.¹ P&ID was ordered to pay Nigeria's costs in relation to these court proceedings on the standard basis,² together with an interim payment of £20 million on account of costs, which was ultimately funded by entities within the VR Capital group – the respondents in the present proceedings. P&ID's subsequent appeal concerning the currency of the interim costs order was unsuccessful (for more on this see P&ID v. Nigeria: UK Supreme Court reaffirms currency of costs orders | White & Case LLP).

Nigeria's detailed bill of costs claimed approximately £44 million (excluding interest), spanning some 3,000 pages and comprising over 95,000 discrete entries. P&ID has challenged almost every item, contending that the costs claimed were "vastly in excess of what could ever be reasonable and proportionate". The parties estimated that a full detailed assessment could require at least 50 days of court time, potentially extending over 18 months or more and incurring millions of pounds in additional costs. A hearing of preliminary issues of the costs assessment was fixed for seven days from 27th April to 6th May 2026, and the first assessment hearing was fixed for 15 days from 13th July to 31st July 2026, with further hearings yet to be fixed.

Against this backdrop, on 29th August 2024, Nigeria applied in the instant proceedings under Section 51 of the Senior Courts Act 1981 and Rule 46.2 of the Civil Procedure Rules for a third-party cost order against entities within the VR Capital group, which had provided financing to P&ID, and the group's founder and president Mr Richard Deitz. This application was grounded in established jurisprudence that third-party funders can be made liable for costs, as confirmed by the Court of Appeal in Excalibur Ventures LLC v Texas Keystone Inc & Ors,³ where the court reiterated that "where a non-party funds proceedings substantially for its own financial benefit and therefore becomes "a real party" to the litigation, a costs liability can be imposed". Nigeria's case was that the funders, having financed P&ID's resistance to the set-aside proceedings and related litigation, should be held directly liable for the resulting costs.

Nigeria argued that its third-party costs application should proceed in tandem with the detailed costs assessment process, contending that "delaying the application for a third party costs order in circumstances where P&ID has no possibility of paying whatever is due without funding from the respondents [the VR Capital group and Mr Deitz] is unjust". The funders took the opposite view, submitting that the detailed assessment should first be completed so that the quantum of any liability would be known, which could potentially obviate the need for further satellite litigation if the assessment concluded that no additional sums beyond the £20 million already paid were recoverable.

The Commercial Court accepted that approach and stayed the third-party costs application until after the conclusion of proceedings for the detailed assessment of Nigeria's costs, emphasising the genuine possibility that no further sums beyond the interim payment would ultimately be found payable. The Court of Appeal endorsed that reasoning, holding that: "the judge was therefore entitled to conclude, and in my judgment clearly did conclude, that there is at any rate a real prospect that nothing further would be payable to Nigeria or that any further sum due would be relatively modest and much less than the (additional) £24.2 million plus interest which Nigeria is claiming."

Court of Appeal's Decision

The Court of Appeal unanimously dismissed Nigeria's appeal and approved the Commercial Court's case management approach. Some points of principle emerge clearly from the judgment.

1. The Court rejected any suggestion that there is a presumption in favour of third-party costs applications being heard immediately or in parallel with a detailed assessment.
2. Sequencing is not governed by rigid rules but is a matter of judicial discretion, to be exercised in accordance with the interests of justice, applying the overriding objective in the particular circumstances of the case.
3. The Court emphasised the breadth of first-instance case management discretion. Decisions as to the order in which costs issues are resolved are quintessentially administrative and appellate intervention will be rare absent clear error or perversity. According to the Court: "the court's case management powers expressly include deciding the order in which issues are to be resolved…When exercising these powers in the interest of justice, a judge has a wide discretion". The Court made clear that another judge might reasonably have taken a different view, but that did not justify interference where the decision fell within the wide ambit of discretion.
4. Proportionality and the efficient use of judicial resources featured prominently. The Court expressed concern at the projected scale of the detailed assessment, describing it as "breathtaking" and warning against the dangers of runaway satellite litigation. The Court expressly encouraged the cost judge to use pragmatic mechanisms—such as sampling—to control the scope and duration of assessment proceedings. It affirmed that the Commercial Court was entitled (indeed required) to consider the position of other court users, particularly in light of the parties' own estimate that Nigeria's detailed assessment could consume at least 50 days of court time and potentially occupy the costs judge for up to 18 months.
5. The Court found no unfair prejudice arising from the sequencing adopted. Nigeria had already received substantial interim payments, and as held by the Court, "there was no suggestion that the respondents would not be good for whatever they might ultimately be held liable to pay and in the meanwhile interest was accruing at 8 per cent".
6. The Court reinforced its view that the quantum of any recoverable costs could not be assumed in advance and emphasised on proportionality in costs recovery. The Court made clear that the magnitude of the underlying dispute does not displace the requirement that costs be reasonable and proportionate, observing that "even for a case of this magnitude and importance… costs of over £44 million represent a staggering amount" and that it remained an open question whether such costs would ultimately be recoverable on a standard basis. The Court highlighted concrete areas of potential vulnerability in the bill, including the "extraordinarily high" fees charged by leading counsel, solicitor hourly rates "well in excess of applicable guideline rates", and approximately "£5.25 million said to have been incurred on overseas litigation and public relations".

Finally, the Court dismissed Nigeria's complaint that the Commercial Court's reasoning was inadequate. While accepting that the judge's extempore ruling "could have been more fully expressed", the Court held that it was nonetheless sufficient to enable the parties and the public to understand the basis of the decision. In the context of busy Commercial Court lists, efficiency would be undermined if fully reasoned judgments were required for every interlocutory case management ruling.

Key Takeaways

Some of the practical takeaways from the judgment are:

1. Appellate intervention in sequencing decisions will be rare: once framed as a case management decision grounded in the overriding objective, the threshold for reversal is high.
2. Where the quantum of recoverable costs remains uncertain, courts are likely to prefer that the costs be assessed first before engaging in potentially complex and expensive litigation over third-party liability.
3. English courts are increasingly vigilant in controlling the scale and cost of litigation and are prepared to endorse pragmatic techniques—such as sampling and imposing limits on hearing time—to prevent costs disputes from eclipsing the substantive litigation.
4. While third-party funders may remain exposed to adverse costs orders, such exposure will typically crystallise only once the underlying costs have been assessed. The Court also observed that there is no risk the funders would evade future payment obligations, given that they already paid the £20 million in interim costs and provided formal undertakings, including agreeing "not to take certain objections in the detailed assessment".

Overall, this decision underscores the English courts' commitment to effective case management and proportionality in costs disputes. It sends a clear signal that ancillary costs battles will not be permitted to spiral into disproportionate satellite proceedings, and that third-party costs applications will be subject to careful, measured oversight. For litigants and funders alike, the lesson is clear: strategic cost management is essential, and the courts will insist that efficiency and fairness prevail over parties' procedural tactics.

_{1 The Federal Republic of Nigeria v Process & Industrial Developments Limited [2023] EWHC 2638 (Comm).
2 Where the amounts are to be assessed on the standard basis, the court will only allow costs that are proportionate to the matters in issue and reasonably incurred. Any doubt as to whether costs are reasonable or proportionate is resolved in favour of the paying party. Costs are considered proportionate if they reasonably relate to factors such as the sums or relief in issue, complexity, conduct, wider factors like reputation and any additional work due to vulnerability. Costs that are unreasonably incurred or unreasonable in amount will not be allowed. Generally, if the court does not specify a basis for assessment, costs are assessed on the standard basis. The alternative is the indemnity basis, where the court will resolve any doubt which it may have as to whether costs were reasonably incurred or were reasonable in amount in favour of the receiving party (Rule 44.3, Civil Procedure rules).
3 Excalibur Ventures LLC v Texas Keystone Inc and others [ECWA] Civ 1144.}

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