The UK Supreme Court has handed down an important decision in Process & Industrial Developments Ltd (P&ID) v The Federal Republic of Nigeria ([2025] UKSC 36), unanimously dismissing P&ID’s appeal against a costs order made in favour of Nigeria. The ruling provides valuable guidance on the treatment of costs in international litigation, including the currency of payment and the treatment of third-party funding.
The dispute arose after Nigeria successfully defended proceedings and was awarded its legal costs in the English Commercial Court. P&ID appealed, arguing that the costs should have been awarded in Nigeria’s national currency, the naira, rather than in sterling. It claimed that because Nigeria had converted naira into sterling to pay its legal fees—and because of the depreciation of the naira—awarding costs in sterling effectively gave Nigeria a “windfall.”
The Supreme Court disagreed. It held that both the Commercial Court and the Court of Appeal were correct to order costs in sterling, as that was the currency in which Nigeria incurred and paid its legal expenses. The Court emphasised that costs orders are discretionary, not compensatory in nature like damages awards, and that their purpose is to reimburse a party for its actual legal outlay, not to address any currency loss or gain. The judges found no error of law in the lower courts’ reasoning and confirmed that there was no windfall to Nigeria as a result of exchange-rate fluctuations.
Beyond the currency issue, the judgment also addressed an increasingly important aspect of international disputes — third-party funding (TPF). The Court reaffirmed that payments made to litigation funders, including success fees or returns on investment, do not form part of recoverable legal costs. In other words, while a funded party may be contractually bound to pay a funder’s share of the proceeds or a success-based uplift, those sums cannot be claimed back from the opposing party through a costs order. This distinction reinforces the principle that costs orders compensate only for actual legal liabilities, not for the financial arrangements underpinning how those costs were met.
This point carries significant implications for funders, states, and commercial claimants alike. Funded parties must recognise that even if they prevail, their recoverable costs will generally be limited to the lawyers’ fees and disbursements incurred, not the funder’s return. For funders, it highlights the continuing importance of careful risk assessment and pricing, given that English courts remain reluctant to expand the recoverable scope of costs to include funding costs or success fees.
Duarte G. Henriques of Victoria Associates comments on this case in LexisNexis. The full article can be accessed here (subscription required): Supreme Court upholds costs award in sterling – Process & Industrial Developments Ltd v The Federal Republic of Nigeria.
The full judgment is available on the UK Supreme Court’s website: Process & Industrial Developments Ltd v The Federal Republic of Nigeria.
This decision will resonate across the landscape of sovereign disputes, arbitration enforcement, and funded litigation — reaffirming that English courts will prioritise real, documented expenditure in determining costs awards, not contractual funding arrangements or fluctuating currencies.
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