Staying Third-Party Costs Order Applications Pending Detailed Assessment: “Interests of Justice”, Not a Presumption Against a Stay

1. Introduction

The Federal Republic of Nigeria v VR Global Partners LP & Ors [2026] EWCA Civ 25 concerns the sequencing of (i) a detailed assessment of costs and (ii) an application for a third-party costs order against non-parties said to have funded the litigation.

The appeal arose out of high-profile Commercial Court proceedings in which Nigeria successfully set aside arbitral awards obtained by Process & Industrial Developments Limited (“P&ID”) for serious irregularity under section 68 of the Arbitration Act 1996. The trial judge (Robin Knowles J) found that P&ID had procured the awards through fraud and severe abuse of the arbitral process (as recorded in Federal Republic of Nigeria v Process & Industrial Developments Limited [2023] EWHC 2638, [2024] 1 Lloyd's Rep 1). P&ID was ordered to pay Nigeria’s costs (standard basis), with an interim payment of £20 million.

Nigeria then sought a third-party costs order under section 51 of the Senior Courts Act 1981 and CPR 46.2 against entities within the VR Capital group and its founder (the “respondents”), who had funded P&ID’s litigation. The procedural question was whether that third-party costs application (and associated disclosure/means applications) should proceed (a) before, (b) after, or (c) alongside the detailed assessment of Nigeria’s very substantial bill.

Key issue

Whether the judge erred in staying the third-party costs application until completion of the detailed assessment, including whether he gave adequate reasons and whether the decision was “perverse/plainly wrong”.

2. Summary of the Judgment

The Court of Appeal (Males LJ; Andrews LJ and Lewis LJ agreeing) dismissed Nigeria’s appeal. It held that:

The judge’s reasons, though brief, were sufficient in context.
There is no presumption that a third-party costs application must be heard immediately or in tandem with assessment.
The correct test is the interests of justice, applying the overriding objective; sequencing is a matter of broad case-management discretion.
The judge was entitled to treat it as a live issue whether any further sum would be payable after assessment, and to avoid potentially pointless satellite litigation.

Separately, the Court of Appeal expressed strong concern about the scale of the detailed assessment (projected 50+ days), urging firm control and even a sampling approach to avoid disproportionate satellite litigation.

3. Analysis

3.1 Precedents Cited

(A) Duty to give reasons (even on interim/case-management applications)

Flannery v Halifax Estate Agencies Ltd [2000] 1 WLR 377: established the importance of giving reasons sufficient to explain the decision to the parties and to permit appellate review. Nigeria relied on this to argue the judge’s oral ruling was too cursory.
Simetra Global Assets Ltd v Ikon Finance Ltd [2019] EWCA Civ 1413, [2019] 4 WLR 112: reaffirmed the requirement for adequate reasons. The Court of Appeal accepted the principle but held the ruling here was adequate when read against the background and the judge’s clear premise (uncertainty as to whether any further costs would be payable).
GLAS SAS v European Topsoho Sarl [2025] EWCA Civ 933, [2025] 1 WLR 5343: provided a modern synthesis of the approach to reasons on short interim applications, including that such rulings need not be “polished”. Males LJ relied on this to reject an over-exacting standard for a time-pressured extempore case-management ruling.

(B) Stays and “powerful reason” language

Athena Capital Fund v Secretariat of State for the Holy See [2022] EWCA Civ 1051, [2022] 1 WLR 4570: cited for the general idea that courts normally decide cases and a powerful reason may be needed to depart from that in some contexts. The Court of Appeal distinguished it: Athena concerned a stay awaiting foreign proceedings that might effectively stifle the English action. Here, the stay was a sequencing decision and did not impede access to justice.

(C) Timing/availability of third-party costs applications (no rigid rule)

Old Park Capital Maestro Fund Ltd v Old Park Capital Ltd [2024] EWHC 1482 (Ch): used to show there is no rule that joinder/third-party costs steps can only happen after final assessment. The Court of Appeal accepted that, but stressed it does not create a presumption that such applications must be heard before/in tandem with assessment.
Magomedov v TPG Holdings [2025] EWHC 1996 (Comm): similarly rejected rigid timing constraints (there, in the disclosure-to-funding context). Again, it supported flexibility, not priority.

(D) Joining individuals and risk of abusive pressure

Goknur v Organic Village Ltd [2020] EWHC 2542 (QB), [2020] Costs LR 1973, para 38, citing Housemaker Services Ltd v Cole [2017] EWHC 924 (Ch), [2017] 3 Costs LR 417: invoked as illustrating the kinds of issues that may arise when attempting to join individuals, including whether joinder is being used oppressively. While not determinative on the stay question, these cases contextualised the likely complexity, cost and time burden of the third-party costs litigation.

3.2 Legal Reasoning

Correct legal test: interests of justice under the overriding objective.
The Court of Appeal rejected Nigeria’s proposed “general principle” that a costs creditor is ordinarily entitled to have the third-party costs application determined unless a “powerful reason” exists to stay it. The Court held there is no such presumption. The decision turns on CPR case-management principles: CPR 1.1 (justly and at proportionate cost), CPR 1.4 (active management), and the express power to decide sequencing (CPR 1.4(2)(d), CPR 3.1(2)(k)).
The judge’s core factual premise was legitimate: it was genuinely uncertain whether anything further would be payable.
Nigeria’s argument assumed it was “overwhelmingly likely” substantial further sums would be found due. The Court of Appeal held the judge did not accept that; his ruling repeatedly treated further liability as a live question (“what if any sum”). Given the scale of the bill (£44.2m+, with items such as very high counsel fees, rates beyond guidelines, and arguable irrecoverable categories), the judge was entitled to regard further liability as uncertain or possibly modest.
Avoiding potentially pointless satellite litigation (and tailoring it to what is actually at stake).
If assessment resulted in no further payment due, a third-party costs application would be wasted effort. If only a modest amount was due, that would materially affect appropriate disclosure, scope, and proportionality of the third-party costs process. Sequencing assessment first therefore served proportionality and efficient management.
Court resources and other court users were a proper consideration.
The judge emphasised the “position for other users of the court” (CPR 1.1(2)(e)). The Court of Appeal confirmed this was a legitimate factor in deciding whether to commit further court time to satellite costs disputes.
Prejudice to Nigeria was recognised and mitigated, and did not compel a different outcome.
The relevant delay was not assessment time (inevitable absent agreement) but the extra time after assessment to determine third-party liability. The judge’s plan was to move rapidly post-assessment. The Court of Appeal also noted there was no suggestion respondents would be unable to pay if ultimately liable, and interest accrued at 8%.

3.3 Impact

Sequencing principle clarified: This decision strengthens the proposition that the timing of third-party costs applications is a discretionary case-management question with no built-in priority over detailed assessment. Parties should expect courts to ask: what is likely to be left to fight about after assessment?
Practical incentive: Costs creditors cannot assume that uncertainty of recovery (because the paying party is impecunious) will itself force early determination of third-party liability. Courts may instead insist that quantum be pinned down first.
Sharper proportionality control in costs proceedings: The Court of Appeal’s admonition about 50-day assessments and endorsement of sampling signals a firmer appellate stance against “worst kind of satellite litigation”, especially where it burdens limited judicial resources.
Litigation funding and exposure: While not deciding the merits, the judgment underscores that funders may face third-party costs risk, but the court may defer that inquiry until it is clear what (if anything) remains payable after assessment.

4. Complex Concepts Simplified

Third-party costs order (section 51 Senior Courts Act 1981; CPR 46.2): An order requiring someone who was not a party to the case (often a funder or controlling person) to pay some or all of a party’s costs, usually where fairness demands it because the non-party effectively funded, controlled, or benefitted from the litigation.
Detailed assessment (standard basis; proportionality): The court’s line-by-line (or issue-based) determination of recoverable legal costs after a costs order is made. On the standard basis, any doubt is resolved in favour of the paying party, and the court applies a strong proportionality filter.
Case-management stay vs access to justice: A case-management stay pauses part of a case to decide other steps first. It is different from a stay that effectively blocks a claim. Here, Nigeria could still pursue third-party costs later if assessment showed further sums due.
Sampling approach to costs: Instead of arguing every item, the court reviews a representative sample and applies the resulting percentage reduction (or reasoning) across the bill—used to keep the process fair but proportionate.

5. Conclusion

[2026] EWCA Civ 25 confirms that there is no presumptive entitlement to have a third-party costs application determined before (or alongside) detailed assessment. The governing question is the interests of justice under the overriding objective, and judges have a wide discretion to sequence issues to avoid disproportionate satellite litigation and conserve court resources. The judgment also delivers a clear warning against sprawling costs assessments and endorses robust judicial control—potentially including sampling—to ensure proportionality in the administration of justice.