Barely 10 months after a court overturned $11 billion damages against Nigeria in the controversial Process & Industrial Developments (P&ID) deal, the federal government is facing another legal battle involving a Chinese firm, Zhongshan Fucheng Industrial Investment Co. Limited, which is seeking to enforce a $70 million arbitration award against Nigeria.
But does the federal government stand a chance of emerging as the victor in the current case?
Seasoned analysts weighed the odds in what they described as a mismanaged deal in separate interviews with Weekend Trust on Friday.
Zhongshan recently got an order from a court in France to enforce the award following an aborted contract between the company and the Ogun State Government, which was initiated in 2007.
The order, which authorised the seizure of the three presidential jets under maintenance in France, has since been validated by a United States court, dismissing Nigeria’s sovereign immunity defence to the enforcement of the $70 million award.
The Ogun State government and Zhongshan have been at daggers drawn over the management of an export processing zone in the Gateway state.
In 2010, Zhongshan Fucheng, through its parent company, Zhuhai Zhongfu Industrial Group Co. Ltd, acquired rights to develop a free trade zone in Ogun State, Nigeria.
In 2011, Zhongshan established Zhongfu International Investment (NIG) FZE, to manage the project with the Ogun State government’s permission.
In July 2016, Zhongshan accused the Ogun State government of attempting to terminate its appointment and install a new manager for the free trade zone.
Zhongshan initiated an investment treaty arbitration against Nigeria under the bilateral investment treaty between China and Nigeria (China-Nigeria BIT).
The arbitrators ruled in favour of Zhongshan, awarding approximately $70 million in compensation. In January 2022, Zhongshan sought enforcement of the arbitration award.
In addition to the seizure of the presidential jets, a court of appeal in the US has authorised the Chinese company’s final charging orders over two residential properties owned by Nigeria.
The development worsens a crisis that the Nigerian government has been attempting to manage in Europe and prevent from spilling to other jurisdictions.
Nigeria had pleaded state immunity against the arbitration but was denied by a United Kingdom High Court judge, Sara Cockerill, who noted Nigeria’s abuse of the timeframe for appealing arbitral awards.
In the majority judgement issued by Patricia Millett and Julianna Childs, the US court held that the final arbitration award is enforceable under the New York convention since the dispute is between “persons” that share a legal commercial relationship.
The court ruled that the Foreign Sovereign Immunities Act (FSIA) arbitration exception stripped Nigeria of sovereign immunity in the arbitration award case.
However, in the dissenting judgement, the third judge, Gregory Katsas, argued that when the New York convention was drafted, the word “persons” did not include a sovereign nation.
Katsas held that the action of Ogun State cannot be attributed to Nigeria, adding that the arbitration award “arises solely out of Nigeria’s sovereign acts governed by public international law.”
Meanwhile, the Presidency had accused Zhongshan of attempting to take over Nigeria’s offshore assets through subterfuge.
“The Presidency is aware of the various failed attempts by a Chinese company, Zhongshan Fucheng Industrial Investment Co. Limited, to take over offshore assets of the Federal Government of Nigeria through subterfuge.
“The Federal Government is not under any contractual obligation with the company. The case in which Zhongshan is trying to use every unorthodox means to strip our offshore assets is between the company and the Ogun State Government,” a statement signed by the Special Adviser to the President on Information and Strategy, Mr. Bayo Onanuga, on Thursday read in part.
Also speaking on the development on Thursday, the Attorney-General of the Federation, Lateef Fagbemi (SAN), said Nigeria has initiated both legal and diplomatic steps to ensure the release of three seized presidential aircraft in France and Switzerland.
In the statement by his spokesperson, Kamarudeen Ogundele, the Attorney-General said its efforts were grounded in the principle that the aircraft are sovereign assets, used exclusively for sovereign purposes, and therefore immune from attachment.
“The Offices of the National SecurityAdviser and the Attorney-General of the Federation, have already set in motion both legal and diplomatic steps to ensure the discharge of the inappropriate orders against the aircrafts, which are covered by sovereign immunity,” it said.
The government also maintained that the interim orders against the aircraft were inappropriate, given their status under sovereign immunity.