Relief as UK Court Quashes $11bn  Judgement Debt against Nigeria

•London court holds award obtained by fraud  

•Seeks evaluation of arbitration process  

•Tinubu, FG applaud judgement, describe verdict as victory over corruption, indictment of predatory international investors 

•Reveal company approached govt last week for out-of-court settlement  

•Say further hearing by court will determine cost payable by P&ID

Deji Elumoye and Alex Enumah in Abuja

Nigeria’s effort to upturn a whopping $11 billion judgement debt and avert a major economic consequence, yesterday, paid off, as a United Kingdom Royal Courts of Justice held that the earlier judgement awarded against Nigeria in favour of Process and Industrial Developments Limited (P&ID) was fraudulent.

Reacting, yesterday, President Bola Tinubu and the federal government hailed the judgement.

Tinubu, in a statement issued by his media adviser, Ajuri Ngelale, commended the UK court for prioritising the merits of the case above all other considerations.

According to the president, “This landmark judgement proves conclusively that nation states will no longer be held hostage by economic conspiracies between private firms and solitarily corrupt officials who conspire to extort and indebt the very nations they swear to defend and protect.

“Today’s victory is not for Nigeria alone. It is a victory for our long exploited continent and for the developing world at large, which has for too long been on the receiving end of unjust economic malpractice and overt exploitation.

“Nigeria is appreciative of the tremendous efforts of the defence team and acknowledges the role of the Federal Ministry of Justice and the Office of the Attorney-General in the process of defending Nigeria’s interest in this case.”

Reacting to the court judgement, also, Attorney General of the Federation (AGF) and Minister of Justice, Lateef Fagbemi, expressed government’s satisfaction with the verdict, describing the judgement as a triumph over corruption and predatory international investors. Fagbemi stated this while briefing newsmen in the middle of the Federal Executive Council (FEC) meeting presided by President Bola Tinubu at State House, Abuja.

Nigeria had been locked in an arbitration battle since 2017 over a judgement debt entered in favour of an Irish firm, P&ID. The judgement debt, which was initially $6.6 billion, rose to $9.6 billion and, then, climbed to over $11 billion at the time judgement was delivered yesterday.

Delivering judgement in Nigeria’s appeal against the seizure of its assets anywhere in the world in payment of the said debt, Justice Robin Knowles held that P&ID had engaged in fraud, bribery, concealment of material facts regarding the contract it entered with Nigeria, among others.

Knowles held that Nigeria was able to establish that there was, indeed, serious irregularity that affected the tribunal.

The judge held, “I have not accepted all of Nigeria’s allegations. But, the awards were obtained by fraud and the awards and the way in which they were procured was contrary to public policy.”

According to Knowles, “As at the time Nigeria was taking part in the arbitration, it did not know and could not with reasonable diligence have discovered the grounds of objections on Section 68(2).”

The judge pointed out that the reasonable diligence he was concerned with was “confined to reasonable diligence that would have discovered the grounds that the objection, that is the award being obtained by fraud or the award or the way in which it was procured,” was contrary to public policy because of bribery or corrupt payment, because of false evidence of what happened with Nigeria’s internal legal documents.

Besides bribing an official of the Ministry of Petroleum Resources, P&ID was alleged to have been in possession of some legal documents used against Nigeria in the arbitration.

“In the circumstances and for the reasons I have sought to describe and explain, Nigeria succeeds on its challenge under section 68,” the judge held.

The said section provides, “if there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may-

“(1) Remit the award to the tribunal in whole, or in part for reconsideration; (2) set the award aside in whole or in part, or (3) declare the award to be of no effect in whole or in part.”

However, Knowles said he would leave the question of what order the court should make in the circumstances to parties so as to afford them the opportunity to “present arguments once they have considered the judgement”.

The judge disclosed that the “arbitration was a shell that got nowhere near the truth,” and called for the evaluation of arbitration process. He added that the fact of the case, “which are remarkable but very real, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value, needs further attention where the value involved is so large and where a state is involved.”

He said arbitration, as a process, was becoming less reliable, less able to find difficult but important new legal grounds, and more vulnerable to fraud.

Knowles advised states to engage experts and professionals whenever they were drafting agreements and contracts in future.

While noting that much blame could not be placed on the tribunal because it did not have the necessary assistance it was entitled to, the court declared that it did not find any merit in the charges of bribery levelled against Mr. Olasupo Shasore, a former Attorney General of Lagos State, who was representing Nigeria in the arbitration.

Shasore had been accused of obstructing Nigeria’s legal proceedings against P& ID.mHe was accused of negligence and failure to carry out due diligence in handling the case, besides claims that he had inadequately defended Nigeria’s interests.

But, in his defence, the senior lawyer maintained that he had done everything within his power to secure the best outcome for the country.

Meanwhile, the same government that accused him of not serving the national interest awarded him another arbitration contract on July 12, 2019.

Knowles held, “As far as I am aware, Mr. Shasore, SAN, has not, in my judgment, been shown to be corrupt. His actions are inconsistent with Nigeria’s theory that he was.

“I add that in my view, Nigeria (and specifically Mr Malami SAN, the Attorney General) did not in truth believe Mr. Shasore, SAN, was corrupt.

“On November 21, 2017, Mr Shasore, SAN, was engaged by Nigeria to represent the Ministry of Power in a $2.4 billion arbitration claim by Sunrise Power and Transmission Co. His appointment was approved by Mr Malami, SAN, on March 6, 2018 and formally confirmed by Mr Malami, SAN, on March 18, 2018.”

The judge cited several reasons for his decision, highlighting Shasore’s sound advice to Nigeria to investigate and obtain expert evidence, his assistance in Nigerian court applications, his contribution to reducing settlement figures, and his vigorous challenges against P&ID during the liability hearing.

Nigeria had filed an appeal against the enforcement of the arbitration award and the UK commercial court granted the country the relief in September 2020, returning the matter to the high court for trial.

At the two-month trial that took place before Knowles between January and March 2023, the Nigerian legal team argued that there was overwhelming evidence that the contract and the arbitration award had been procured through “an audacious fraud on Nigeria”.

They argued that the award should be set aside, citing the trials and conviction of some of the actors for corruption and money laundering as evidence of graft on an “industrial scale”.

P&ID had in 2012 instituted the legal battle against Nigeria in the Court of Arbitration, UK, in 2012, following Nigeria’s refusal to carry on with the GSPA agreement entered with the firm in 2010.

By the terms of the agreement, P&ID was to build and operate an accelerated gas development project at Adiabo in Odukpani Local Government Area (LGA) of Cross River State. The agreement required the federal government to supply natural gas from Addax Petroleum-operated Oil Mining Leases (OMLs) 123 and 67 for P&ID to refine into fuel suitable for power generation in the country.

According to the terms, the initial volume of gas was about 150 million cubic feet of gas per day, which would be ramped up to about 400 million cubic feet per day during the 20-year period.

P&ID had alleged that after signing the agreement, the federal government reneged on its obligation after it had opened negotiations with the Cross River State Government for allocation of land for the project.

P&ID claimed that the failure of the federal government to construct the pipeline system to supply the gas frustrated the construction of the gas project and deprived it the potential benefits expected from 20 years’ worth of gas supplies.

But the federal government maintained that P&ID never began the construction of the project facility for which it claimed about $40 million in preliminary expenses.

The government said the firm’s claim in the arbitration proceedings was mainly for loss of profit for the entire 20-year term of the GSPA, “initially claiming the sum of $1.9 billion and later increasing its claim to $5.9 billion”.

FG Applauds London Court Judgement

Reacting to the court judgement while briefing newsmen at the FEC meeting, Fagbemi expressed government’s satisfaction with the verdict, describing it as a triumph over corruption and predatory international investors.

He credited the court victory to close collaboration between various government agencies, including Federal Ministry of Justice, Economic and Financial Crimes Commission,  Nigeria Police, Central Bank of Nigeria, Ministry of Petroleum Resources, Nigerian National Petroleum Company Limited, Department of State Services, and Nigerian Financial Intelligence Unit.

According to the minister, associates of P&ID had last week approached the Nigerian government for an out-of-court settlement.

Fagbemi said further hearings in the United Kingdom court would determine the cost to be paid by P&ID and other involved parties.

He stated at the press briefing, “Let me start by making a speech introduction. As you may all be aware by now, the Honourable Justice Robbin St. John Knowles of the United Kingdom commercial court today handed down a historic judgement, in the suit, where the Federal Republic of Nigeria, otherwise known as FRN, moved to set aside the arbitral award of $9.6 billion but which has now accrued interests now come to $11 billion, made against Nigeria in 2017 in favour of P& ID for an alleged breach of a gas supply and processing agreement, purportedly entered into with the Ministry of petroleum Resources to establish a gas processing plant in Calabar for which P&ID never secured any land sight.

“The arbitral award had over the years placed the assets of the Federal Republic of Nigeria and those of its agencies all over the world at the risk of attachment, erosion of foreign reserves and distortion of monetary, fiscal and other policies of government with attendant dire consequences for Nigeria and its people.

“These emphasised the need for the FRN to vigorously challenge and resist the enforcement of the award by P&ID.

“The High Court has today ruled that the Federal Republic of Nigeria’s challenge to the arbitration award granted against it, to an obscure hedged fund back VVI shell entity process an industrial development limited in 2017 has been successful.

“The judgement handed down today found that the award had been obtained by fraud and in a way which goes contrary to public policy. In particular, the judge concluded that P&ID obtained the award only by practising the most severe abuses of arbitral process. It has been a night of long nights indeed.

“The success marks the culmination of a decade of legal action and is not just a victory for poor of Nigeria but any similar target of corruption and fraud.”

Fagbemi explained, “In the words of the lead counsel to Nigeria, Mark Orwell Casey, which the High Court in England endorsed and P&ID was exactly the type of entity that was prepared to engage in bribery to achieve its aim to undermine the administration of justice in Nigeria, in the pursuit of riches young dreams of avarice.

“This successful result is a decisive victory for the people of Nigeria, who stood to lose over $11 billion, and for the Nigeria administration, which has now reached a milestone in its mission to challenge the scourge of corruption.”

He added, “The judgement also serves as a damning indictment of predatory international investors, who should now rightfully be deterred from prying upon Nigeria and other developing nations to satisfy their greed.

“P&ID and its associates, both Nigeria and the world over, shamelessly attempted to defraud the country and enrich themselves through sharing the Federal Republic of Nigeria’s privileged document, fraud, bribery and corruption on an industrial scale. Those efforts, which took place over many years, have now finally been uncovered for all of us to see.

“It is imperative to point out that several agents of P&ID made overtures, even as at last week, to the Federal Republic of Nigeria for settlement on this case. However, the resolve of the administration of President Bola Ahmed Tinubu not to go hand in gloves with fraudulent counterparties or condone corruption informed the position of the Federal Republic of Nigeria to hold fast to its position, not to settle.”

Furthermore, the minister stated, “Indeed, earlier this morning, the president, at the opening ceremony of Nigeria Economic Summit Group, retreated this cardinal position of his administration.

“History has been made today, as this judgement is no doubt significant in the annals of Nigeria and, indeed, Africa.

“This judgement has vindicated the government and should serve as a pointer to others who might be nursing or nurturing the plan to swindle the country.

“The success recorded was as a result of a close inter-agency collaboration of the federal government team, comprising Honourable Attorney General of the Federation, Federal Ministry of Justice, Economic and Financial Crimes Commission, otherwise known as EFCC. The Nigerian police force, Central Bank of Nigeria, Ministry of petroleum Resources, the Nigerian National Petroleum Company Limited, NNPCL, Department of State Services (DSS) and the Nigerian Financial Intelligence Unit, otherwise known as NFIU.

“There will be further hearing by the United Kingdom court on the heels of this judgement to determine costs payable by P&ID and others in the matter.”