Fagbemi: We’ve Learnt Our Lessons from P&ID Arbitration

Alex Enumah in Abuja

The Attorney General of the Federation (AGF) and Minister of Justice, Mr. Lateef Fagbemi (SAN), yesterday disclosed that one of the major lessons Nigeria learnt from the fallout of her recent victory over Process and Industrial Development (P&ID) at the London Arbitration, is to ensure that the lawyers engaged in future arbitration are competent and experienced.

Speaking recently at the 2023 Annual Conference of the Chartered Institute of Arbitrators, Nigeria Branch, which was held in Lagos, Fagbemi added that the lawyers must also be patriotic and morally upright.

The AGF, who pointed out that there was something wrong with the manner Nigeria was defended in the arbitration, urged African leaders to endeavour to follow the Chartered Institute of Arbitrators (CIArb) London Centenary Principles in improving their perspectives, culture, jurisprudence, and operation of arbitration practices and procedures.

According to the minister, “the judgment highlighted the fact that arbitrators can probably do better than they currently do in ensuring that they intervene, especially when the issue of incompetent representation is quite obvious during the proceedings”.

He argued that Nigeria would have lost a whopping $11 billion to a “company with no assets and that has made no investment,” but for the establishment of the court, the award against Nigeria was obtained by fraud.

“Like the P&ID case, Nigeria is currently involved in other international commercial and state-investor arbitrations, which are ongoing outside Africa for transactions that occurred in Nigeria. It is not unlikely that had the P&ID arbitration been conducted in Nigeria, the outcome would have been different as some of the challenges that Nigeria faced in the proceedings might have been avoided”.

He expressed confidence that Nigeria’s current reforms through the AMA 2023 and the National Arbitration Policy will prevent the country from slipping into such a cul-de-sac again.

“To drive home this point, the majority decision by Lord Hoffman and Sir Anthony Evans, awarded to P&ID the sum of $6.597 billion-plus interest at the rate of seven per cent from 20th March, 2013. However, Chief Bayo Ojo (SAN) – the FRN (Federal Republic of Nigeria) – appointed arbitrator, in his minority decision, awarded the sum of $ 250 million to P&ID as fair compensation”.

Other lessons, Fagbemi said Nigeria learnt from the outcome of the P&ID case included the issues of statutory or regulatory non-compliance, corruption, and the negative impact of inter-agency squabbles on state defence, among others.

Fagbemi also observed that the totality of the lessons had substantially shaped the country’s perspective on arbitration and will serve as a guide in dealing with other cases.

While recognising the role technology played in instant arbitration and the future, the AGF, stated that the Ministry of Justice on its part is considering and actively taking steps to adopt and encourage the use of safe and ethical technology.

 “In concluding this address, I wish to recommend that African States (both public and private stakeholders) should be guided by the CIArb London Centenary Principles in improving their perspectives, culture, jurisprudence, and operationalization of arbitration practices and procedures.

“The London principles comprise of 10 fundamentals including: an arbitration law providing a good framework for the process, limiting court intervention, and striking the right balance between confidentiality and transparency; an independent, competent and efficient judiciary; an independent, competent legal profession with expertise in international arbitration; a sound legal education system; the right to choose one’s legal representative, local or foreign; and ready access to the country for witnesses and counsel; a safe environment for participants and their documents; good logistical support, including transcription, hearing rooms, document handling, and translation; professional norms embracing a diversity of legal and cultural traditions, and ethical principles governing arbitrators and counsel; well-functioning venues for hearings and other meetings; adherence to treaties for the recognition and enforcement of foreign awards and arbitration agreements; and immunity for arbitrators from civil liability for anything done or omitted to be done in good faith as an arbitrator,” Fagbemi explained.

P&ID had entered into a fraudulent agreement with the Nigerian government in 2010, to build a gas-processing plant in Calabar, Cross River State.

The company, which had no assets anywhere in the world, later claimed that Nigeria breached the terms of the contract, and secured an arbitral award against the country.

On January 31, 2017, a tribunal ruled that Nigeria should pay P&ID $6.6 billion as damages, as well as pre-and post-judgment interest at seven per cent which later amounted to $11 billion.

The Nigerian had appealed the judgment awarded at the United Kingdom Royal Courts of Justice, which had in a judgment delivered on October 23, held that the judgment awarded against Nigeria was obtained by fraud.

Justice Robin Knowles held that P&ID had engaged in fraud, bribery, and concealment of material facts regarding the contract it entered with Nigeria, amongst others.

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