Nigeria faces a hard time in its bid to get a UK judge to overturn the order clearing the way for a hitherto unknown firm called Process and Industrial Developments Ltd (P&ID) to seize some $9 billion in assets from the Nigerian government over an aborted gas project.
Experts speaking in London have told Reuters why they think that Nigeria’s prospects are limited.
“Nigeria would have to apply to set aside the order for enforcement and that may be difficult to achieve,” says James Langley, a partner with international law firm Dentons and an expert in arbitration.
A set-aside request would have to prove there was an error in the ruling. Langley said the judge’s decision was not legally controversial.
Lawyers representing the Nigerian government argued the award should not be enforced because England was not the correct place for the case, and even if it were, the amount awarded was “manifestly excessive”.
But the decision on the UK as the seat of arbitration was made in 2016, and the arbitration award was made in 2017. Nigeria had 28 days in each case to appeal. It appealed the former decision, but missed the deadline by several months and a judge dismissed it. It never appealed the latter decision.
Nigeria successfully applied to have the award set aside by the Federal High Court in Lagos.
But in English law, judges do not typically review either the decision on the seat of arbitration or the underlying award once the window for appeal has passed, Langley said.
Nigerian Information Minister Lai Mohammed said there was no imminent threat to Nigeria’s assets while the case was underway.
But once the court makes its judgement into an order, which is expected in September, P&ID could start targeting assets.
Arbitration awards in the billions are not uncommon. Langley said the method used to determine the figure, based on expected earnings over the life of the contract, was standard for commercial arbitration.
A co-founder of P&ID testified during the arbitration that the company spent $40 million before the project failed, but Langley said the sum was not necessarily relevant.
The award, Langley said, is “just a function of the kind of contract this was”, reflecting potentially large profits.
Parties at this stage would typically reach a settlement that is often well below the award, the experts said.
In addition to fighting the UK ruling, Mohammed said Nigeria “will strongly avail itself of all defences customarily afforded to sovereign states … to stave off any enforcement of the award”.
Nigeria is also fighting a P&ID effort to convert the arbitration award to a judgement in a U.S. federal court.
The information minister made no mention of seeking a settlement.
The government has also asked its anti-graft agency, intelligence agency and police inspector general to investigate P&ID and the circumstances surrounding the deal, which, it said, “includes commencing a full-scale criminal investigation”.
In a statement, P&ID said government allegations that the gas project was designed to fail were “entirely fictional” and “will not make the legal obligation to pay go away.”
State asset seizures “happen all the time. In a 2008 case against Chad, a UK judge ruled that proceeds of oil sales held for the purpose of making repayments to the World Bank qualified as commercial assets.
And in 2018, a U.S. judge cleared the way for a Canadian mining firm to target shares in a U.S. oil refinery owned by state oil company Petroleos de Venezuela SA (PDVSA) over an arbitration debt owed by Venezuela.
