After over five years of legal battles, Nigeria has succeeded in halting the enforcement of the $11 billion arbitration award in favour of an Irish firm, P&ID, over breach of contract by the Nigerian government.
A judge in London ruled in favour of the Nigerian government, agreeing that the process by which the company secured legal reprieve in the United Kingdom (UK) was fraught with fraud and irregularities.
In reaching his decision, the judge, Robin Knowles, said: “In the circumstances and for the reasons I have sought to describe and explain, Nigeria succeeds on its challenge under section 68. I have not accepted all of Nigeria’s allegations. But the Awards were obtained by fraud and the Awards were and the way in which they were procured was contrary to public policy.
In 2012, P&ID accused Nigeria of failing to fulfill its end of the bargain of a Gas Supply Purchasing Agreement (GSPA) contract it entered with the company in 2010.
According to the agreement that was later shown to be controversial, P&ID was to build and operate an Accelerated Gas Development project at Adiabo in the Odukpani Local Government Area of Cross River State while the Nigerian government sources natural gas from oil mining leases (OMLs) 123 and 67 operated by Addax Petroleum and supply to P&ID to refine into fuel suitable for power generation in the country.
However, P&ID alleged that the Nigerian government reneged on its obligation after negotiations were opened with the Cross River State government for the allocation of land for the project, leading to an arbitration that would last more than a decade.
In 2014, Nigeria’s former Attorney General, Mohammed Adoke, contracted legal counsel to represent Nigeria in the arbitration between the country and P&ID, which was still in its early stages.
In 2017, A private arbitration tribunal had on January 31, 2017 ordered Nigeria to pay $6.6 billion to P&ID plus interest beginning from March 20, 2013. The interest rate was fixed at seven percent amounting to $1 million a day, making the potential payment accumulate to over $11 billion before the verdict.
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”.
This case has raised questions about the possibilities of many other instances of such fraud in several other legal challenges that the country is currently fighting in the courts.
Financial and political Analysts in the country say it is likely that the country’s current government would reappraise the legal framework that guides its contractual arrangements with private firms and also task its law enforcement agencies to scrutinise such financial transactions to ensure the government curbs such schemes.
