Court grants P&ID right to seize Nigeria’s $9.6bn assets in 160 countries

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bubu P&IDNigeria is at risk of losing its assets in 160 countries worth over $9.6bn to Process and Industrial Developments Limited,P&ID after a United Kingdom court granted them the right as part of the New York Arbitration Convention, international arbitration experts says.

A specialist on international arbitration at a European law firm,and dispute resolution partner and Fieldfisher, Mr Simon Sloane, and a partner with international law company Dentons, Mr James Langley, said P&ID could seize property belonging to Nigeria in the regions of 160 nations that are signatories to the New York Arbitration Convention.

New York Convention, a Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the New York Arbitration Convention which Nigeria is a member was adopted by a United Nations diplomatic conference on June 10, 1958, and entered into force on June 7, 1959.

A London Commercial Court judgment of 16 August 2019 granted P&ID the right to seize some $9.6 billion in Nigerian assets over an aborted gas project.

The situation includes a 2010 agreement in which the federal government agreed to supply gas to a Calabar processing plant that would be built and operated by P&ID.

The project was aborted and in 2012, P&ID took the Federal Government to arbitration over the deal’s failure.

The tribunal, consisting of Lord Hoffman (the presiding arbitrator), Chief Bayo Ojo (Nigeria’s arbitrator) and Sir Anthony Evans (P&ID’s), was organized in London as part of the original contractual agreement between the parties under the rules of the Nigerian Arbitration and Conciliation Act.

In January 2017, the tribunal ordered the Federal Government to pay P&ID $6.6bn. With interest, the sum now tops $9bn, an amount said to be about 20 per cent of Nigeria’s foreign reserves.

Despite Nigerian Government claims of taking measures to appeal the judgment, Sloane and Langley said on Friday following the judgment that P&ID could target actual property, bank accounts or any mobile wealth that has proven to be unrelated to the activities of Nigeria as a sovereign country.

“The onus will be on the claimant to prove that the property is exclusively in use for commercial purposes,” Sloane told Reuters. “It’s quite a difficult hurdle to overcome.”

The arbitration expert noted that state assets that had any diplomatic function, such as a commercial property that is also used to issue visas, could not be seized.

On his part, Langley said state asset seizures happened all the time, noting that in a 2008 case against Chad, a British judge ruled that proceeds of oil sales held for the purpose of making repayments to the World Bank qualified as commercial assets.

According to reports by Reuters in 2018, an American judge cleared the way for a Canadian mining firm to target shares in a United States oil refinery owned by a state oil company, Petroleos de Venezuela SA, over an arbitration debt owed by Venezuela.

As the Federal Government holds bank accounts in foreign jurisdictions, including Britain, the experts said ultimately, a judge would have to rule on whether any individual asset was subject to seizure.

Be that as it may, the experts said the August 16 ruling against Nigeria converted the arbitration award to judgement and gave it the same force as a British court ruling, which would be recognised across the European Union as long as Britain remained a member.

Sloane said Nigeria’s best protection would be to ensure it had no significant commercial assets in any jurisdiction that could be exposed to an asset execution.

However, he said the arbitration award also allowed P&ID to seek to seize assets in any of the 160 countries that were part of the New York Convention, which is a global pact for the recognition and enforcement of arbitration awards.

Some of the countries that are part of the New York Arbitration Convention include Australia, Belgium, Canada, China, France, Germany, Greece, India, Ireland, Israel, Italy, Japan, Singapore, Switzerland, Turkey, the United Arab Emirates, United Kingdom and the United States.

African countries that are signatories to the convention include Angola, Benin, Botswana, Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, South Africa, Morocco and Nigeria, which was acceded to the Convention on March 17, 1970.

Sloane and Langley said there was a long history of successful asset seizures using the New York Convention, stating that Nigeria’s prospects of the appeal against the $9bn judgement were limited.

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“Nigeria would have to apply to set aside the order for enforcement and that may be difficult to achieve,” Langley said.

He explained that a set-aside request would have to prove there was an error in the ruling and stated that the judge’s decision was not legally controversial.

Lawyers representing the Federal Government had 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 Langley said 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,” the lawyer said.

Although Nigeria successfully applied to have the award set aside by the Federal High Court in Lagos, however, Sloane and Langley said in English law, judges did not typically review either the decision on the seat of arbitration or the underlying award once the window for appeal had passed.

The lawyers said once the court made its judgement on an order, which was expected in September 2019, P&ID could start targeting Nigeria’s assets.

To delay this, they said Nigeria would also have to request a stay of enforcement while the set-aside request was considered.

“A set-aside request ruling is quick in legal terms – a matter of weeks or months rather than a year or more,” Langley said.

Meanwhile, the Federal Government on Friday said the UK court judgement was targeted at the nation’s foreign reserves and that the “international scammers” had Nigerian collaborators

The Minister of Information and Culture, Alhaji Lai Mohammed, said this while featuring on a Television Continental’s programme, ‘This Morning.’

Mohammed claimed that whenever it was observed that the nation’s foreign reserves were increasing, some people who he described as “vultures” would conspire and decide how to deplete the reserves.

He said the “international scammers” could not have succeeded in their bid if they did not get enjoy the cooperation of some Nigerians.

He said the Federal Government’s desire to unravel those behind the deal was what informed President Muhammadu Buhari’s recent directive to the relevant agencies to probe the contract.

Mohammed said, “Anytime the foreign reserves of the country are rising, there is always this attempt by vultures that will come with one scam targeting the reserves.

“It is also important to state here that these international scammers would not have succeeded without the collaboration of the people within.

“That is why the Federal Government is beaming its searchlight on this particular contract to unravel those behind the move to inflict economic injury on Nigeria and its people.”

Stating that the Federal Executive Council as constituted at the time of signing the contract in 2010 did not approve the contract as required by law, the minister added that the Ministry of Petroleum Resources which signed the contract had no technical knowledge to execute a gas contract.

Meanwhile, while seeking self-execution to set aside the judgement, the minister on Thursday said the Federal Government was willing to meet with P&ID to negotiate the agreement.

Mohammed said this on “Good Morning Nigeria,” a live breakfast programme of the Nigerian Television Authority.

“We are leaving no stone unturned to ensure that this judgement is set aside. I want to assure Nigerians that there is absolutely no imminent threat to the seizure of our assets because even the UK courts said they couldn’t begin any attachments until the courts were back and there will be a further hearing on the matter.

“We are even willing to sit down with the P&ID and negotiate. We are ready to take this matter to the highest level – legal, diplomatic and otherwise – because we think it is just unfair and unconscionable. You don’t inflict this kind of injury on a country and its people for your selfish reasons,” he said.

The minister on Tuesday at a press conference in Abuja said President Buhari had directed the Economic and Financial Crimes Commission, the National Intelligence Agency and the Inspector-General of Police, Mohammed Adamu, to conduct a thorough investigation into the contract.

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He said the President’s decision to probe P&ID and its activities was based on the fact that the Federal Government suspected a foul play in the contract.

He said, “We want to set the record straight that the Federal Government views with serious concerns the underhanded manner in which the contract was negotiated and signed.

“Indications are that the whole process was carried out by some vested interests in the past administration, which apparently colluded with their local and international conspirators to inflict grave economic injury on Nigeria and its people.”

In an interview with, a Senior Advocate of Nigeria, Mr Olisa Agbakoba, also backed Sloane and Langley, saying Nigeria’s prospects of appeal in the $9bn judgement were limited.

“We can appeal, but our prospects are limited in this case. It is too late now. Rather, we should assemble a team of crack Nigerian arbitration lawyers to join the UK lawyers and launch an appeal. We can also settle. A litigation mediation strategy should be employed right now,” he said.

Agbakoba said the case should serve as a lesson to Nigeria, stating that for close to 30 years, he had consistently appealed to the Federal Government to ensure disputes arising from contracts with International Oil Companies and others were settled in Nigeria.

He said the problem with third world countries such as Nigeria was that they didn’t realise the gravity of the arbitration process on time.

He said, “The western world developed the New York Convention and one thing they did, which I hope Nigeria will learn a lesson from, is that then when contracts are written, they make sure it contains a foreign arbitration clause. Why would a Nigerian gas project contain an arbitration clause that refers the dispute resolution process to London?

“I’ve been in arbitration for 30 years and there is an unwritten rule by foreign arbitration courts, which is why countries like China, India and Dubai will make sure the arbitration seat is in their countries. You can’t be entering a contract and be contracting the dispute resolution to foreigners who will not favour you.”

Agbakoba said Nigeria must learn from the ongoing episode, while knocking the Attorney General of the Federation, Abubakar Malami, for missing the point when he said the government would look for who to prosecute.

The lawmaker said, “I understand an executive order will be issued by the President which will state the terms of the contract in the arbitration; this will do us good.

“What I hope this will be is a lesson for Nigeria to wake up, we must stop being stupid. All the wealth we generate will have disputes, but they must be resolved on Nigerian territory.

“We must review our arbitration practise and establish an arbitration policy. Those IOCs and all those who want to do business with us must agree that all disputes will be resolved in our country.”

Also expressing his views, an arbitration lawyer and Senior Advocate of Nigeria, Mr Tayo Oyetibo, said since Nigeria had applied to set aside the order of the British court which registered the $9bn award, then all steps to enforce the judgement would have to wait for the outcome of the proceedings.

“But, if Nigeria doesn’t take any step and allows the judgement to remain on record, then it can be registered in any part of the world, wheresoever Nigeria has the reciprocal of enforcement of judgement .

“This means it (the judgement) can be registered wherever Nigeria has assets. So, it all depends on which steps Nigeria has taken with respect to the order of the British court. I don’t expect Nigeria to sit back and fold its arms without taking steps to appeal the award to be set aside,” he said.

Asked his perspective on the claim that the prospects available to Nigeria were limited in the appeal, Oyetibo said, “It depends on the facts. There are grants for setting aside an arbitral award, but those grants have to be complied with.

“It depends on the fact of the case and also the grants that Nigeria wants to rely upon in attacking the award. But obviously, there are situations in which arbitral awards can be set aside.

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