Nigeria v P&ID: Caution Against An Arbitral Tribunal's Non-Interventionist Approach To Arbitration?

• Published date: 19 February 2024
• Subject Matter: Litigation, Mediation & Arbitration, Arbitration & Dispute Resolution
• Law Firm: Norton Rose Fulbright
• Author: Paul Stothard and Olivia Fox

In an extraordinary judgment from the English High Court on 23 October 2023, Nigeria successfully challenged a US$11 billion arbitral award under Section 68 of the Arbitration Act 1996 (the Act) on the basis that the award was obtained by fraud and conduct contrary to public policy, including bribery of a witness, improper retention of privileged documents and perjury by a key witness.

The Hon Mr. Justice Robin Knowles CBE appeared to question the integrity of arbitration itself, observing that there were risks associated with the process (particularly in cases of significant public money), including vulnerability to fraud and a lack of transparency. Mr. Justice Knowles noted that in this case "the Arbitration was a shell that got nowhere near the truth" and expressed hope that the circumstances of the case would provoke debate and reflection among the arbitration community.

Whilst the circumstances of fraud leading to the Nigeria v P&ID judgment were probably sui generis, the judgment should give pause. In particular, the obiter comments made by Mr. Justice Knowles about Nigeria's representation during the arbitration and the tribunal's role in managing the arbitration process should be of concern to all practitioners. Where London is the seat of the arbitration, the tribunal's general duty under Section 33 of the Act can give rise to a tension between the duty to act fairly and impartially in giving each party the opportunity to put its case; and the duty to adopt procedures suitable to the circumstances of the case (avoiding unnecessary delay or expense in the arbitration process). These are tensions that can arise in commercial and investor-state arbitrations alike.

Brief background

Process & Industrial Developments Ltd (P&ID) and the Nigerian Ministry of Petroleum Resources signed a 20-year gas supply and processing agreement (GSPA) in 2010. P&ID issued an arbitration against Nigeria, accusing Nigeria of failure to perform its obligations under the GSPA.

In January 2017, the tribunal rendered a final award against Nigeria finding it liable to pay damages of US$6.6 billion. By the time the High Court rendered its judgment in October 2023, the award had a value exceeding US$11 billion including interest.
Nigeria first attempted to set aside the partial award on liability before the English courts in 2016 but was unsuccessful. P&ID began enforcement proceedings of the final award in 2019.

Following successful actions for discovery against P&ID in various courts internationally, in December 2019, Nigeria applied to set aside the final award and to challenge enforcement based on new evidence that the GSPA itself and the award had been procured by fraud. In 2020, Nigeria obtained an 'unprecedented' extension of time from the English court under Section 70(3) of the Act to apply to set aside the award. Sir Ross Cranston decided that there was...