Nigeria Avoids Payment Of Us$11 Billion Dollar Arbitral Award Debt To P&Id: Is The Legal Battle Really Over?

• Published date: 05 March 2024
• Subject Matter: Litigation, Mediation & Arbitration, Criminal Law, Arbitration & Dispute Resolution, Sovereign Immunity: Public Sector Government, Trials & Appeals & Compensation, White Collar Crime, Anti-Corruption & Fraud
• Law Firm: Tope Adebayo
• Author: Harrison Ogalagu and Chukwuebuka Okeke

INTRODUCTION

In January 2010, the Nigerian Government entered into a Gas Supply and Processing Agreement (GSPA) with a company known as Process & Industrial Developments Limited (P&ID). Three years after, P&ID declared breach and commenced arbitration proceedings. In two awards th st issued 17 July 2015 and 31 January 2017, the arbitral tribunal - composed of Lord Hoffmann, Sir Anthony Evans and Chief Bayo Ojo, SAN - found that Nigeria had committed a repudiatory breach of the GSPA, that P&ID was entitled to the sum of US$6.6 billion as damages and 7% interest (Chief Ojo, SAN published a dissent with respect to the award of damages). Having regard to the interest awarded by the arbitral tribunal, as of 2023, Nigeria was an award-debtor in the sum of US$11 billion.

After a series of proceedings in English and Nigerian courts, Nigeria formally challenged the arbitral awards in proceedings commenced before the Commercial Court in England. In a 127- paged judgment - excluding the Annex - handed down on the 23^rd day of October 2023,¹ Hon. Mr.

Justice Knowles upheld the Nigeria's challenge to the awards. In his judgment, Knowles J found as a fact that among other elements of fraudulent conduct proved during the challenge proceeding: (a) P&ID had obtained the GSPA by bribing an oficial of the Nigerian government; (b) P&ID had knowingly provided false evidence to the arbitral tribunal; and (c) P&ID had corruptly obtained privileged documents pertaining to Nigeria's conduct of the arbitral proceeding.² Accordingly, Nigeria's challenge under SECTION 68 of the Arbitration Act 1996 (applicable in England) succeeded because the awards were obtained by fraud and were contrary to public policy.³

In a further ruling handed down on 21^st December 2023, Knowles J set aside the awards and denied leave to P&ID to appeal against his judgment.⁵ With these decisions, Nigeria does not have to pay "a sum so vast that it is material to Nigeria's entire federal budget".⁶ The judgment of the Knowles J has been rightly described as a landmark decision,⁷ and traditional news media has reported that the decision has effectively terminated Nigeria's obligation to pay the award debt.⁸ However, is it legally correct to state that arising from the order of Mr. Justice Knowles setting aside the arbitral awards, P&ID can no longer seek to enforce the award of US$11 billion against the funds and assets of the Federal Republic of Nigeria? That is the premise of this article.

THE POSSIBILITY OF...