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Introduction
The raving news is the decision of a British court, which ordered the seizure of Nigeria’s foreign assets to satisfy a judgment debt of $9 billion that was awarded by an arbitral tribunal. This sum is surely over N3.4 trillion naira. This is an order, which, if carried out, will simply cripple Nigeria, whose entire 2019 budget, for the whole country (which was signed into law only in June) is N8.92 trillion only. The current foreign reserves of Nigeria are about a mere $47.62 billion, with China having the highest foreign reserves in the world, to the tune of $3.6 trillion. This is distantly followed by Japan ($1.323); Switzerland ($804.323 billion); Saudi Arabia ($487.259 billion); Taiwan ($464.828); Russia ($463.800); India ($430.572 billion). Others are Hong Kong, South Korea, Brazil, Singapore, Thailand and Mexico, in that order. The UK has $164.209. The United States of America comes a very distant 18th in the world, with $125.725 billion in foreign reserves. You can now imagine where Nigeria, with a miserly $47.62 billion, would be on the world index. The best option thus open to the federal government to halt the looming disaster of attaching her foreign assets to the tune of $9 billion, in my humble opinion, is to immediately appeal the judgment and ask the court for stay of execution. It could, in the interregnum, negotiate the quantum as it had already done. To allow execution of the judgment will plunge Nigeria’s already battered, pilfered and mismanaged economy into irreversible doldrums and recession of unimaginable proportions.
No one should take Lai Mohammed serious when he boastfully asserted that Nigeria will not surrender any of her foreign assets. Really? Did I hear him say “surrender”. Lai easily and shockingly forgets that UK is not Nigeria, where court judgment orders are treated with disdain, levity, derision and violated with utmost impunity. The judgment creditors will not seek Nigeria’s permission to go after her foreign assets. They will not politely ask Nigeria to “surrender” her assets. No. They will simply use the available, tested and trusted legal option of garnishee proceedings (writ of fieri facia) and attach all available and known Nigerian bank accounts, assets, monies, properties, etc, wherever they find them in the UK and in any part of the world, especially in countries within the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, June 10, 1958); otherwise known as “the New York Convention. This convention requires courts of contracting states to give effect to private agreements to arbitrate and to recognize and enforce arbitration awards made in other contracting states.
As at April, 2018, the convention had 160 state parties which include 157 of the 193 United Nations member states, plus the Cook Islands, the Holy Sea and the State of Palestine. Nigeria and the United Kingdom, the two countries involved in the P&ID and Nigerian imbroglio are state parties to this New York convention.
It means the arbitral award of $9 billion judgment debt made in favour of P&ID can be enforced in any of these 160 countries. It can also be enforced against the property of Nigeria in any of the European Union (EU) states made up of 28 countries. The UK had triggered off Article 50 to begin UK’s withdrawal from the EU in March, 2017, following a referendum which started a two-year process due to conclude on 29th March, 2019. 51.9% voters favoured UK’s leaving the EU. This process is expected to be concluded (final exiting) by 31st October, 2019. But, until then, the judgment of P&ID can be enforced in any of these 28 countries.
So, this is a time to be strategic and tactical. This is not a matter given to puerile lachrymal effusion, chest beating, adventurous swash buckling and grandstanding. It is a matter of cold law and facts. Let the federal government hire experienced legal hands in the UK immediately to stem this impending disaster that will eclipse all of us, without exception.
The facts
Process and Industrial Developments Limited (P&ID) is an engineering and project management company founded and led by Michael Quinn and Brendan Cahill who are said to have over 30 years’ experience of project management and execution in Nigeria.
P&ID conceived and planned a project that would deliver much-needed power generation to millions of Nigerians, and create profitable by-products for sale on the international market. Under an agreement with Nigeria, P&ID would build a state-of-the-art gas processing plant to refine natural gas (“wet gas”) into “lean gas” that Nigeria would receive free of charge to power its national electric grid. The lucrative natural gas liquid by-products (propane, ethane, butane) of this processing would be sold by P&ID on the international market, with expected profits in the billions of dollars.
In 2010, P&ID entered into a 20-year agreement with the federal government of Nigeria to execute this project.
Under the agreement, the Nigerian government was to ensure that all necessary pipelines and related infrastructure were installed and that arrangements were made with agencies and third parties to deliver gas for P&ID to process. However, the Nigerian government failed to meet its commitments, causing the project to flounder. This meant Nigeria would lose the opportunity of a new power supply, and P&ID would lose 20 years’ worth of profits.
P&ID attempted on multiple occasions to find a solution, and yet Nigeria refused to come to the table. Arbitration commenced in 2012 before a tribunal in London. Although during the arbitration Nigeria claimed to be interested in reaching an amicable settlement with P&ID, in fact Nigeria never made a serious offer and it became clear that Nigeria was attending settlement discussions only to delay the proceedings.
In July 2015, the tribunal in London unanimously concluded that Nigeria was liable for the government having repudiated the agreement with P&ID.
Nigeria was taken to arbitration under the terms of the agreement in 2015, which handed down an original award of $6.6bn. It has since accumulated substantial interest making it $9.6bn as of today. It is the decision of the arbitration which has now been turned into the judgment of the high court. That effectively entitles the applicant, the P&ID Ltd, to impound the assets of the Federal Government of Nigeria wherever located in the world, to the value of the award, estimated to be 20% of the country’s external reserves.
Cacophony of voices: Former AGF Aondoakaa’s reaction
A former Attorney-General of the Federation, Michael Aondoakaa, SAN, has advised the Federal Government to file corruption charges against representatives of the Process and Industrial Developments firm for entering into a sham contract with some unscrupulous Nigerians.
He said the contract with P&ID was illegal ab initio because it was not approved by the Federal Executive Council, adding that there was no budgetary provision for such a contract.
Aondoakaa said the contract was in contravention of the Infrastructural Regulatory Commission Act and Public Procurement Act. Incredible submission for an arbitration award already made with both parties participating. Incredible that Aondoaka is advocating going after alleged culprits in this cul de sac, rather than profer serious solution. Pursuing rats when the house is on fire?
Malami, san’s response
Abubakar Malami, SAN, the Attorney General of Nigeria agrees in his reaction that:
“The Arbitral Tribunal on 31st January 2017 rendered its Final Award against the Ministry of Petroleum Resources in the sum of US$6.597 Billion together with pre-award interest at the rate of 7% per annum effective from 20th March 2013 and post award interest at the same rate till date of payment.” He further agrees that:
“Upon the Award, P&ID commenced recognition and enforcement proceedings of the arbitration award against FGN in March 2018 in both the United Kingdom (“UK”) and the United States of America (the “United States”). In view of the huge arbitration award, the current administration took positive steps in challenging the award, thus, the FGN is duly represented in the proceedings in the United States and the UK by the foreign Law Firm of Curtis, Mallet-Prevost, Colt & Mosle LLP.”
He however added that:
“Consequently, FGN is vigorously defending its interests in the United Kingdom. It is entirely proper for Nigeria to raise and to strongly assert all available and proper defences to the claims brought by P&ID.”
Central Bank of Nigeria’s response
The CBN Governor, Godwin Emefiele, described the contract leading to the judgment as a “fraudulent contract” between the Ministry of Petroleum Resources and P&ID.
Emefiele noted that, contrary to its claims in the media, the foreign firm did not invest any money on the contract in Nigeria.
“As a foreign company, if you are investing either in a contract or a project in Nigeria, there are various options you will adopt in bringing in your investment.
“If you are bringing in capital, in which case you are bringing in the money, you will fill Form A and you will also collect a certificate of capital importation.
“If you are bringing in machine or assets to execute your contract, then in this case you will fill Form M and also collect a certificate of capital importation to prove that you actually brought in money.
“We have gone through our records, we do not have any information in our records to show that this company brought in one cent into this country and we have accordingly written to the Economic and Financial Crime Commission and the Intelligence Department of the Nigeria Police that are currently investigating this matter.”
Okay, we have heard the Nigerian government’s side of the story. But, is that what the law says?
Legal issues arising
Alleged discovery of ‘silver bullet’ to shoot down $9.6bn P&ID claim: position of private international law
Suddenly, some Nigerians, especially of this government, laden with sentiments, have now said they have found a “silver bullet” to shoot down the $9.6billion world record claim against Nigeria’s assets by Irish company Process and Industrial Development (P&ID). The rock-solid defence, they claim, is contained in a UK law that gives immunity to Sovereign states.
UK’s State Immunity Act 1978 (the Act) bars UK courts from confiscating assets of a foreign state without the consent of that state, gives it a leeway in the matter.
The Act allows a written consent of a foreign state before the enforcement of a judgment which could lead to seizure of assets or freezing of accounts.
(To be continued)
Thought for the week
“The best form of government is that which is most likely to prevent the greatest sum of evil.” (James Monroe)
