In the last two days, we have followed live from London a two-in-one virtual case between the Federal Government of Nigeria and Process and Industrial Development Limited, P&ID, in respect of a British court ruling last year that the engineering and project management company has the right to seize $9bn in Nigeria’s assets.
There is no doubt that the fascinating legal case which ran from 10.30am on the two days have huge implications for Nigeria, so several people watched the live streaming of the hearing.
Listed as CL-2019-000752 and CL-2018-000182 in the Queen’s Bench Division, Her Majesty’s Courts and Tribunals Service, before Sir Ross Cranston, the hearings were streamed on Opus2, with cautions that viewers of the live stream had to accept the privacy policy and agree not to make any unauthorised recordings or take screenshots of the webcast. It was further stressed that it was a criminal offence to record, publish and take pictures of the hearing, including making, or attempting to make, an unauthorised recording or transmission of any images or sounds being transmitted via the webcast.
Case CL-2019-000752 is between the Federal Republic of Nigeria, as the Claimant, and Process and Industrial Developments Limited as Defendant; while CL-2018-000182 is between Process and Industrial Developments Limited as Claimant and the Federal Republic of Nigeria as Defendant.
Let us recall the background to the cases which have of course provide a venue of legal fireworks because of their complexities, the magnitude of the settlement involved and cross-border implications.
On August 16 last year, a British court ruled that P&ID had the legal right to seize $9 billion in Nigerian assets. The ruling was delivered by Justice Butcher and it had to do with a 2010 contract Nigeria, through its Ministry of Petroleum Resources, was said to have signed with P&ID for the company to build a state-of-the-art gas processing plant to refine natural gas (“wet gas”) into “lean gas”, which Nigeria would receive free of charge to power its national power grid. It was to involve a 20-year Gas Supply and Processing in Nigeria’s OMLs 67 and 123. The project would have generated annually up to 2,000 megawatts of power for electrical generation and industrialization.
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.
P&ID claimed that the Nigerian government failed to meet its commitments, causing the project to flop. This, according to it, meant Nigeria would lose the opportunity of a new power supply, while P&ID would lose 20 years’ worth of profits.
The firm accused the Federal Government of breach of contract. The co-founder of P&ID, Brendan Cahill, said, “P&ID was eager to deliver this promising project in the hope of bringing electricity to millions and helping Nigeria reach its full potential. Unfortunately, the government did not uphold its side of the contract, so the project failed. Having been unable to find a willing partner in government to resolve the matter forced us to seek remediation for the repudiation of our contract, which has resulted in an arbitration award against Nigeria.”
The company said it tried several times to find an amicable solution but was not successful. Therefore, arbitration had to commence in 2012 before a tribunal in London. Although during the arbitration Nigeria said it was interested in reaching an amicable settlement, P&ID claimed Nigeria never made any serious offer.
Following the unsuccessful settlement, the tribunal in London in 2015 unanimously concluded that Nigeria was liable for the government having repudiated the agreement with P&ID.
In January 2017, the tribunal ordered the Nigerian government to pay P&ID $6.6 billion in damages, plus interest that is accruing daily at a rate of over $1.2 million which brought it to $2.8 billion.
The $6.6 billion was arrived at after several litigations between the two sides in the United States District Court of the District of Columbia, the United States Courts of Appeals for the District of Columbia and the Business and Property Courts of the United Kingdom.
However, when the Nigerian government refused to pay, P&ID went to court in both the United Kingdom and the United States, to enforce the award.
The Nigerian government had insisted that P&ID never began the construction of the project facility, although the company alleged it incurred about $40 million in preliminary expenses. In effect, P&ID’s claim in the arbitration proceedings was mainly for loss of profit for the entire 20-year term of the GSPA, initially claiming the sum of $1.9 billion and later increasing its claim to $5.9bn.
The Arbitral Tribunal on 31st January 2017 rendered its Final Award against the Ministry of Petroleum Resources in the sum of $6.597bn, 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.
On February 15th 2019, the United States Courts of Appeals for the District of Columbia issued a decision in favour of Nigeria by dismissing P&ID’s motion requesting the court to dismiss Nigeria’s appeal for lack of jurisdiction or to summarily affirm the scheduling order of the District Court.
However, in August last year, P&ID secured judgment at a British court authorising it to seize $9 billion in Nigerian assets. The British judge who delivered the ruling, was said to have ordered that P&ID could take 20 per cent of Nigeria’s foreign reserves achieve its settlement.
There was a lot of furore in Nigeria when the matter became public, with several analysts calling the contract a scam signed by those who were not qualified to take such decisions. There was even doubt that the agreement for project received any official government approval before the country was committed to such a huge internationally binding contract. Promises were made to fish out those responsible for the huge commitment which was capable of seriously eroding already depleted foreign reserve and assets.
It is not yet clear what kind of hope the two-day hearing in the UK would offer to make both sides happy. We hope the country’s representation at the hearings are top notch, unlike in previous litigations that did not bear the expected fruit.
Sir Ross Cranston of the Queen’s Bench Division of Her Majesty’s Courts and Tribunals Service and his team must go the extra mile to ensure that Nigeria puts this untidy matter behind so that the country can focus on more development-oriented issues that will benefit her people.
HM Courts & Tribunals Service is responsible for the administration of criminal, civil and family courts and tribunals in England and Wales. They are also in charge of non-devolved tribunals in Scotland and Northern Ireland. They work with an independent judiciary to provide a fair, efficient and effective justice system.
Through the courts and tribunals, the Service gives people and businesses access to justice, including victims and witnesses of crime; defendants accused of crimes; consumers in debt or with other disputes; people involved in the adoption or protection of children; businesses involved in commercial disputes; individuals asserting their employment rights or challenging the decisions of government bodies; and people affected by relationship breakdown.
IMAGE CREDIT: Wiki, www.gov.uk
Epa Ogie Eboigbe, veteran journalist, broadcaster and public affairs specialist writes on, and analyses current and historical issues with a ‘wise pen’.
