Less than a year after successfully overturning an $11 billion judgment in the Process & Industrial Developments (P&ID) case, the Nigerian government now faces a new legal challenge from the Chinese company, Zhongshan Fucheng Industrial Investment Co. Limited. This firm is seeking to enforce a $70 million arbitration award against Nigeria,Daily Trust reports.
But can the federal government prevail in this case?
Experienced analysts, in interviews with Weekend Trust, offered their insights, describing the situation as a poorly handled agreement.
Zhongshan recently secured a court order in France to enforce the award, stemming from a failed 2007 contract with the Ogun State Government. This order, which authorized the seizure of three presidential jets under maintenance in France, has been upheld by a U.S. court, which dismissed Nigeria’s claim of sovereign immunity.
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The dispute between the Ogun State government and Zhongshan revolves around the management of an export processing zone. In 2010, Zhongshan, through its parent company, Zhuhai Zhongfu Industrial Group Co. Ltd, acquired the rights to develop a free trade zone in Ogun State. In 2011, Zhongshan established Zhongfu International Investment (NIG) FZE to manage the project, but by 2016, tensions escalated when Zhongshan accused the Ogun State government of attempting to replace it as the zone’s manager. This led to Zhongshan initiating arbitration under the China-Nigeria Bilateral Investment Treaty, resulting in a $70 million award in favor of the company.
Following the award, a U.S. court of appeals allowed the Chinese company to obtain final charging orders over two Nigerian residential properties. This complicates Nigeria’s ongoing efforts to manage the crisis in Europe and prevent it from spreading to other jurisdictions. Despite the Nigerian government’s claim of sovereign immunity, a U.K. High Court judge rejected this defense, citing Nigeria’s delay in appealing the arbitration award.
In a divided decision by the U.S. court, two judges ruled that the award is enforceable under the New York Convention, stripping Nigeria of its sovereign immunity in this case. However, the dissenting judge argued that the term “persons” under the New York Convention should not apply to sovereign nations and that Ogun State’s actions were not attributable to the Nigerian government.
The Nigerian Presidency has accused Zhongshan of attempting to seize the country’s offshore assets through deceptive means, asserting that the federal government has no contractual obligation with the company. The Attorney-General of the Federation, Lateef Fagbemi (SAN), also announced that Nigeria has initiated both legal and diplomatic efforts to recover the three seized aircraft, emphasizing their status as sovereign assets.
Some legal experts have criticized Nigeria’s handling of the dispute, calling for a settlement. Senior Advocate of Nigeria Dayo Akinlaja urged the government to pursue settlement options, while Nkem Okoro, Esq., called for an investigation into the mishandling of the contract to clear Nigeria’s name. Okoro emphasized the importance of honoring international agreements to reassure potential investors.
Human rights lawyer Nkereuwem Akpan, Esq., suggested a diplomatic approach but warned that international law generally grants sovereign states immunity from asset seizure, cautioning against a retaliatory cycle of asset seizures between states.
The case evokes memories of the P&ID arbitration ruling, which also dealt with Nigeria’s delayed response to a failed contract, and raises concerns about the country’s reputation in international contracts. Former Foreign Affairs Minister Ambassador Bolaji Akinyemi noted that international law does not protect sovereign assets when a nation is engaged in commercial activities, which places Nigerian assets at risk. He criticized the Ogun State government for mismanaging the contract and suggested that the federal government seek a resolution through the Chinese government.
Meanwhile, former NIMASA Director-General Dakuku Peterside argued that the case further damages Nigeria’s global image, deterring potential investors. He stressed the importance of the Attorney-General’s office reviewing international contracts to protect sovereign assets.
Despite these challenges, former NBA President Olisa Agbakoba (SAN) believes Nigeria has a strong defense. He argued that Nigeria could recover the seized aircraft by proving they are used for diplomatic purposes, and that the attachment of property belonging to Ogun State should not extend to Nigeria’s sovereign assets.
Zhongshan has expressed willingness to negotiate with the Nigerian government and, as a goodwill gesture, released one of the seized aircraft needed for President Bola Tinubu’s trip to meet with French President Emmanuel Macron. The company remains open to discussions aimed at reaching a reasonable settlement.
