Process and Industrial Developments Limited, which got a United Kingdom court’s grant to seize $9.6bn in Nigerian assets, may be able to seize the nation’s assets in 160 countries which are part of the New York Arbitration Convention, international arbitration experts have said.
A dispute resolution partner and expert in international arbitration at a European law firm, Fieldfisher, Mr Simon Sloane, and a partner with international law firm Dentons, Mr James Langley, said P&ID could seize assets belonging to Nigeria in the territories of 160 countries which are signatories to the New York Arbitration Convention.
The New York Convention is also known as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the New York Arbitration Convention.
The convention – of which Nigeria is a member – was adopted by a United Nations diplomatic conference on June 10, 1958, and entered into force on June 7, 1959.
An August 16, 2019 judgement by a London’s Commercial Court has granted P&ID the right to seize some $9.6bn in assets from Nigeria over an aborted gas project.
The case involves a 2010 deal in which the Federal Government agreed to supply gas to a processing plant in Calabar that P&ID would build and run.
The project was aborted and in 2012, P&ID took the Federal Government to arbitration over the deal’s failure.
The tribunal, made up of Lord Hoffman (the presiding arbitrator), Chief Bayo Ojo (Nigeria’s arbitrator) and Sir Anthony Evans (P&ID’s), was organised in London under the rules of the Nigerian Arbitration and Conciliation Act as part of the original contractual agreement between the parties.
In January 2017, the tribunal ordered the Federal Government to pay P&ID $6.6bn. With interest, the sum now tops $9bn, an amount said to be about 20 per cent of Nigeria’s foreign reserves.
Although the Federal Government has said it is taking steps to appeal the judgement, Sloane and Langley on Friday said going by the judgement, P&ID could target real estate, bank accounts or any kind of moveable wealth proven to be unrelated to Nigeria’s operations as a sovereign state.
“The onus will be on the claimant to prove that the property is exclusively in use for commercial purposes,” Sloane told Reuters. “It’s quite a difficult hurdle to overcome.”
The arbitration expert noted that state assets that had any diplomatic function, such as a commercial property that is also used to issue visas, could not be seized.
On his part, Langley said state asset seizures happened all the time, noting that in a 2008 case against Chad, a British judge ruled that proceeds of oil sales held for the purpose of making repayments to the World Bank qualified as commercial assets.
Reuters also reported that in 2018, an American judge cleared the way for a Canadian mining firm to target shares in a United States oil refinery owned by a state oil company, Petroleos de Venezuela SA, over an arbitration debt owed by Venezuela.
As the Federal Government holds bank accounts in foreign jurisdictions, including Britain, the experts said ultimately, a judge would have to rule on whether any individual asset was subject to seizure.
Be that as it may, the experts said the August 16 ruling against Nigeria converted the arbitration award to judgement and gave it the same force as a British court ruling, which would be recognised across the European Union as long as Britain remained a member.
Sloane said Nigeria’s best protection would be to ensure it had no significant commercial assets in any jurisdiction that could be exposed to an asset execution.
However, he said the arbitration award also allowed P&ID to seek to seize assets in any of the 160 countries that were part of the New York Convention, which is a global pact for the recognition and enforcement of arbitration awards.
Some of the countries that are part of the New York Arbitration Convention include Australia, Belgium, Canada, China, France, Germany, Greece, India, Ireland, Israel, Italy, Japan, Singapore, Switzerland, Turkey, the United Arab Emirates, United Kingdom and the United States.
African countries that are signatories to the convention include Angola, Benin, Botswana, Cameroon, Côte d’Ivoire, Egypt, Ghana, Kenya, South Africa, Morocco and Nigeria, which was acceded to the Convention on March 17, 1970.
Sloane and Langley said there was a long history of successful asset seizures using the New York Convention, stating that Nigeria’s prospects of the appeal against the $9bn judgement were limited.
“Nigeria would have to apply to set aside the order for enforcement and that may be difficult to achieve,” Langley said.
He explained that a set-aside request would have to prove there was an error in the ruling and stated that the judge’s decision was not legally controversial.
Lawyers representing the Federal Government had argued the award should not be enforced because England was not the correct place for the case, and even if it were, the amount awarded was “manifestly excessive.”
But Langley said the decision on the UK as the seat of arbitration was made in 2016 and the arbitration award was made in 2017.
“Nigeria had 28 days in each case to appeal. It appealed the former decision but missed the deadline by several months and a judge dismissed it. It never appealed the latter decision,” the lawyer said.
Although Nigeria successfully applied to have the award set aside by the Federal High Court in Lagos, however, Sloane and Langley said in English law, judges did not typically review either the decision on the seat of arbitration or the underlying award once the window for appeal had passed.
The lawyers said once the court made its judgement on an order, which was expected in September 2019, P&ID could start targeting Nigeria’s assets.
To delay this, they said Nigeria would also have to request a stay of enforcement while the set-aside request was considered.
“A set-aside request ruling is quick in legal terms – a matter of weeks or months rather than a year or more,” Langley said.