SENIOR Advocate of Nigeria (SAN), Mr. Mike Igbokwe, has said a contentious clause in a $400 million commercial loan agreement between Nigeria and China is standard in contracts.
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The loan deal was signed by the Federal Ministry of Finance on behalf of Nigeria and the Export-Import Bank of China on September 5, 2018.
It will fund the Nigeria National Information and Communication Technology Infrastructure Backbone Phase II Project.
The National Assembly recently stoked controversy when it suggested that Article 8(1) of the contract surrendered Nigeria’s sovereignty to China.
This was denied by Justice Minister Abubakar Malami (SAN) and his Transportation counterpart, Rotimi Amaechi, who explained that the clause was only a form of assurance that Nigeria will not default in repaying the loan.
Igbokwe agreed with the government’s position.
He said: “The Clause 8(1) of the commercial loan agreement, stating that ‘The borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets,’ brings to light at least two principles in international law or international commercial transaction.”
“In international law, a country like Nigeria has sovereign immunity against actions and enforcement of judgments on its assets, including military and diplomatic, but not in respect of certain areas, like trading or commerce.
“However, it has the right and power to waive such sovereign immunity by agreement or consent.
“By that clause, Nigeria has waived its sovereign immunity in respect of the enforcement on itself and its assets, of any arbitral award that may be made against it in a dispute arising from the contract, but not in respect of its military and diplomatic assets.”
This position, the lawyer explained, means that should there be any arbitral award against Nigeria in any dispute between it and China arising from the agreement, “Nigeria will not raise sovereign immunity as a defence to the enforcement of the arbitral award against it and its assets other than military and diplomatic assets and will not revoke that waiver”.
Igbokwe added: “The other principle of international law here is ‘pacta sunt servanda’, meaning that an agreement voluntarily entered into must be complied with.
“It implies that Nigeria is bound by the waiver of its sovereign immunity, if China decides to execute any arbitral award against Nigeria and on Nigerian assets other than military and diplomatic assets.
“The Attorney General of the Federation was right in saying that the waiver of sovereign immunity by a country was standard provision because such waivers are not unusual in commercial transactions.
“The other state party usually insists on such a waiver to ensure that such sovereign immunity would not be used by the other state party as a defence to prevent it from either taking a legal action against it or levying execution of any judgment or arbitral award against it or the assets of the liable state party.”
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