P&ID And The $9.6 Billion Arbitral Award Against Nigeria: Why Is It Now That Nigeria Is Just Learning?! By Hameed Ajibola Jimoh Esq.

On the 16th day August, 2019, an English Court sitting in England granted leave to a Foreign Company by name ‘Process and Industrial Developments Limited’ (which had entered into an agreement with Nigeria in a ‘Gas Supply and Processing Agreement (GSPA), executed on the 11th day of January, 2010)’, to enforce the arbitral award held in its favour against Nigeria, the sum which has cumulatively risen to $9.6 billion as at the time of the English Court’s Judgment of the 16th day of August, 2019, inclusive of the accruing interests.

The accruing interest daily is 7% of the arbitral award which is about $1.2 million daily. Having read the soft copy of the judgment delivered by the English Court (though, I have not been able to lay my hands on the said GSPA) and after considering those background, facts and figures expatiated by the Honourable, the Presiding Judge of the English Court, I had called the Attorney-General of the Federation to duly investigate the whole saga and to always effectively coordinate all the Federal Government’s Agencies, Ministries and Departments of the Federal Government.

Then, some events have taken place since the decision of the English Court where in the Federal Government has called upon some of the Federal Government’s Agencies inclusive of the Central Bank of Nigeria to submit all pending contracts that the Federal Government has entered into which is above $5 million.

The Federal Government and the P&ID have been exchanging some utterances against each other over the circumstances leading to the execution of the contract and the award of the arbitral award. With due respect, even though the Federal Government has taken or is taking some of these steps, the question that this paper is asking is whether Nigeria must always wait for things to always get out of hands before taking any necessary step and for Nigeria to take the current situation as a way of always being pro-active to situations before such situations get out of hands in the interest of the public and that of Nigeria’s development.

In my humble view, with due respect to the Federal Government of Nigeria, I am of the view that the way that the Federal Government had handled the whole situation leading to the award of the arbitral award was too reckless and careless. And Nigeria and all its concerned agencies ought to have learnt the practical and technical knowledge in contract. Also, the Nigerian government ought to have learnt the need to always coordinate and for some agencies of government to always synergise in functions and performance.

I believe that were the various concerned government’s agencies synergized, Nigeria would not be found in this kind of circumstance of the award which continues to add up to accruing interest daily of 7% of the arbitral award which is about $1.2 million daily until the judgment sum is fully paid. Also, I think that Nigeria is not yet approaching the issue of the award as she ought to approach it. Fighting, quarrelling and engage in exchange of words in accusation does not help the situation at all! So, I humbly appeal to the Federal Government to liaise with the P&ID in negotiation on the award.
Furthermore, like I had observed in my letter of displeasure of the 30th day of August, 2019, which I petitioned to the Attorney-General of the Federation with the heading

‘RE: CASE NO: CL-2018-000182, BETWEEN: PROCESS & INDUSTRIAL DEVELOPMENTS LIMITED V THE FEDERAL REPUBLIC OF NIGERIA
LETTER OF DISPLEASURE AT THE CIRCUMSTANCES SURROUNDING THE ARBITRAL AWARD OF $9.6 BILLION (EQUIVALENT TO ABOUT N3.2. TRILLION) BY THE ENGLISH COURT AGAINST THE FEDERAL REPUBLIC OF NIGERIA IN FAVOUR OF PROCESS AND INDUSTRIAL DEVELOPMENTS LIMITED ON THE 16TH DAY OF AUGUST, 2019 AND A RECOMMENDATION FOR A THOROUGH INVESTIGATION OF ALL FEDERAL AGENCIES AND PUBLIC OFFICIALS INVOLVED IN THE PRE-CONTRACT, CONTRACT AND POST-CONTRACT AFFAIRS LEADING TO THE SAID ARBITRAL AWARD AND LITIGATION AND A HUMBLE REQUEST FOR FEED BACK ON THE PROGRESS OF THE INVESTIGATION AND NECESSARY ACTIONS TAKEN BY THE FEDERAL GOVERNMENT OR YOUR EXCELLENCY ON THE OUTCOME OF THE INVESTIGATION’,

I therefore observe emphatically here that Federal Government of Nigeria’s objections in the whole Arbitration and the suit were based on technicalities and not on the substance of the claims, much more so that it was self-inflicted by the Federal Government of Nigeria, with due respect (which the Federal Government of Nigeria also needs to learn in this circumstance in order to forestall any subsequent reoccurrence). The first of it was that the initial contract was repudiated by the Federal Government of Nigeria as alleged by the foreign company/claimant. Also, I beg to disagree with those who hold the view that the award was as a result of a ‘lacuna’ which is contained in the agreement! The reason for my disagreement was because the Federal Government of Nigeria through its representatives, with due respect, was grossly negligent in the whole transactions. Some of these gross negligent conducts are:

i. The lack of diligently prosecuting the suit that it instituted in Nigerian Court in Lagos, on the 9th day of May, 2016, challenging misconduct on the part of the Arbitration Tribunal, which was later struck out by the Nigerian Court for lack of diligent prosecution;

ii. The Federal Government of Nigeria never applied to set aside the Final Award of the Arbitration Tribunal decided on the 31st day of January, 2017, which in law, will mean that the Federal Government of Nigeria was or is not objecting to the Final Award. And the Federal Government of Nigeria never took such step or file any process to challenge and or set aside the said Arbitration Award in any court even since the said 31st day of January, 2017 till the 16th day of August, 2019, when the English Court delivered its Judgment confirming the Award with accruing interests (which was about two (2) years since the Arbitral award was made).

iii. Apart from the agreed terms in the agreement, Clause 20 of the GSPA, provides that ‘The Arbitration award shall be final and binding on all the parties…’.

Therefore, I humbly disagree and submit, with due respect, that the Judgment of the English Court’s Judgment was not as a result of any legal lacuna whatsoever rather, it was much more strengthened by the gross negligence of the Federal Government of Nigeria and its representing officials. More so, the Arbitral Award issue was resolved before the Arbitration Tribunal and not the English Court.

The said award was not challenged for good two (2) years by the Federal Government of Nigeria and the issue before the English Court was for leave to enforce the said Arbitral Award. It is only unfortunate that there are several monetary judgments by the Nigerian courts against the Federal Government of Nigeria or its Ministries, Departments and Agencies which the government has made very difficult to enforce but just a foreigner will be able to enforce more than 3 trillion naira of the Nigerian money!

I have also considered the reasoning of the English Court at page: 18, paragraphs: 65 and 67 and page: 18, paragraph 87 of the soft copy of the Judgment which I was able to lay my hands on and perused, which was about 28 pages in all.
Finally, I therefore in all, having suspected that something must definitely be wrong somewhere and I therefore recommend as follows as I had recommended in my letter of displeasure to the Honourable, the Attorney-General of the Federation:

i. a thorough investigation of all Federal Agencies and public officials involved in the pre-contract, contract and post-contract affairs leading to the said arbitral award and to bring anyone found culpable to book in the interest of this nation and to deter such further act in the nearest future!

ii. Effective Coordination and supervision of all the Federal Government’s Ministries’, Departments’ and Agencies’ activities by the Honourable, Attorney-General of the Federation.

iii. Passing of circular(s)/directive for submission of all contracts embarked upon or pending before the Ministries, Departments and Agencies of the Federal Government henceforth to Your Excellency, for a thorough legal scrutiny and advisory by the Honourable, the Attorney-General of the Federation, in order to forestall any of such unfortunate circumstance in the nearest future;

iv. Negotiation (if possible) with the P&ID Limited on the Arbitral Award’s payment and or likely consideration for reduction in the award;

Finally, it is my recommendation that Nigeria and of course, the FGN needs to always be proactive in handling any national situation without waiting for a time when issues would go out of hands (such as the case of the P&ID’s arbitral award) before taking steps which might be too late and or might have been overtaken by events.

Email: hameed_ajibola@yahoo.com