Nigeria pursues appeal in landmark P&ID arbitration case

The 28-day time limit Nigeria had under English law to challenge the $6.6bn award, ordered by a three person arbitral tribunal in 2017 in respect of a breach of a major gas supply and processing agreement, has expired, and the High Court last year granted the other party to the agreement, Process and Industrial Developments (P&ID), permission to enforce the award. However, Nigeria has subsequently alleged that the agreement was procured on the basis of fraud and corruption, citing new evidence it claims has come to light. According to media reports, Nigeria believes the new evidence justifies an extension of time to challenge the award.

In addition to the proceedings raised before the High Court, Nigeria is involved in proceedings in the US where it has applied for disclosure of documents from 10 banks which it says will help prove its fraud and corruption claims, Bloomberg has reported.

P&ID has labelled Nigeria's claims a "conspiracy theory" that "relies on speculation and conjecture with no basis in fact", according to the Bloomberg report.

The $6.6bn in damages ordered in the arbitration is almost five times Nigeria’s national education budget and eight times its health budget, the Financial Times reported last month.

At a two-day hearing before the High Court last month Nigeria applied for an extension of time to bring challenges under sections 67 and 68 of the Arbitration Act 1996 on the grounds of fraud. It also applied for a relief from sanctions relating to the enforcement application. At the end of the two days, the judge hearing the arguments reserved judgment. The eagerly awaited decision will be handed down in due course, when Nigeria will learn if it is able to continue its challenge of the award or not.

Rob Wilkins, arbitration specialist at Pinsent Masons, the law firm behind Out-Law, said: "This case is attracting huge interest in Nigeria because of the size of the award and its potential implications for the economy and the outcome of this latest twist will determine how the case will continue. If the application is granted, Nigeria will likely have the opportunity to challenge the Award at a further hearing on the substantive fraud allegations. However if the application is refused, and in the event Nigeria does not voluntarily pay out under the Award, P&ID will likely continue its efforts to recover the sums awarded to it. In so doing it will likely be looking at the nature of and assets owned by Nigeria globally and will explore enforcing its judgment in those jurisdictions."

The latest proceedings in the case come after an earlier jurisdictional struggle that Nigeria was unsuccessful with. The dispute was borne out of a gas supply and processing agreement governed by Nigerian law. The dispute resolution clause in the contract provided for arbitration under the rules of the Nigerian Arbitration and Conciliation Act with the venue stated as London, England. During the arbitration proceedings and after a partial award on liability, the seat of the arbitration was called into question. Nigeria claimed the correct seat of the arbitration under the agreement was Nigeria, whereas P&ID said that England was the correct seat of arbitration.

Nigeria then commenced proceedings before the courts in Nigeria on the basis that Nigeria was the seat of the arbitration and so a partial award on liability by the tribunal should be set aside. Although Nigeria was successful in its challenge in the Federal Court of Nigeria to set aside the partial award, both the tribunal and later the English courts ruled that the correct seat was, in fact, England, and that the Federal Court of Nigeria therefore had no jurisdiction to set aside the arbitral award.

The seat or legal place in an arbitration holds great importance. It can determine, amongst other things, the national courts responsible for issues relating to the annulment of an award. Once an award is made, a party has limited time according to the national laws of the seat of the arbitration within which to challenge an award.

Additional reporting by Mahir Hussein of Pinsent Masons.