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Nigeria Loses Sovereign Immunity Claim As US Court Upholds $70m Award to Chinese Firm
Nigeria’s claim to sovereign immunity cannot stand in a commercial venture, a US Appeal Court has ruled.
The court rejected Nigeria’s sovereign immunity defence to the enforcement of a $70 million investment treaty award won by Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese investor, in a free trade zone.
Nigeria had “gruesomely” violated both fundamental and commercial rights of the Chinese firm, judges at the US Court of Appeals in Washington DC ruled.
In a 2-1 verdict delivered on August 9, documents of which are attached, majority ruling affirmed the judgment of the US district court for the District of Columbia that held that the arbitration award is enforceable.
In January 2023, Beryl Howell, the presiding judge of the lower court, dismissed Nigeria’s argument that the court did not have jurisdiction over the case since the country is a sovereign entity.
Howell held that the court has jurisdiction since the United Kingdom (UK), where the $70 million arbitration award was issued against Nigeria, is a signatory to the New York Convention.
In 2010, Zhongshan, through Zhuhai Zhongfu Industrial Group Co. Ltd. (Zhuhai), its Chinese parent company, acquired rights to develop a free trade zone in Ogun state.
A year later, Zhongshan set up Zhongfu International Investment (NIG) FZE (Zhongfu), a Nigerian entity, to manage the project under the permission of the Ogun state government.
However, things took a different turn in July 2016 when the investor accused the state government of abruptly moving to terminate its appointment while attempting to install a new manager for the free trade zone.
Subsequently, Zhongfu initiated an investment treaty arbitration against Nigeria under the bilateral investment treaty between the People’s Republic of China and Nigeria (the China-Nigeria BIT).
The arbitrators had ruled that Nigeria was in breach of its obligations under the China-Nigeria BIT and awarded Zhongshan compensation of around $70 million.
In January 2022, the Chinese company initiated a case to seek enforcement of the arbitration award.
Nigeria pleaded state immunity but was turned away by Sara Cockerill, a high court judge in the UK, who said the country abused the time frame for appealing arbitral awards.
In the majority judgment, the US appellant court held that the final arbitration award is enforceable under the New York convention since the dispute is between “persons” that share a legal commercial relationship.
The court ruled that the Foreign Sovereign Immunities Act (FSIA) arbitration exception stripped Nigeria of the sovereign immunity in the arbitration award case.
“For the foregoing reasons, we hold that the final award is enforceable under the New York convention because it arose out of differences between ‘persons’ that share a legal, commercial relationship,” the majority judgment reads.
“The district court therefore has jurisdiction over this case under the FSIA’s arbitration exception. The judgment of the district court is affirmed.”
The majority judgment was issued by Patricia Millett and Julianna Childs.
In the dissenting judgment, Gregory Katsas, the third judge, argued that when the New York convention was drafted, the word “persons” did not include a sovereign nation.
Katsas held that the action of Ogun State cannot be attributed to Nigeria, adding that the arbitration award “arises solely out of Nigeria’s sovereign acts governed by public international law”.
“Text, legal context, and drafting history all indicate that the word ‘persons,’ as used in the New York Convention, does not include signatory nations acting as sovereigns. I respectfully dissent,” Katsas said.
Three days after the judgment of the US appeal court, a Paris court in France ordered the seizure of three jets belonging to the Nigerian government over the dispute involving the arbitration award to the Chinese firms.
In 2023, a court of appeal in the UK ruled that Nigeria is liable for a $70 million arbitration award in favour of the Chinese firm.
The development means that Nigeria has lost arbitration award cases against the Chinese firm in France, the US, and the UK.
The Nigerian government has accused the Chinese firm of attempting to use deceptive means to acquire the country’s offshore assets.
Agency Report
Below is the detailed judgment:
United States Court of Appeals
Former Military President, Gen Ibrahim Badamasi Babangida (IBB), is set to launch his long-awaited autobiography.
Reports said the memoir titled: ‘A Journey In Service’, will be released on February 20, 2025, at the Congress Hall of Transcorp Hilton Hotel in Abuja.
The development is coming 32 years after IBB left office.
The regime of the former Head of State was negatively shaped and defined by the adoption of the Structural Adjustment Programme (SAP) policy, among other regulations, which sparked a nationwide riot by student union and other similar groups.
There was also the unresolved murder of the late journalist, Dele Giwa, and the June 12 annulment, among other controversial issues.
While in office, IBB was popular with the moniker “evil genius” and “Maradona”.
Explaining the nicknames, IBB said they were manufactured by the media because of his “deft political moves”.
“That’s the very good thing about the Nigerian media and Nigerian people. You have to anticipate them.
“If you anticipate them, then you live well with them. They call me ‘evil genius’, I marvel at that. The contradiction, you can’t be evil and then be a genius.”
“The definition of Maradona I got from the media is because of deft political moves. That’s the way the media described it”, he had said.
He succumbed to pressure in August 1993 when he “stepped aside” for the late Ernest Shonekan as the chairman of the Interim Government.
The late General Sanni Abacha would, however, topple the government in 1993 and would subsequently die in office in 1998.
Although IBB granted interviews to local and international media since leaving office, he has somehow found a way around some of these contentious issues that happened during his rule.
About seven years ago, he had expressed doubts about writing an autobiography, saying he was uncertain if Nigerians would “want to read about a dictator”.
He added that the public had a wrong impression of him, citing his role in the June 12 crisis, and some of the policies he unfurled between 1985 and 1993 as head of a junta.
However, he made a U-Turn and wrote the book.
President Bola Ahmed Tinubu will lead former Nigerian leaders and their counterparts in other parts of Africa to grace the much awaited autobiography.
According to an invite dispatched to dignitaries this week, the board of trustees of the IBB Presidential Library Foundation said the book launch will take place alongside fundraising for a Presidential Library.
The organisers said the event would be chaired by former President Olusegun Obasanjo, with President Bola Tinubu as the Special Guest of Honour.
The keynote address would be delivered by the former president of Ghana, Nana Akufo-Addo, while former vice-president Yemi Osinbajo would review the autobiography.
Other guests billed to attend include ex-presidents Muhammadu Buhari, Yakubu Gowon, Abdulsalami Abubakar, and Goodluck Jonathan.
A former Minister of Defence Gen. Theophilus Danjuma and Chairman of BUA Group; Abdul Samad Rabiu, are named chief launchers.
Members of the National Working Committee (NWC) of the Peoples Democratic Party (PDP) have expressed support for the recent court ruling that nullified the party’s congresses in Rivers State.
The NWC members made their position known during a visit to Governor Siminalayi Fubara at the Government House in Port Harcourt on Wednesday night, where they also held a closed-door meeting with the Governor.
The delegation included the PDP National Publicity Secretary, Debo Ologunagba.
Speaking after the meeting, the National Treasurer, Ahmed Mohammed, reaffirmed Governor Fubara’s status as the party leader in Rivers State.
He described their visit as part of an effort to realign the party and strategize for a comeback in the 2027 elections.
Mohammed stated their commitment to fostering unity, stability, and effective repositioning in the State.
He also expressed the NWC’s support for Ude Okoye, who was recently reinstated as the party’s National Secretary by the Court of Appeal.
Mohammed urged party stakeholders and governors to rally behind Okoye for the party’s progress.
The visit comes just days after PDP Youth leaders from across the country met with Governor Fubara in a bid to resolve internal party crises, with a focus on affirming his leadership in the state.
The court ruling that nullified the Ward, Local, and State congresses, which were won by allies of the Minister of the Federal Capital Territory, Nyesom Wike, has created ripples within the party.
The congresses, which were held last year, were marred by conflicting court orders, with a State High Court restraining the exercise while a Federal High Court allowed it.
Following the nullification, an interim committee emerged, saying it will oversee the leadership of the party in Rivers State.
Justice Chukwujekwu Aneke of the Federal High Court in Ikoyi, Lagos, has denied the request of Economic and Financial Crimes Commission (EFCC) to issue an arrest warrant for Dr Oba Otudeko, Dr Bisi Onasanya and others due to lack of formal service on the defendants.
The court addressed multiple motions during the session, including the Prosecutor’s request for a warrant of arrest, which the Judge rejected due to the lack of formal service to the defendants. The Judge, therefore, granted an application for substituted service.
Bode Olanipekun, appearing for Dr Otudeko, sought an order restraining parties from irresponsible use of the media, Thus, the Judge advised all parties to exercise restraint in media engagement and urged journalists present to ensure accurate reporting of court proceedings.
The case has brought the EFCC under scrutiny for allegedly flouting procedural norms.
Critics have faulted the agency for going public with the charges without first formally serving Otudeko and other implicated parties. Legal experts argue that this approach undermines the principle of fair hearing and could prejudice the public against the accused.
The case has been adjourned to February 13 for arraignment.
