UK court dismisses $11.5bn P&ID arbitral award against Nigeria

•Tinubu hails verdict, says victory is for Africa

A UK judge has dismissed the $6.6 billion judgment against Nigeria – which has now risen to $11.5 billion with interest – won by Process & Industry Developments (P&ID) Ltd over a failed 2010 deal to develop a gas processing plant.

Judge Robin Knowles of the Business and Property Court in London court, which sat remotely and behind closed doors, ruled that the award was obtained by fraud and what has happened in the case is contrary to public policy.

The judge also found that P&ID had paid bribes to a Nigerian oil ministry official in connection with the gas contract and had failed to disclose this when it later took Nigeria to arbitration over the collapse of the deal.

President Bola Tinubu applauded the judgment, saying that “nation states will no longer be held hostage by economic conspiracies between private firms and solitarily corrupt officials who conspire to extort and indebt the very nations they swear to defend and protect” and called it a “victory for our long-exploited continent.”

Nigeria has been embroiled in a fight with P&ID over a failed 2010 deal to develop a gas processing plant.

Read also: EFCC seeks Interpol’s support against P&ID, extradition of treasury looters

P&ID claimed Nigeria violated terms of its agreement by failing to provide gas for the power plant it wanted to build for the country.

This frustrated the construction of the gas project agreed to during the government of former president Umaru Yar’Adua and deprived P&ID the potential benefits expected from 20 years’ worth of gas supplies with “anticipated profits of $5 to $6 billion.”

The arbitral tribunal unanimously decided that the Federal Government had repudiated the Gas Supply and Processing Agreement (GSPA) by failure to perform its obligations under the GSPA and awarded P&ID $6.6 billion in 2017. That fine, along with interest, has now risen to $11.5 billion.

Former president Goodluck Jonathan’s government reached an out-of-tribunal agreement for the payment of $850 million and passed on disbursement to the administration of President Buhari.

Buhari balked at the idea of paying the negotiated sum, set aside the settlement agreement and challenged the enforcement of the award before the English Commercial Court. But the London court added $2.4 billion in interest, making it $9 billion.

Read also: UK court sets October 23 verdict date in $11bn P&ID vs. Nigeria case

The judge granted Nigeria’s request for a stay on any asset seizures while its legal challenge is pending, but ordered it to pay $200 million to the court within 60 days to ensure the stay. It also must pay some court costs to P&ID within 14 days.

The original decision on Aug. 16 converted an arbitration award held by P&ID to a legal judgment, which would allow the British Virgin Islands-based firm to try to seize international assets.

Nigeria then began investigating the company through the Economic and Financial Crimes Commission and found evidence of two bank transfers totalling $20,000 made by Dublin-based Industrial Consultants (International) Ltd. — part of the P&ID group of companies — to Grace Taiga, a Nigerian government lawyer who oversaw the award of the gas plant contract.

Read also: UK court orders P&ID to deposit £1.5m for appeal against Nigeria

The payments, in 2017 and 2018, were made from an Industrial Consultants account at Allied Irish Banks and were purportedly for “medical costs,” Bala Sanga, the lead prosecutor, said in the interview.

Based on this new evidence it called ‘seismic’, Nigeria filed fraud challenges against P&ID but the company has failed to respond to the charges.

With a depleted excess crude account and low returns from even lower crude oil prices, Nigeria does not even have the capacity to pay the judgement debt, a development that could lead to seizure of Nigeria’s international assets including oil cargoes.

The judge stated in the ruling that the case had “brought together a combination of examples of what some individuals will do for money”.

“Driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others,” he wrote, referring to the loss to the Nigerian people.

The judge said a further hearing would take place to decide whether to send the case back to arbitration or ditch the $11 billion award without further delay.

Knowles found P&ID had paid bribes to Taiga, formerly legal director at Nigeria’s Ministry of Petroleum Resources.

Read also: Lessons FG learnt from P&ID contract – Malami

He also found that P&ID’s co-founder Michael Quinn, who died in 2015, dishonestly failed to tell the original arbitration panel about the bribes paid to Taiga.

Knowles ruled that the arbitration “would have been completely different, and in ways strongly favourable to Nigeria, had the fact of bribery of Mrs Grace Taiga when the (gas contract) was being made been before the tribunal”.

President Tinubu commended the UK court for prioritising the merits of the case above all other considerations.

Ajuri Ngelale, special adviser to the President on media and publicity, in a statement, said: “Today’s victory is not for Nigeria alone. It is a victory for our long exploited continent and for the developing world at large, which has for too long been on the receiving end of unjust economic malpractice and overt exploitation.

“Nigeria is appreciative of the tremendous efforts of the defense team and acknowledges the role of the Federal Ministry of Justice and the Office of the Attorney-General in the process of defending Nigeria’s interest in this case.”