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Nigeria: Arbitration review and outlook for 2019 (Part II)

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In my previous article, I mentioned that 2018 was quite an interesting year for the arbitration community in Nigeria, considering the considerable developments in the Nigerian arbitration space. I wrote about the imminent birth of an era in the history of arbitration in Nigeria, which could ensure that Nigeria becomes one of the preferred seats for arbitration. I made a case for the House of Representatives (HoR) to pass the Bill to amend the Arbitration and Conciliation Act before the end of the Quarter 2 of 2019. I opined that the passage of the much-awaited Bill would provide the much-needed boost desired to increase foreign investment in Nigeria. I mentioned that foreign investors would do well to look in the direction of Nigeria post 2019 general elections. I started the discussion on the $8.9 billion arbitration award against the Nigerian government and promised to provide more update in this regard, particularly, as it relates to enforcement of international arbitral awards are to be expected.

For the purpose of this publication, however, I will start with continuation of the conversation on the $8.9 Billion Arbitration Award. I will equally proceed to consider the $1.69 Billion Arbitration Award in favour of the federal government of Nigeria by an arbitral tribunal sitting at the Lagos Court of Arbitration. Thereafter, I will briefly discuss the lawsuit between ‘The Chartered Institute of Arbitrators (UK)’ and conclude.

Update on the $8.9 billion arbitration award against the Nigerian government

As previously mentioned, one of notable incidents of 2018, which has already surfaced in 2019, is the $8.9 billion arbitration award issued against the Nigerian government. In my initial publication, I alluded to a report where it was stated that Nigeria risks losing about $9 billion worth of assets in the UK to a British firm, Process and Industrial Developments Limited (P&ID). Given that I had provided the background on this award in my last publication also accessible here, I will proceed straight to what transpired when P&ID sought to enforce the award in the UK.

One of the issues that surfaced when P&ID sought to enforce the award in the UK was whether P&ID could seize Nigeria’s commercial assets in the United Kingdom (UK) notwithstanding the defense of sovereign immunity by the Nigerian government. The position of the Nigerian government raised through its legal team was that it was immuned from enforcement of judgment or arbitral award given the provisions of Section 13(2)(b) of the UK State Immunity Act. It would be recalled that a similar argument had been raised by the Nigerian government during the enforcement proceedings P&ID instituted in the United States (US) where the Nigerian government equally relied on the provisions of the US Foreign Sovereign Immunities Act of 1976 (as amended in 1988).

Attorneys often engaged by clients, for the purpose of dispute resolution with the government and particularly, the international arbitration community, would be well conversant with the fact that commercial parties who contract with states as well as state-controlled entities and then seek to arbitrate disputes and/or execute judgments are often faced with the reoccurring issue of state parties raising the defense of sovereign immunity to challenge the jurisdiction of the arbitral tribunal or court, with a view to avoiding enforcement of an arbitral award or judgment.It is for this reason that in my next publication, I shall be considering the issue of sovereign immunity under international law, while drawing inspiration from the celebrated decision of the English Court in Trendtex Trading Corporation v. Central Bank of Nigeria, the UK State Immunity Act and the US Foreign Sovereign Immunities Act (as amended), together with State Practices in this regard.

Coming back to recognition and enforcement proceedings instituted by P&ID in the UK Commercial Court, the matter came up last on 15 February 2019 and resulted in the Nigerian government being reportedly granted an extension of time to file its arguments on the merits at a subsequent hearing now re-listed and scheduled for hearing on the merits for 21 May 2019 but originally scheduled for 15 February 2019. It is worth noting that the UK Commercial Court’s jurisdiction encompasses all aspects of commercial disputes and serves as the principal supervisory court for international arbitration, with a seat in England and Wales. The UK Commercial Court equally deals with the granting of freezing orders and other relief in aid of arbitration, challenges to arbitration awards and enforcement of awards.

While the efforts by the Federal Government of Nigeria (FGN) to defend its interests in the UK is arguably commendable and taking into consideration that it is well within the FGN’s rights to raise all available and proper defenses in law, it is quite uncertain how the recognition and enforcement proceedings before the UK Commercial Court will go. However, if the precedents of the English Court(s) and attitude to the defense of sovereign immunity by states are anything to go by, it may augur well for the Nigerian government to see to an amicable resolution of the $8.9 billion award. Such a lingering matter does no good to the commercial attractiveness of Nigeria and an affirmative nod by the UK Commercial Court, granting P&ID access to assets belonging to the Nigerian government to satisfy the arbitral award will most certainly not be pleasant to the FGN. It does remain to be seen, however, whether the Nigerian government would prudently leverage on this seemly little window of grace and work towards an amicable resolution of this matter with P&ID or leave matters to chance by trusting its fate in the hands of the UK Commercial Court.

$1.69 Arbitration award in favour of the Nigerian government

An Arbitral Tribunal sitting at the Lagos Court of Arbitration (LCA) recently awarded the FGN $1.69 billion in an arbitration. The arbitral proceedings, which was in Nigeria, before the Arbitral Tribunal sitting at the LCA, was instituted on15 August 2016, by the claimants, Atlantic Energy Drilling Concepts Nigeria Limited and Atlantic Energy Brass Development Limited, against the Nigerian Petroleum Development Company (NPDC).

The dispute, which resulted in the arbitral proceedings, started when NPDC entered into several SAAs with Atlantic for the development and production of hydrocarbon resources with respect to OMLs 26, 30, 34 and 42 (the “Forcados Assets”) and OMLs 60, 61, 62 and 63 (the “Brass Assets”). The SAAs created obligations for Atlantic Energy to remit to the government the revenues from the crude oil lifted.

In resolving the dispute in favour of NPDC, the Arbitral Tribunal dismissed Atlantic Energy’s claims and awarded the sum of US$1,690,900,391.39, US$200,000 and N1,500,000 as costs in favour of NPDC.It directed that the amount be paid within 21 days from the date of the Award for crude oil lifted from the Forcados Assets) and OMLs 60, 61, 62 and 63 (Brass Assets).The Arbitral Tribunal further held that Atlantic Energy and its sister companies were indebted to NPDC for their failure to perform their financial obligations under the respective Strategic Alliance Agreements (SAAs).

Lawsuit between ‘The Chartered Institute of Arbitrators (UK)’ and ‘The Chartered Institute of Arbitrators (Nigeria)’

Another significant development in 2018 for the arbitration community in Nigeria was the passing-off law suit instituted at the instance of the Nigerian Branch of the Chartered Institute of Arbitrators United Kingdom (UK) against “The Chartered Institute of Arbitrators (Nigeria).”

In October 2018, the Honourable Justice Olaterogun of the Federal High Court, Lagos Judicial Division, delivered a judgment in favour of The Chartered Institute of Arbitrators (UK) (“the Plaintiff”) against a body called “The Chartered Institute of Arbitrators (Nigeria) Ltd/Gte” (“the Defendant”). The Plaintiff had instituted an action in passing-off against the Defendant, on the basis that the Defendant was using the Plaintiff’s name, logo and membership grades. Meanwhile, the Defendant on the other hand, counterclaimed against the Plaintiff. In delivering its judgment, the Court held that by using the name ‘Chartered Institute of Arbitrators’ (Nigeria), as well as the Plaintiff’s logo and its membership grades, the Defendant was passing itself off as the Nigerian branch of the Plaintiff.Consequently, the Court granted an order of perpetual injunction restraining the Defendant from further using the ‘Chartered Institute of Arbitrators (Nigeria) Ltd/Gte name, the logo, membership grades and accompanying acronyms of the Plaintiff on any materials.

Concluding remarks

Taking into consideration how engaging 2018 was for the arbitration community in Nigeria and given preliminary review as well as informal engagement with leading stakeholders in arbitration in Nigeria, it suffices to say that 2019 will be more eventful, engaging and laced with lots of potentials for enriching the arbitration landscape in Nigeria. This year, some developments regarding enforcement of (international) arbitral awards are projected. For 2019, more should be expected from the Lagos Court of Arbitration (LCA). A Joint Seminar wasrecently held by the LCA and the UK Legal Services Trade Mission, with a view to promoting increased arbitration practice and ADR in Nigeria, across different sectors of the Nigerian economy.

While it is not in doubt that some arbitral institutions in Nigeria are making efforts to advance and encourage professional knowledge of arbitration in Nigeria, in addition to ensuring the development of Nigeria as resource for arbitration in dispute resolution, it remains to be seen whether the following arbitral institutions, to wit, the Maritime Arbitrators Association of Nigeria, Lagos Chamber of Commerce International Arbitration Centre, and the Society of Construction Industry Arbitrators, would push out of their seemly comfort zones and aspire to be more competitive like their contemporaries jurisdictions often chosen as most preferred arbitration seat and/or venue.

In all, it is projected that 2019 would witness significant developments for the Nigerian arbitration community. The seemly challenges and shortcomings notwithstanding, Nigeria is making efforts to become one of the Preferred Arbitral Seats as well as positioning herself as one of the world’s leading arbitration hubs in no distant future. The race is one already and one can only hope for the best for a nation committed to becoming the pride, bride and darling of arbitration enthusiasts alike and non- alike.

 

Joseph Onele

 

Onele is a Legal Practitioner based in Lagos. He wrote via  [email protected]

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