FG granted leave to challenge $9.6bn arbitral award to P&ID

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The Commercial Court of England, on Friday, granted Nigeria leave to appeal against the $9.6 billion arbitral award to a British Virgin Island firm, Process and Industrial Developments Limited (P&ID) over a botched gas supply and processing agreement.

Nigeria had applied to the court for an extension of the time to appeal against the award having earlier missed the initial 28 days deadline.

The London arbitration panel had in January 2017 issued the award against Nigeria for a breach of a 2010 gas supply contract it entered into with P&ID.

The arbitral award was confirmed by a British court in a judgment delivered on August 16, 2019 while Nigeria made its set-aside and related applications on December 5, 2019.

In his ruling today, the judge, Sir Ross Cranston, held that Nigeria successfully established a prima facie case of fraud against P&ID in the gas supply contract.

He held that Nigeria acted reasonably well and that the delay in bringing the allocation was not deliberate.

According to him, the balance of fairness necessitated that Nigeria be given the opportunity to argue her case to set aside the judgement.

“With that as background I find persuasive Mr. Howard’s submission that the fairness factor does have an impact in challenges where there is strong prima facie evidence of fraud, certainly of the through-going character alleged in this case.

“Not only is the integrity of the arbitration system threatened, but that of the court as well, since to enforce an award in such circumstances would implicate it in the fraudulent scheme. Conclusion on the Kalmneft factors,” he said.

The judge further held that the delay in the case was extraordinary and weighed heavily on the side of the balance against an extension.

“In my view, however, other factors bring it down in favour of an extension.

“As I have explained, the delay is not in my view the result of a deliberate decision made because of some perceived advantage, and in all the circumstances Nigeria has acted reasonably”, the judge held.

He held that given the strong prima facie case of fraud which Nigeria had established, “the position is along the lines of that identified in Terna, where Popplewell J identified the substantial injustice an applicant would suffer in respect of the underlying dispute if deprived of the opportunity of making a challenge should an extension of time be refused: Terna Bahrain Holding Company WLL v Bin Kamil Al Shamsi [2012] EWHC 3283 (Comm), (2013) 1 Lloyd’s Rep 86, (33).”

The judge further stated that: “For the reasons I have given, P&ID has contributed to the delay, and it will not by reason of the delay suffer irremediable prejudice in addition to the mere loss  of time if the application is permitted to proceed.

“Although not a primary factor, fairness in the broadest sense favours an extension in this case.

“For the reasons given, I grant Nigeria’s applications for an extension of time and relief from sanctions.”

Confirming the development, the attorney general of the federation and minister of justice, Mr. Abubakar Malami, described the court’s ruling as “unprecedented.”

He said in a statement issued in Abuja by his spokesman, Dr. Umar Gwandu that the Court, allowed Nigeria to challenge the verdict, “well outside the normal time limits, due to the exceptional circumstances where the FRN has uncovered evidence of a massive fraud in procuring the award”.

“The Court heard evidence from the FRN and the offshore shell company, P&ID, in relation to the gas supply and processing agreement (GSPA), which the parties entered into 10 years ago and which was never performed.”

Malami noted that the present government having inherited the dispute from the previous administration, “only recently uncovered evidence that the GSPA was a sham commercial deal designed to fail from the start, and that its subsequent arbitral award was based on fraud and corruption.”

He said Nigeria relied on a number of ongoing investigations across multiple jurisdictions, including the US, to build its case.

“During the hearing, new evidence was presented to further support Nigeria’s challenge.

“The FRN will now proceed to a full trial of the issues, where the FRN’s substantive application to finally set aside the award will be heard, thereby recording a major success considering the fact that the Federal Government exceptional circumstances application to have its challenge taken well outside the normal time limits is upheld on account of uncovered evidence of massive fraud in procuring the award.

“In light of the new and substantive evidence presented regarding P&ID’s fraudulent and corrupt activities, the Court has granted our application for an extension of time to hear our challenge out of normal time limits.

“The federal government will now proceed to a full hearing of our fraud challenge in the coming months.

“Investigations into the GSPA are ongoing, and we are firmly committed to overturning the award – no matter how long it takes – to ensure that this money goes towards Nigeria’s future, not into the pockets of millionaires trying to exploit our country,” he added.

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