In a landmark decision with far-reaching implications, a London court on Thursday decisively rejected an application by Process & Industrial Development Limited (P&ID) to appeal the judgment halting the enforcement of its $11 billion arbitration award against Nigeria.
Robin Knowles, the presiding judge, ruled that the award against Nigeria should be thrown out immediately.
On October 23, Knowles halted the enforcement of the award by upholding Nigeria’s prayer that it was obtained by fraud and in violation of section 68 of the English Arbitration Act 1996.
The judge found that P&ID had paid bribes to Nigerian officials involved in the drafting of the gas supply and processing agreement (GSPA) in 2010.
He also found that P&ID was illegally in possession of Nigeria’s privileged legal documents during the arbitration hearings.
However, Knowles said he still had to choose from three options after making his determination.
The options included: ” (a) to remit the award to the tribunal, in whole or in part, for reconsideration, (b) to set the award aside in whole or in part, or (c) to declare the award to be of no effect, in whole or in part”.
This ruling marks a significant victory for the Nigerian government and its fight against what it has characterized as a fraudulent and corrupt contract.
The Background:
In 2010, P&ID, a company with limited operations and a murky history, secured a gas processing contract with the Nigerian government through allegedly corrupt means. The contract, riddled with irregularities, was later canceled by Nigeria, leading P&ID to initiate arbitration proceedings. In 2017, the tribunal awarded P&ID a staggering $6 billion, which, with accrued interest, ballooned to $11 billion.
Nigeria’s Fightback:
The Nigerian government refused to accept the award, alleging that the contract was procured through fraud and that P&ID had engaged in a “sham” arbitration process. It launched a multi-pronged legal offensive, contesting the award in both Nigeria and the United Kingdom.
The Turning Point:
In October 2023, a London court ruled in favor of Nigeria, finding that the P&ID contract was indeed procured through fraud and in violation of the English Arbitration Act. This judgment effectively halted the enforcement of the $11 billion award, dealing a major blow to P&ID’s claims.
P&ID’s Appeal Attempt:
Undeterred, P&ID sought permission to appeal the judgment, arguing that the court had made errors in its decision. However, on Thursday, the court once again rejected their application, concluding that there were no grounds for appeal.
Impact and Implications:
The London court’s decision is a significant victory for Nigeria, both in terms of its financial implications and its broader fight against corruption. It bolsters the government’s position and sets a crucial precedent for other cases involving potentially fraudulent contracts and arbitration awards.
For P&ID, the ruling likely marks the end of the road in its pursuit of the $11 billion award. The company now faces the possibility of legal repercussions for its alleged involvement in the fraudulent contract.
Looking Ahead:
While the immediate legal battle is over, the ramifications of this case are likely to reverberate for some time. The Nigerian government’s success in challenging the arbitration award could pave the way for similar challenges in other cases involving questionable contracts and awards. Additionally, the case raises broader questions about the integrity of international arbitration processes and the need for stronger safeguards against fraud and corruption.
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