Sometime in 2017, the Nigerian Government found itself in a petrifying quagmire of a humongous $6.6 billion judgement delivered against it (which ballooned to $11.2 billion as at October, 2023, as a result of the interest accrued thereon), from an arbitral award resulting from arbitration proceedings involving the Process & Industrial Developments Limited aka P & ID and the Federal Republic of Nigeria in London. The embarrassing award was, to say the least, very unsettling for Nigeria, who proceeded to challenge the award, at the High Court of England and Wales. In the judgement which was delivered on October 23, 2023, Hon. Mr Justice Robin Knowles, CBE, found in favour of the Federal Republic of Nigeria, holding that the arbitration proceedings and award were fraudulent. Even the British Lawyers that represented Nigeria in the Arbitration proceedings were found to have been compromised, making classified Nigerian documents which P & ID were not entitled to see, available to them. Has this put an end to the anxiety of the Nigerian Government? Going forward, what lessons must Nigeria learn from this outing? How can this level of grand corruption in the Civil Service be eradicated, to ensure that Nigeria never falls into this type of trap again? Dr Gbenga Oduntan, Sam Kargbo, SAN, Chukwuemeka Eze and Kede Aihie, examine the salient points and knotty issues in the case
Legal Analysis of the P & ID Judgement: The Good, the Bad and the Ugly
Dr Gbenga Oduntan
On the 23rd of October, the international legal community and the Nigerian public received the news of the delivery of the judgement in the celebrated case before The Hon Mr Justice Robin Knowles, CBE between: The Federal Republic of Nigeria (Claimant) and Process & Industrial Developments Limited (P&ID) (Defendant). This case will no doubt in time come to stand as locus classicus on many significant points of law especially because of its relevance to international arbitration, commercial agreements, contract law, government procurements, corruption in arbitration and dispute settlement, anticorruption law and transparency in international business transactions among others. The P & ID case is a caution tale for every developing country, particularly Nigeria, on their multispectral vulnerability in the field of international business transaction, international trade, dispute resolution mechanisms, particularly arbitration and mediation. It is also a significant wake up call for all professionals and government departments that work on long term contracts, foreign investments, oil and gas transactions and international financial institutions. The case also exposed, the underbelly of the highly closed world of arbitration and alternative dispute resolution. It is also clear that there are also lessons for developed States and their courts and tribunals, about their imperfections and exposures in international commercial law and relations.
Background of the Case
The background of this highly interesting case, rests on a complex commercial arrangement that dates to the first decade of this century. There was a near catastrophic Award of $7 billion against Nigeria and of course, a challenge under Section 68 of the English Arbitration Act 1996. It is perhaps, important to recap some of the issues underlying the dispute.
The underlying contract was based on a “Gas Supply and Processing Agreement for Accelerated Gas Development” (“the GSPA”) signed on 11 January, 2010 between two parties. In the event Nigeria did almost nothing to perform the GSPA after signing it, but, as Nigeria strenuously pointed out, neither did the other party. Yet, after a long drawn out high profile arbitration, the arbitral tribunal decided in 2017, that Nigeria owed P & ID US$6.6 billion. This sum is so vast, that it is material to Nigeria’s entire federal budget. With interest at the rate awarded by the Tribunal, the amount as at judgement day, if it had gone against Nigeria, would exceed US$11 billion (Paragraph 4).
Despite huge mineral resources, especially in the hydrocarbon sector, Nigeria notoriously has a huge problem of energy insecurity. The country has for a long time, been seeking innovative means to address this challenge. Under the GSPA, Nigeria was to supply specified quantities of “wet” gas to Gas Processing Facilities (GPFs) constructed by P & ID. P & ID was to strip the wet gas into “lean” gas, to be delivered to Nigeria to be used for power generation. The remaining natural gas liquids were to be retained by P & ID for onward sale, either domestically or by export. The stated duration of the GSPA was 20 years (or more, under one scenario). It is common ground that, in the event Nigeria did not in fact supply any wet gas to P & ID, and nor did P & ID construct any Gas Processing Facilities (Paragraph 8).
Needless to say, the contract as a commercial conceptual arrangement is exactly the kind of thing that Nigeria needs to further kickstart its development, especially in the very ambitious era of the new century when the country’s economy was raging and the governments of the period were bullish and audacious in their plans. It will perhaps, never be found out precisely why nothing moved on this arrangement, but red flags were abound.
An English court in 2020 ( EWHC 2379 (Comm) Case No: CL-2019-0007), noted that the company as at the time it won the contract had “no assets, only a handful of employees, and was without a website or other presence”. The contract was given to P & ID without competitive tender, and this was despite several existing contractual disputes between other companies belonging to the very same directors and other Nigerian government departments.
It is fair to say that the required robust due diligence Nigeria ought to have done before entering this contract, was perhaps, only done eight years later in June 2018 when former President Buhari directed that Ministries should make available all relevant documentation and hand them over to the country’s Economic and Financial Crimes Commission (EFCC), so it could investigate the contract given to P & ID. Nigeria’s National Intelligence Agency was then involved, to investigate P & ID. The Nigeria Police and Federal Inland Revenue Service, eventually opened separate investigations into P & ID.
Criminal proceedings then commenced against P & ID, and other principal actors. P & ID in Nigeria, thereafter, pleaded guilty to conspiracy to defraud Nigeria, money laundering, tax evasion and trading without authorisation. Sir Anthony Evans was nominated to the Tribunal by P & ID. Chief Bayo Ojo, SAN was nominated by Nigeria. Lord Hoffmann was appointed Chairman on 29 January, 2013.
The Major Grounds of Contention
In its challenge, Nigeria made allegations of bribery, corruption and perjury in several respects. The allegations extend to the GSPA, but they then extend further across the arbitral process from the Arbitration Agreement to Final Award. The allegations by Nigeria include allegations of bribery and corruption by P&ID before, at and after the time the parties entered into the GSPA. Nigeria alleged that some of its own Lawyers at the time of the arbitration, including two Leading Counsel, were corrupted by P & ID. The allegations extended, even to the early stages of the challenge before the Court. In turn, for its part, P & ID expressly refuted Nigeria’s main arguments, and described Nigeria’s case against it as “false and dishonest” (Paragraphs 12, 471).
A Cacophony of Illegal Actors Within Nigeria
It may be predicted that one of the enduring usefulness of this case is that it forced into the bright sunlight of national and international scrutiny the massive problem of corruption in Nigeria. The facts and unsavoury practices unearthed during the case and contained in the judgment indict for all to see named individuals and institutions. Without passing any particular judgment on guilt because that is not what the judgment itself did or even sought to do there is a balance of probability that shameful conducts and improper behaviour abound in Nigerian officialdom over the decades and perhaps till present.
The list is rich, and there can only be space and time to highlight a few. The facts revealed included previous deals the court considered indicative of a corrupt operation of Mr Michael Quinn and Mr Brendan Cahill, the businessmen operating as P & ID. For instance, multiple sets of murky transactions were highlighted at Nigeria’s Ministry of Police Affairs, Ministry of Defence, Nigerian National Petroleum Corporation (NNPC), among others.
Whereby an erstwhile Minister of Police Affairs, around 2003 and 2007 received several high sums of payments in Pounds Sterling ostensibly for medical treatment in a London Clinic, of which the Honourable Judge concluded as suspicious and indicative of money-laundering, and which probably explains the background of a 2007 contract for the supply of ammunition and bulletproof vests signed by a company and the Ministry of Police Affairs to a stated value of US$3,173,354.08. Other contracts laying the tone for the corruption that led to he debacle Nigeria found itself, date back to a Ministry of Defence contract in May 2002. This was for a contract for the refurbishment of 36 Scorpion tanks (the Scorpion Contract). Following a set of dodgy payments between highly placed workers in the Ministry of Defence, facts establishing grounds for a finding of grand-corruption were exposed.
The Temple of Arbitration on Trial
As the Honourable Judge correctly wrote “… this is a highly unusual case, although one that draws attention to matters of wider importance. Quite apart from the consequences for the parties, the matter touches the reputation of arbitration as a dispute resolution process”. At the arbitration stage, several clearly terrible things happened to provide the fertile and fortunate ground for challenge. There are allegations, and some were persuasive to the Court, showing a pattern of bribery of Nigerian officials.
The facts traversed throughout the long judgement, do establish serious grounds of impropriety on the part of Mr Shasore, SAN, Nigeria’s Leading Counsel at the Arbitration. These include 2019 admissions by Mr Shasore, SAN to the EFCC that he made personal gifts of US$100,000 each to a certain Ms Adelore (former Director of Legal Services at the Ministry of Petroleum Resources) and Mr Ikechukwu Oguine, General Counsel, Coordinator of Legal Services and Secretary to the NNPC. On 13 September, 2019, Mr Oguine equally gave a statement in which he said that he received US$100,000 from Mr Shasore, SAN.
Yet, the Court did not accept allegations easily as is true of every robust judgement, such as the one delivered by Mr Justice Robin Knowles. A testimony by Mr Tijani alleging that the Directors of P & ID bribed him with US$50,000 in a “black bag” in April 2009, while he attended a dinner with Mr Michael Quinn and Mr Hitchcock at the “Chopsticks” Restaurant in Abuja and was given a US$50,000 cash ‘gift’ was disputed by P & ID. The Judgr was not prepared to rely on it, and he stated, “I am concerned, it cannot be tested satisfactorily.” In relation to a “statement of facts and documents concerning bribery” prepared by Nigeria, where it was alleged that a payment of US$300,000 by Mr Shasore, SAN to Mr Ukiri was a corrupt payment in return for which Mr Ukiri (who did not do any work on the P & ID case) “acted as one of Mr Shasore’s conduits in leaking [Nigeria’s Internal Legal Documents]” (Paragraph 444), the Judge concluded “[t]here is not the evidence before me at this trial, to substantiate this”.
Aside from that, the facts betray a very untidy system of legal instruction in the country. There were attempts to withdraw instruction, addition of co-Counsel, and disappearance of same for inexplicable reasons. Nigeria’s defence strategy as revealed in the judgement, was essentially chaotic in the main. In other words, Nigeria so obviously betrays an undisciplined system of prosecuting even the most important trials and cases such as this, even though failure will certainly be catastrophic. Could this be why the country has been losing previous high-profile cases? Notably in July 2022, Nigeria unfortunately lost the UK Judgement in FRN v JP Morgan case, which arguably jeopardised international anticorruption works. More specifically, the case may have negatively impacted ongoing and future prosecutions relating to the notorious Oil Prospecting License 245 scandal, some of the indicted characters such as Mohammed Bello Adoke, SAN, a former Attorney-General of the Federation, who also turned up in the P & ID case too. The 2022 London judgement brought sheer disappointment to anticorruption campaigners, both in Nigeria and abroad, and that experience contrasts very much with the P & ID case, where Nigeria clearly dodged a very dangerous bullet.
Murky World of Legal Services in the UK
The judgement revealed that even UK based providers of legal services are not beyond descent into the murky waters of greed and corruption, in the conduct of their services. For instance, Mr Andrew and Mr Burke KC allowed Nigeria’s internal legal documents that were privileged, to enter into the hands of the P & ID, despite knowing that P & ID was not entitled to see these documents. The Judge noted that “Their decision not to put a stop to it, at least, by informing Nigeria or immediately returning the documents they knew were received, was indefensible” (Paragraph 215). The damning conclusion reached by the Judge was that, “The reason Mr Andrew and Mr Burke KC behaved in this way, was because of the money they hoped to make”. There is the suggestion that Mr Andrew may have had a claim for up to £3 billion in the event of P & ID’s success, while Burke may have had a claim for up to £850 million, he said. It is worthy of note that, this is not the first time British Lawyers have been found seriously wanting in their rendering of legal services against Nigeria’s interests, in commercial transactions and during international proceedings. British Lawyer, Bhadresh Gohil received a conviction in 2010 over 13 counts of money laundering and other offences linked to his role helping James Ibori, a former Governor of Delta State from 1999 to 2007, to disguise illicit funds from criminal activities. The fines of around £28 million (around $36 million) was however, forfeited to the British State representing a further loss to Nigeria. It is fast becoming irrefutable that Britain remains a global money-laundering hub for foreign kleptocrats, who rely on a small but damaging crop of professional enablers that make the world of bribery, money laundering and illicit financial flows go round, and against the interests of developing States like Nigeria. This is an area worthy of closer, dedicated and specialist studies from within both countries, and collaboratively too.
Several heads will, of course, roll internationally, because of this judgement. Mr Justice Robin Knowles literally went to town in lambasting certain individuals within the UK’s jurisdiction, who were ‘driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others.
The judgement has been formally referred to the Solicitors Regulation Authority and Bar Standards Board, in relation to the conduct of Solicitor, Seamus Andrew and Barrister, Trevor Burke KC. This is principally in relation to the handling of documents, which came into P & ID’s hands during the arbitration proceedings. As the Judge noted: ‘I trust that these two regulators of the legal profession in England & Wales will consider the professional consequences of the conduct of Mr Burke KC and Mr Andrew, in relation to Nigeria’s internal legal documents’ (Paragraph 593).
After all said and done, Nigeria has allowed itself to be played through a national trauma. As stated in Margaret Moses, The Principles and Practice of International Commercial Arbitration (Cambridge CUP, 2017) Page 216 persuasively put it “[a] party that has lost before an arbitral tribunal faces an uphill battle, if it wishes to set aside or vacate the award. Courts rarely overturn an arbitral award. Arbitral awards are considered to be final and binding”. Grounds of a successful challenge to an International arbitral award of this nature, are quite narrow by design. A final and binding award is often the aim of the parties, and rationale of most ICA proceedings. (See UNCITRAL Arb. Rules Art 32 (2) ICC Rules Art 28(6)) See also Section 52 English Arbitration Act, for form of award whereby parties and arbitrators must assist each other to ensure that a valid award emanates from the tribunal that is capable of enforcement internationally.
Nigeria cannot always count on this kind of near miraculous but quite deserved exemption, from a manifestly unjust award based on illegalities. Thus, the imperatives are clear. A phase of introspection and re-strategising for success, is needed. A quick but effective audit of Nigeria’s Bilateral and Multilateral Investment Treaty commitments, is urgently required. Just as the military engages in periodic exercises and simulations for the country’s defence, so also must the Ministry of Justice carry out dedicated simulations of the country’s commercial vulnerabilities, based on international commitments. Ditto the Ministry of External Affairs, and Ministry of Trade and Investment.
There ought to be an increased capacity shown by bodies like the National Intelligence Agency to reflect the huge sums Nigeria expends on them, by pulling their weight in sniffing out foreign ‘cowboy’ businesses and their dodgy characters like the ones featured in this case. If Nigeria is to emerge as a serious player in this century, it must develop effective means of vetting out unserious and downright criminal operations that are abound in the international system. This is more so, in those areas and sectors of key importance to Nigeria. Businessmen with foreign convictions ought to be at least vetted again before being allowed to venture into business in Nigeria, and only specialist bodies like the NIA and Nigerian Embassies and High Commissions can do this job effectively.
If this 21st Century is to become Nigeria’s century of accelerated development, it literally cannot be business as usual in terms of how the country interfaces with multinational corporations. Nigeria cannot afford to be a soft touch for crafty tax dodgers, bribe givers and part time crooks. More importantly, internal grand corruption will kill the country if the country does not kill it. The judgement by the Hon. Mr Justice Robin Knowles, is a treasure trove of legal hit list of shady characters of Nigerian civil servants to be investigated by multiple security agencies and brought to book. The judgement is also a good blueprint. to study the anatomy of business and official corruption in Nigeria. The 140 pages of the judgement has detailed the shady and dysfunctional institutions within Nigeria, that have made the country vulnerable to outside predators helping to generate illicit financial flows away from Nigeria. These institutions must be followed up, and indeed, ought to be mandated immediately by the new President H.E Bola Ahmed Tinubu to conduct internal reassessments, considering the revelations and implications of the judgement.
The international community, including other unsavoury characters, will be watching carefully to see whether Nigeria realises the true importance of what it just went through and will be drawing the correct lessons. Complacency on this type of issues, is not really an option. It is bad for business, and worse for the commercial and economic destiny of the nation. This judgement literally gave Nigeria, a new lease of life. To whom much is given, much is expected.
Dr Gbenga Oduntan, Reader (Associate Professor) – International Commercial Law, University of Kent, Canterbury, UK
Lessons from the P & ID Case
Sam Kargbo, SAN
The Case of Process & Industrial Developments (P & ID) should motivate us to pay attention to the Offices, Ministries, Departments and Agencies of the Federal Government, that are established and empowered to exercise the executive powers of the President.
There is hardly any Nigerian who does not have his or her self-invented negative characterisation of Nigeria’s President, Asiwaju Bola Ahmed Tinubu (BAT). No President of the country has been better than his predecessor, in the estimation of the generation he is governing. The reason may not be separated from the fact that Nigerians are getting more aware by the day of the responsibility of the Government and are, as such, fashioning higher standards to assess Presidents and Public officers and give value to their performance. But, not too many of us spare the time to scrutinise and respond to the activities of the Vice President, personal staff of the President (including the Chief of Staff, Secretary to the Government of the Federation, Special Advisers, Special Assistants and sundry domestic staff), Ministers, Officers in the Public Service of the Federation, the Civil Service, Departments and Agencies of the Federal Government.
Whilst some people were quick to express critical views about the number of Ministers that President Bola Ahmed Tinubu has appointed, not too many are aware that Nigeria presently has more Agencies than Ministries, and that some of these agencies are more critical to the life and sustenance of the country than many Ministries combined.
These agencies are established and vested with specific mandates, for the overall goals of democratic governance and the purpose of the State. Because of the crucial nature of their roles and functions, they are insulated from the rigidity and routine of Civil Service Rules and are meant to run independently as specialised agencies with the highest – of and most effective and competitive – bureaucratic standards. They are by law hived and corralled in their respective islands, and ensconced behind the shields of merit and professionalism. They are not only expected to pay humongous salaries and perquisites, but to attract high-end productive professionals from society. If the agencies of the Federal and State Governments work at full throttle and with the expected efficiency, the road to growth and development will be shortened and Nigerians will enjoy a higher standard of living. But, alas, not only are they inefficient, they have turned out to be the conduits for the syphoning of public funds and the suppression of the Nigerian! These agencies are, in general, Lords unto themselves. They are not accountable, and transparency is not origin to them. I will demonstrate this point with a few examples.
Until the reign of Godwin Ifeanyi Emefiele, some of us had regarded the Central Bank of Nigeria (CBN) only in terms of its role as Nigeria’s apex monetary authority. Those in the financial and banking sector may go further to defer to its powers to maintain the external reserves of the country, promote monetary stability and a sound financial environment, and be the banker of last resort and financial adviser to the Federal Government. Not even the National Assembly could suspect that the letters and provisions of the CBN Act are loose, to the extent of allowing an ambitious and overbearing CBN Governor to appropriate it and use it as a tool to further political ambition. The CBN Governor was therefore, unscrutinised, and left to enjoy extensive and near absolute powers in his interventions in identified sectors of the economy. He could, at his own choosing, activate the CBN to lend directly to consumers and even, in some cases, bypass the commercial banks in such transactions.
Based on this, Emefiele became audacious and provokingly brazen. He allegedly picked up forms to contest the primaries of the ruling All Progressives Congress (APC), and also manipulated the then President to embark on the ill-fated and destructive recall of specified Naira notes and their replacement with newly designed and printed ones on the false claim that the exercise would fight banditry and vote buying. As it later turned out, the policy was fashioned and hurriedly implemented on the eve of the February 2023 Presidential election, to overreach the suspected leverage of the flagbearer of the APC. In the trail of that tragedy, are tales of massive corruption in the CBN. The dangers of corruption originating and residing in the CBN, are unimaginable. And, yet, the public, media, civil society, anticrime and prosecutorial agencies, and, in particular, the National Assembly that is vested with oversight powers in the form of anticorruption investigations and the conduct of hearings to procure concrete evidence on corrupt practices, have let the CBN be. Today, the Naira is in a freefall and we connivingly pretend not to know why.
The Oil and Gas Industry
If the CBN is corrupt and incapable of delivering on its mandate, what can we say about the agencies of the Federal Government in the Petroleum Industry?
Being second to Angola in oil production in Africa, Nigeria’s annual budget has always been largely supported by the income and revenue it earns from the oil sector, though the sector’s contribution to the country’s GDP has hardly been beyond 9%. This national cash cow has attracted all manner of “investors” and hustlers, who have captured the sector and appropriated it. That is why a country so rich in oil, is so poor and unable to provide modern infrastructure and efficient public utilities, or build and maintain good public institutions and bureaucracies for efficient public services and fair, equitable and efficient distribution and redistribution of public wealth and resources for the enhancement of growth and development. This contradiction is not promoted or justified by a lack of capacities or know-how. The worst culprit is corruption. The sector has produced individual domestic and international billionaires, than any other industry on the continent. Sadly, a critical trace of such individual wealth may hit the laxity and permissive nature of the sector.
P & ID
The P & ID case, which exposed Nigeria to a dubious debt of over US$ 11 billion that originated from a satanic scheme orchestrated and implemented by unscrupulous foreign hustlers, loudly demonstrates how international crooks and their cheap and infernally treacherous domestic collaborators feast on the sector. Of course, the question that naturally comes to mind is: Why is corruption so endemic in the sector, when we have the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices & Other Related Offences Commission (ICPC)? Part of the answer has been highlighted by regulatory failure, and the absence of public scrutiny. Much of it could be gleaned from the origin and modus operandi of P & ID and its kind in the sector.
Briefly, Mr Michael Quinn and Michael Cahill – who, as far back as 1992, had executed contracts for the NNPC in Nigeria – registered a company named Industrial Consultants (International) Ltd (ICIL Ltd) in 1979 in Ireland. In 1997 they incorporated ICIL LTD in Nigeria and brought Mr James Nolan, a long-term employee, and Adam Quinn, one of the two sons of Michael Quinn, to run it for them. Through ICL Ltd, Quinn and Cahill procured and executed military contracts. As they perpetuated and entrenched themselves into the Nigerian system, they diversified their contract portfolios under different sister companies to ICIL Ltd. Although there is no evidence of their ever importing capital into the country, they were the toast of the Ministries of Defence and Police, in the execution of humongous contracts denominated in foreign exchange.
Being high players in such strategic sectors as Defence and Police, they were in a vantage position to know policy shifts and directions of the Federal Government, which explains the proliferation of companies under their kitty. With their track record as executors of military and Police contracts, it was easy for them to penetrate other sectors with project-specific incorporated companies. P & ID is one of the companies, from the stable of ICL Ltd. When the Federal Government professed priority in the development of the flaring of gas, ICIL Ltd and surrogates were prepared. They were involved in previous projects, before selling the idea of setting up a gas plant in Lagos under the code name Project Alpha, under the auspices of P & ID.
There is no evidence that P & ID or its parent or sister companies spent their own money on Project Alpha, but P &ID used the profile of Project Alpha to hoodwink Nigeria into signing a Gas Supply and Processing Agreement for Accelerated Gas Development (the GSPA), under which Nigeria was to supply specified quantities of “wet” gas to Gas Processing Facilities (GPF) to be constructed by P &ID in Calabar to strip the wet gas into “lean” gas, to be delivered to Nigeria for power generation and sale, either domestically or by export.
As serious as the import of this contract was to the economic security and financial well-being of the country, the contract gave P & ID unprecedented leverage and absolute discretion to determine when the contract would be repudiated by Nigeria. Leveraging this uncommon economic enslavement of Nigeria to P & ID by Nigerians, P & ID concluded and claimed that Nigeria had repudiated the contract by failing to supply the gas at a time when P & ID had not even secured the land to build the Gas Processing Facility, and had no evidence of having any penny or capacity to build the Gas Processing Facility. It is because of that alleged breach that an Arbitration Panel in London awarded US$6 billion, which, by the interest tenor of the award, has now grown to more than US $ 11 billion.
From the findings in the Judgment of the Honourable Mr Justice Robin Knowles CBE of the King’s Bench Division, Commercial Court of the High Court of England in the case of the Federal Republic of Nigeria and Process & Industrial Developments Ltd delivered on 23/10/2023, the contract was prepared under the influence of bribes given by P & ID. For cheap money, Nigeria was sold to P & ID.
His Lordship also found that the P & ID hacked into every aspect and stage of the dispute processing system and chain of the Nigerian Government, and was able to have in real-time every document and correspondence concerning its claim made and/or communicated by or received by any or all the officers, Lawyers, offices and channels involved in the dispute. Like a god, P & ID was reading the mind of Nigeria and ahead of Nigeria, in the arbitral proceedings. With that leverage, it knew when to pounce and what to demand. Again, Nigerians were selling the country to P & ID for cheap, by availing it of secret and classified documents and information.
Is this an isolated case? No! That is the story of how Nigerians underdeveloped Nigeria.
Sam Kargbo, SAN, Abuja
FRN v P & ID: Digging Into the Heart of the Judgement
In January 2010, Nigeria and a company called Process & Industrial Developments Limited (“P & ID”) that was co-founded by two Irish businessmen, Mr Michael Quinn and Mr Brendan Cahill, entered into an agreement called “Gas Supply and Processing Agreement for Accelerated Gas Development” (“the GSPA” or “the Agreement”). Under the GSPA, P & ID was required to build and operate Gas Processing Facilities (“GPFs”) in the Niger Delta, and Nigeria was to supply specified quantities of “wet” gas to the GPFs to be constructed by P & ID. P & ID on the other hand, was to strip the wet gas into “lean” or dry gas, to be delivered to Nigeria for use in power generation, while the remaining natural gas liquids were to be retained by P & ID for onward sale in local or foreign markets. The Nigerian Government would guarantee the supply of wet gas and construct pipelines and other infrastructure, to transport the gas to the GPFs.
The GSPA was to assist Nigeria solve its perennial electric power challenge by utilising gas recovered from oil to generate electricity, instead of continuing its flare with the associated harmful pollution effects. Thus, the GSPA was to be part of the Federal Government’s Accelerated Gas Development Project, aimed at tackling both gas flaring and the problem of electricity in Nigeria. The lifespan of the Agreement was about 20 years.
After about three years of signing the GSPA, neither Nigeria nor P & ID did any work in line with their obligations under the Agreement. However, P & ID viewed the failure of the Nigerian Government to construct the facilities to kick-start the project as a repudiatory breach and invoked the arbitration clause under the Agreement, by commencing arbitration proceedings against Nigeria in London. The Arbitration Tribunal was made up of Sir Anthony Evans who was nominated by P & ID, Chief Bayo Ojo, SAN who was nominated by Nigeria, and Lord Hoffmann who was appointed Chairman of the Tribunal on 29th January, 2013.
The case of P & ID at the Tribunal was that, it had already invested $40 million on preparatory engineering work in respect of the project. It also claimed that the company had secured land from the Cross River State Government for the project as provided in the Agreement, and had got confirmation from Addax Petroleum, the oil & gas upstream company that would supply some quantity of the gas to the GPFs. P & ID also claimed that it had secured financing for the facility and was ready to proceed with the project, which it communicated to the NNPC as far back as May 2010, but was ignored. It requested that the Tribunal should award P & ID damages, based on the lost profit it would have earned if the Agreement had been performed.
Nigeria, on the hand, challenged the jurisdiction of the London Tribunal to entertain the dispute, and also defended the case on the merit. On the merit, Nigeria argued that P & ID had not built the GPFs and therefore, could not reasonably assert that the Government’s failure to perform its side of the bargain had prevented it from earning its future profits. That since there was no GPFs built by the company, it could not have made profits. It argued that the amount P & ID was entitled (if at all) was nominal damages, as it could have mitigated its loss at the point of arbitration by pursuing other investment opportunities.
In its Part Final Award rendered on 17th July, 2015 (i.e. “the Initial Award”), the Tribunal first affirmed its jurisdiction to entertain the dispute, and proceeded to find Nigeria liable of repudiatory breach of the GSPA for which P & ID was entitled to damages. On 31st January, 2017, the Tribunal rendered a further award dealing with quantum of damages that Nigeria was liable to pay P & ID (“the Final Award”) which stood at US$6.6 billion with interest at the rate of 7%. Chief Ojo, SAN, a Nigerian who was one of the three Arbitrators, gave a dissenting opinion to the Final Award.
Nigeria’s legal team in the arbitration in London was led by the former Attorney- General of Lagos State, Olasupo Shasore, SAN.
This Award is said to represent over 20% of Nigeria’s reserves, and the value of its annual exports.
The Court Proceedings
There have been many court proceedings in respect of the award, and they are briefly considered below.
(i) In December 2015, Nigeria filed an application before the High Court of Justice in London to have the Liability Award annulled, but the application was denied in February 2016 on the ground that the deadline for challenging the Liability Award had passed and an extension was not warranted.
(ii) In February 2016, Nigeria filed an application before the Federal High Court in Lagos, praying the court to set aside the arbitration proceedings in London. In May 2016, the Nigerian court granted the order “setting aside and/or remitting for further consideration, all or part of the arbitration award”. However, the arbitration proceedings continued in London, as the Tribunal issued an order stating that the Nigerian court lacked jurisdiction to set aside the liabilities award.
(iii) In March 2018, P & ID filed an application before US District Court for the District of Columbia, seeking the confirmation of the arbitration award (which was worth roughly $10 billion as at then). Nigeria unsuccessfully raised an objection based on sovereign immunity, as the US court (per Christopher R. Cooper) held in its ruling dated 4th December, 2020, that “Nigeria waived its immunity under the Foreign Sovereignty Act by signing the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and by agreeing to arbitrate in the territory of another Convention signatory. Nigeria appealed this ruling to the United States Court of Appeal for the District of Columbia, but on 11th March, 2022, the US Court of Appeal affirmed the ruling of the District Court. However, on 6th June, 2022, the US District Court for the District of Columbia granted a stay of its proceedings on the confirmation application by P & ID, pending the outcome of Nigeria’s application to set aside the award before the English High Court of Justice.
(iv) Meanwhile in August 2019, the High Court of Justice in London on application of P & ID held that arbitral award against Nigeria was enforceable. But, in December 2019, Nigeria applied to the High Court of Justice in London for an extension of its deadline to challenge the award, based on newly discovered evidence of fraud in the arbitration and in the negotiation of the underlying contract, the GSPA. The London court granted the application in September 2020, holding that Nigeria had “established a strong prima facie case” that the GSPA was obtained by bribery, and that one of the P & ID’s principals committed perjury in the arbitration hearings. The court also found a prima facie case that Nigeria’s attorney in the arbitration, was engaged in corruption that compromised Nigeria’s defence at the arbitration.
Finally, on 23rd October, 2023, the High Court of Justice (The Business and Property Courts of England and Wales – Commercial Court, King’s Bench Division) presided over by The Honourable Mr Justice Robin Knowles, CBE, in The Federal Republic of Nigeria v Process and Industrial Developments Limited  EWHC 2638 (Comm) delivered a well-considered judgement in favour of Nigeria, on Nigeria’s application to set aside the arbitral awards which was at the time of judgement worth over $11 billion. The court made far-reaching findings, the summary of which is that “the Awards were obtained by fraud, and the Awards were and the way in which they were procured, was contrary to public policy”.
Implications for Nigeria
i. Mr Olasupo Shasore, SAN, a former Attorney-General of Lagos State, was the leading counsel to Nigeria during the arbitral proceedings. Mr Shasore was paid $2 million as professional fees, for the first and second stages of the arbitration.
The government, after losing the arbitration in 2017, when the Final Award was given, accused Mr Shasore and other Lawyers on his team of conniving and colluding with P & ID to sabotage the arbitration.
In 2022, the EFCC charged Shasore on allegations of money laundering by paying $100,000 cash to Ms Adelore, through some named persons. He pleaded not guilty to the charges, and in October 2022, he was granted bail by the Federal High Court, Lagos Division.
Justice Robin Knowles cleared Mr Shasore of the allegations. There is the likelihood that Mr Shasore would use the contents of the judgement to apply for the quashing of the charges, especially if the EFCC fails to withdraw the charges accordingly.
ii. The judgement also contains indubitable evidence of bribery and fraud, perpetrated by public officials for filthy lucre. Although the evidence is damning, this writer does not think that the findings will deter corrupt public officials from sharing our common wealth. There is no record of other contractors, that have benefitted from the cesspool of corruption in Nigeria.
iii. It is still in view that the Judge will consider the arguments of parties whether to take ancillary measures to decide the final award directly, in whole or in part, or to return it to the arbitral tribunal for a decision, in whole or in part.
iv. The refusal of the arbitration tribunal to consider fraud and bribery as vitiating elements, should teach Nigeria to be wary of executing contracts or trade agreements with arbitration in a foreign jurisdiction as a clause, as it usually ends up as final arbitral awards against Nigeria.
Chukwuemeka Eze, former Lecturer of Diplomatic and Consular Relations Law, Law Faculty, Nasarawa State University
P & ID Case: Lessons for Nigeria
This piece is going direct to the point. To my mind, the real hero is a good friend of mine Gromyko Amedu Esq, who prepared the initial brief and strategy for making P & ID’s fraudulent activities, as defence for Nigeria.
He first brought the P & ID case to my attention in 2017 in London. A better understanding of the judgement can be found online (Nigeria v P & ID judgement – Courts and Tribunals Judiciary https://www.judiciary.uk/wp-content/uploads/2023/10/Nigeria-v-PID-judgment.pdf ).
The Judge found that the massive arbitration award in favour of Process & Industrial Development Ltd (P & ID), was tainted by bribes. “The awards were obtained by fraud”, Judge Robin Knowles said in a ruling on last Monday, adding, “The way in which the awards were procured, was contrary to public policy”.
So, going forward, what lessons should Nigeria, Lawyers and professionals learn? The first lesson is, transparency and accountability. The second is, documentation. Records produced during the hearing, were quite a lot. The third is, paying attention to details. Fourth is honouring contracts, and fifth is getting competent professionals to have input into complex business issues.
Patriotism was lacking, with too many folks working against national interest.
Kede Aihie, Lawyer, Publisher/Nigeria Magazine, London