P&ID Welcomes English Court’s Decision; Will Now Target Nigerian Assets

Following the English Commercial Court’s decision to grant permission for the enforcement of Process & Industrial Developments Limited’s (P&ID) arbitration award against Nigeria in the U.K., the following statement can be attributed to Andrew Stafford Q.C. of Kobre & Kim:

“We are pleased that the Court has rejected Nigeria’s objections both to the arbitration process and to the amount of the award, and that it will grant permission to P&ID to begin enforcement of the award in the United Kingdom. The Court has ruled decisively in P&ID’s favour and has comprehensively rejected Nigeria’s efforts to avoid payment of this award of over $9.6 Billion. P&ID is committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets in order to satisfy this award as soon as possible.”

The Court rejected Nigerian government’s arguments and agreed with P&ID on every point: (i) London was the seat of the arbitration; (ii) the Award does not violate UK public policy; and (iii) Nigeria cannot now challenge the Tribunal’s awarding of pre-award interest. The findings regarding seat are important, because the determination meant that only the English Court had “supervisory jurisdiction over challenges to awards in the arbitration.”  Nigeria’s applications to the Nigerian court were therefore without any effect. Moreover, Justice Butcher stated that many of the arguments purported by the Federal Republic of Nigeria (FRN) were, “not analogous to the facts (Paragraph 66),” that he “[did] not accept th[e] submission (Paragraph 66),” and that he “was wholly unpersuaded (Paragraph 79)” by the assertions made by the FRN.

Key excerpts from the Court’s decision:

Seat of the Arbitration

  • Paragraph 67: “I conclude that the terms of Procedural Order No. 12, coupled with the fact that neither it nor the Final Award have been set aside by this or any court, determine the location of the seat of the arbitration as being London, England, and that that is not a matter which the FRN can now ask this court to revisit.”

 

  • Paragraph 87: “I have also reached the same conclusion as did the Tribunal in relation to there being an agreement by conduct that the seat of the arbitration as provided for by clause 20 of the GSPA should be regarded as London.”

Award Amount and UK Public Policy

  • Paragraph 96: The Final Award, consistently with my earlier conclusions, was one given in an arbitration whose seat was England.  It could, accordingly, have been the subject of an application under s. 68 Arbitration Act 1996 in relation to serious irregularity. No such application was made and the Final Award has, plainly, not been set aside or remitted.”

 

  • Paragraph 97: “Are there any grounds of public policy on which such an award, which is intended to and is expressed as awarding compensatory damages, and which could have been but has not been subject to remedies under ss. 68 Arbitration Act 1996, should not be enforced? In my judgment there are not.”

 

  • Paragraph 102: “Furthermore, the public policy in favour of enforcing arbitral awards is a strong one, and, if a balancing exercise is required at all, outweighs any public policy in refusing enforcement of an award of excessive compensation.  The labelling of such excessive compensation as “punitive” or “penal”, as the FRN seeks to do in this case does not alter this conclusion.”

Pre-Award Interest

  • Paragraph 108: “Given that there was no such application in relation to the award of pre-award interest (or at all), I do not consider that there can now be a separate objection to enforcement on the basis of a lack of jurisdiction.”

 

About the Award: Process and Industrial Developments Limited (P&ID) is an engineering and project management company founded and led by Brendan Cahill and the late Michael Quinn, who had over 30 years’ experience of project management and execution in Nigeria. P&ID and Nigeria entered into a 20-year Agreement – known as the Gas Supply and Processing Agreement (GSPA) – to refine natural gas for Nigeria’s electricity grid. The GSPA would have been very profitable for both P&ID and Nigeria. The GSPA failed when the government did not uphold its commitments. In August 2012, after several attempts over two and a half years by P&ID to salvage the agreement, including offers to renegotiate the deal, the company initiated arbitration proceedings. The tribunal was organised in London under the rules of the Nigerian Arbitration and Conciliation Act as part of the original contractual agreement between parties. In January 2017, the tribunal ruled that Nigeria was liable for $6.6 billion in damages, which by now has increased to well over $9 billion with interest accruing daily.

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