A Court of Appeal in the United Kingdom has ordered Nigeria to pay $70 million awarded in favour of a Chinese investor, Zhongshan Fucheng Industrial Investment Co. Ltd.
The presiding judge, Julian Flaux, gave the order on Thursday while delivering judgement on claims of state immunity made by Nigeria to avoid paying the fine.
In 2010, Zhongshan, through Zhuhai Zhongfu Industrial Group Co Ltd (Zhuhai), its Chinese parent company, acquired rights to develop a free trade zone in Ogun State.
Zhongshan had in 20111 set up Zhongfu International Investment (NIG) FZE (Zhongfu), a Nigerian entity, to manage the project under the permission of the Ogun State Government.
Things, however, took a different turn in July 2016, when the investor accused the state government of abruptly terminating its appointment while attempting to install a new manager for the free trade zone.
Subsequently, Zhongfu initiated an investment treaty arbitration against Nigeria under the bilateral investment treaty between the Peoples Republic of China and Nigeria (the China-Nigeria BIT).
The arbitrators had ruled that Nigeria was in breach of its obligations under the China-Nigeria BIT and awarded Zhongshan a compensation of around $70 million.
In January 2022, the Chinese company initiated a case to seek enforcement of the arbitration award.
Nigeria pleaded state immunity but was turned down a UK High Court presided over by Sara Cockerill, who said the country abused the time frame for appealing arbitral awards.
Affirming Cockerill’s judgement, Flaux said Nigeria had failed to comply with the “generous time limit of two-and-a-half months to raise the issue of state immunity.”
He said Nigeria failed to do the needful until three months after the deadline expired.
The judge held that Nigeria was seeking to re-run the same arguments on state immunity that it had raised and then abandoned in front of the arbitration panel.
The panel also dismissed Nigeria’s ground of appeal that there is a “point of general public importance requiring guidance from the court.”
“There is no question of it being necessary to reopen the appeal to avoid real injustice, and Nigeria cannot show that it has suffered any injustice from its application for permission to appeal being refused,” Flaux wrote.
The judge held that the court did not need to determine whether Nigeria was entitled to state immunity before making an enforcement order.