Lagos, August 19, 2024 — The Chinese company Zhongshan Fucheng Industrial Investment Co. Limited is making aggressive moves to seize the £20 million awarded to Nigeria by a United Kingdom appeal court in its long-running battle against Process & Industrial Developments Ltd (P&ID). This development comes amid escalating efforts by the Chinese firm to confiscate Nigerian assets in various foreign jurisdictions.
Zhongshan Fucheng has been embroiled in a bitter dispute with the Ogun State government in Nigeria since the termination of a joint venture agreement in 2013, which was originally signed in 2007. The partnership was intended to develop a free-trade zone in Ogun State. However, the agreement fell apart amid allegations of misrepresentation and concerns over the capability of Zhongshan and its associates to execute the project.
In March 2021, an arbitration tribunal chaired by the president of the UK Supreme Court awarded $74.5 million (£57.8 million) in compensation to Zhongshan. Ogun State, however, has refused to pay this sum, leading to a series of legal actions by Zhongshan to recover the award by targeting Nigerian assets abroad.
Zhongshan has already secured a court judgment in France, leading to the seizure of two Nigerian presidential planes. The company is now reportedly working to confiscate two properties in Liverpool owned by the Nigerian government. These actions have sparked outrage among Nigerian officials, who accuse Zhongshan of using “arm-twisting tactics” to force Nigeria into compliance.
Lateef Fagbemi, Nigeria’s Attorney-General and Minister of Justice, condemned Zhongshan’s actions, characterizing them as a deliberate strategy to seize Nigerian assets unlawfully. “The Chinese firm is resorting to unscrupulous methods to exert pressure on Nigeria by targeting its assets in foreign jurisdictions,” Fagbemi stated.
The dispute has drawn parallels to the P&ID case, where Nigeria successfully overturned a multi-billion-dollar arbitration award. Former Ogun State Governor, Senator Ibikunle Amosun, labeled Zhongshan as an “imposter,” asserting that the company’s attempts to seize Nigerian assets were illegal and reminiscent of the P&ID situation.
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One of the key issues in the dispute revolves around allegations that Zhongshan misrepresented the status of its partner companies, particularly a Chinese company known as CAI. The Ogun State government claimed that CAI and its parent company had been liquidated, rendering them incapable of executing the free-trade zone project. These claims were central to Ogun State’s decision to revoke the joint venture agreement.
However, during the arbitration, it was revealed that Nigeria failed to provide sufficient evidence to support these allegations. A witness for Nigeria, Mr. Adeoluwa, testified that he had written letters in 2011/2012 based on representations made by Zhongshan about CAI’s poor performance and its involvement in criminal investigations in China. Despite this, the arbitration tribunal found no evidence that CAI had been liquidated or ceased to exist at the time the letters were written.
The tribunal concluded that Ogun State entered into the 2013 joint venture agreement with Zhongshan based on its own assessment of the company’s capabilities. It also noted that the non-disclosure of an Equity Management Agreement between Zhongshan and other parties did not constitute a legal obligation to inform Ogun State.
Zhongshan’s efforts to enforce the arbitration award have been further bolstered by a ruling from the United States Court of Appeals. The court upheld a decision that Nigeria could not claim sovereign immunity under the Foreign Sovereign Immunities Act (FSIA) due to the arbitration exception. This exception applies when three jurisdictional facts are present: an arbitration agreement, an arbitration award, and a treaty governing the award.
In this case, the court determined that the New York Convention, which governs international arbitration awards, applies to the dispute between Nigeria and Zhongshan. The court found that the final award met the Convention’s requirements, as it arose from a legal relationship considered commercial in nature.
The ongoing legal battles between Nigeria and Zhongshan have far-reaching implications for the West African nation. The potential seizure of assets worth millions of pounds could further strain Nigeria’s financial resources and impact its international reputation. Moreover, the case has raised concerns about the risks associated with international investment agreements and the vulnerabilities they can expose for sovereign nations.
For now, the fate of Nigeria’s assets hangs in the balance as the legal tussle with Zhongshan Fucheng unfolds across multiple jurisdictions. The outcome of this dispute will likely have significant ramifications for Nigeria’s international relations and its ability to seal future foreign investment agreements.
Source: ThisDay