Nigerians recently received with shock the news that a United Kingdom court had granted an enforcement order for over $9bn as compensatory damages in the matter of Process and Industrial Developments Ltd vs Federal Government of Nigeria, as a consequence of the determination by an arbitration panel that Nigeria failed to live up to its contractual obligations.
This case raises certain fundamental public policy issues which must be addressed, lest the best interests of our nation are wittingly or unwittingly mortgaged. We must also be mindful of the fact that the award represents about 25% of our annual national budget, and the enforcement of this order will have very real consequences on our national development ambitions. My position on this subject should not be taken as an endorsement of Nigeria’s sometimes unpardonable ways of not respecting the sanctity of contracts, but as a consideration of this case as a standalone matter, distinguished both by the nature of the contract, the subtext of its wider implication and the possible unintended consequences of enforcing this final award.
Let us consider first whether or not the Commercial Court of the High Court of Justice of England and Wales has jurisdiction over the enforcement of the arbitral award, and following from that, whether there is a difference between the Seat of Arbitration and the Venue of Arbitration. The Agreement between the Federal Government of Nigeria and the claimant clearly states that the agreement shall be construed in accordance with the Laws of the Federal Republic of Nigeria. This unambiguously implies that any interpretation of the contract, issues or dispute arising out of the contract shall be resolved in accordance with the Laws of Nigeria. In other words, as far as any issue arises from the entire contract, whether as to the manner or style of performance of the contract, non-performance, recourse to arbitration and enforcement of any award, the laws of the FRN will apply. Parties went further to agree that the Nigeria Arbitration and Conciliation Act CAP A18 Law of the Federation of Nigeria 2004 and its ancillary Rule shall be applied in the resolution of any dispute.
There is as a matter of statute and precedence, a world of difference between the venue/place of arbitration and seat of arbitration (Lex Arbitiri). While the “place” or venue can be a choice of convenience to the parties, the “seat” is a legal construct which determines the court that has supervisory powers over the conduct of the arbitration. In the extant case, apart from stating that the contract between the parties shall be governed by Nigerian laws, the contract equally provided that any arbitration shall be governed by the Arbitration and Conciliation Act, which invariably means that the seat of Arbitration shall be Nigeria. This is because the Nigerian Arbitration and Conciliation Act envisages the supervision of any arbitration under the Act by Nigerian courts and not English courts. For the avoidance of doubt, Section 57 of the Act defines court found in the Act to mean the “High Court of a State, the High Court of a Federal Capital Territory, Abuja or the Federal High Court”. The choice of London as the venue of the arbitration is, therefore, a matter of convenience and cannot be construed to mean the seat of arbitration as determined by the Arbitral Tribunal and the judgment of Justice Butcher.
In the extant case, the contract provides that the venue will be London but the law governing the conduct of the arbitration (seat of arbitration) is the law of Nigeria. This, to my mind, is a concerted effort by the parties to clearly determine their terms to the letter. To hold anything to the contrary will amount to a butchering of the Gas Supply and Processing Agreement. It is my opinion that the High Court of England has neither the supervisory nor enforcement jurisdiction over the arbitral proceedings as the letters of the GSPA are very clear on that issue. The court with the jurisdiction is the Federal High Court of Nigeria. This position is supported by the ruling of the English courts in Tonicstar v. American Home Assurance Company (2004) EWHC 1234 wherein the Court held that where a contract was made in London, signed in London, to be executed in London, made in accordance with the laws of England, it is to be inferred that the parties intended these provisions to be determined by the English court, but even when there is no implied choice of law, there is a presumption under the Rome Convention that the applicable law is that of the place of business of the party whose performance is characteristic of the contract.
As to the question of whether under the international law, the High Court England and Wales has jurisdiction to attach the property of another sovereign nation, I submit that where a sovereign state submits to arbitration, the award emanating from the arbitration proceedings cannot be denied on the grounds of immunity.
To be concluded
Gbajabiamila is Speaker of the House of Representatives
END
Be the first to comment