Treaty violation: UK court orders Nigeria to pay Chinese firm $70m, dismisses immunity plea

Treaty violation: UK court orders Nigeria to pay Chinese firm $70m, dismisses immunity plea

 A court of appeal in
the UK has ruled that Nigeria is liable for a $70 million arbitration award in
favour of Zhongshan Fucheng Industrial Investment Co. Ltd, a Chinese investor.

Julian Flaux, the presiding judge, made the ruling on
Thursday in reaction to claims of state immunity made by Nigeria to avoid
paying the fine.

ZHONGSHAN FUCHENG VS NIGERIA 

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.

A year later, Zhongshan set up Zhongfu International
Investment (NIG) FZE (Zhongfu), a Nigerian entity, to manage the project under
the permission of the Ogun state government. 

Things took a different turn in July 2016 when the investor
accused the state government of abruptly moving to terminate 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
People’s 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 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 away by Sara
Cockerill, a high court judge, who said the country abused the time frame for
appealing arbitral awards.

‘NIGERIA HAS NO GROUNDS OF APPEAL’

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.

The presiding judge said Nigeria failed to do the needful
until three months after the deadline expired.

He said 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.

 

Source: Treaty violation: UK court orders Nigeria to pay Chinese firm $70m, dismisses immunity plea

 - NigerianEye
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