This Case Commentary is written by Ogunsuji Favour Boluwatifet, a Third-year law student of University of Lagos, Nigeria

Case Details:

Court- High Court of Justice, Business and Property Courts of England & Wales, King’s Bench Division, Commercial Court

Equivalent citation- [2023] EWHC 2638 (Comm)

Bench- Robin Knowles J CBE

Decided on- 23 October, 2023

Case type- International Commercial Arbitration

Parties:

Claimant: The Federal Republic of Nigeria

Defendant: Process & Industrial Developments Limited (P&ID)

Abstract:

The Federal Republic of Nigeria v. Process & Industrial Developments Limited is an international commercial arbitration case that explores the resolution of dispute through arbitration. This case stresses the importance of justice and fairness in arbitration proceedings and the need to avoid corrupt practices in business transactions.

Introduction:

The Federal Republic of Nigeria v. Process & Industrial Developments Limited [2023] EWHC 2638 (Comm), is a landmark decision delivered by the High Court of Justice, Business and Property Courts of England & Wales, King’s Bench Division, Commercial Court. On 23 October 2023, The Hon. Mr. Justice Robin Knowles CBE presided over this arbitration claim in the Rolls Building, Royal Courts of Justice, London. The parties were the Federal Republic of Nigeria (Claimant) and Process & Industrial Developments Limited (Defendant). This case followed the previous arbitration suit where Nigeria lost to Process and Industrial Development Limited, thereby awarding a substantial sum of money to Process and Industrial Development Limited. The judgment of this case is a relevant one because it serves as a warning against fraud and corruption in contract process and arbitrations proceedings. It also implores arbitration proceedings to take special care in ensuring that justice is always served. And it shows the role of arbitration in disputes resolution.

Facts:

Prior to the 2023 arbitration, there was a prior arbitration process in 2017 where P & ID sued Nigeria and won. In 2010, Nigeria entered into an agreement, titled the “Gas Supply and Processing Agreement for Accelerated Gas Development (the GSPA)”, with a company registered in the British Virgin Islands, called the “Process & Industrial Developments Limited”. It was no news that Nigeria was known for having insufficient supply of electric power and yet the gas which ought to be used to generate electricity was flared thereby causing pollution. This was the purpose of the contract. The parties agreed that Nigeria would supply wet had to P&ID to enable P&ID convert the wet gas to lean gas for power supply. And the remaining gas would be for whatever use P&ID deem fit. The GSPA agreement was to run a course of 20 years but in the third, that is 2013, dispute arose.

In 2013, P&ID commenced an arbitration against Nigeria. P&ID claimed that Nigeria did not fulfill its obligations after they entered the contract and Nigeria also claimed that P&ID did not do its part. P&ID held Nigeria liable for damages because of its repudiatory breach. Nigeria argued that P&ID were engaged in bribery and corruption before, at and after the time the parties entered the contract. Nigeria alleged that some of its own lawyers at the time of the arbitration, including two leading Counsel, were corruptly influenced by P&ID. P&ID argued by claiming that Nigeria was tardy and incompetent in the contract process and arbitration process. In 2017, the arbitration court ruled in favor of P&ID. The final award required Nigeria to pay P&ID US$ 6.6 billion. Interest was awarded at the rate of 7% and the amount accrued to US$ 11 billion.

In 2020, Nigeria challenged the decision of the arbitration and a decision was given in October 2023. The English commercial court set aside the former ruling and ruled in favour of Nigeria. The court held that P&ID was guilty of bribery and fraud. Through the evidence brought forth by the claimant and through investigations, it came to notice that P&ID had bribed one Ms. Grace Taiga, the lawyer who helped Nigeria out in the drafting and negotiation of the contract, and had also continued bribing the lawyer during the arbitration process to buy her silence. P&ID also had unauthorized access to confidential information belonging to Nigeria, which they used to their advantage. The court thereby reverted the award and dismissed the 2017 arbitration decision.

Legal Issues:

● Whether the Gas Supply and Processing Agreement for Accelerated Gas Development (the GSPA)) was fraudulently obtained through bribery and corruption?

● Whether Nigeria's confidential information was compromised by P&ID when they gained unauthorized access to the documents?

● Whether the arbitration award in favour of P&ID should be set aside because it was obtained fraudulently and in manners contrary to public policy?

● Whether the arbitration process is to be reversed or upheld following the evidence against the defendant?

Arguments:

The learned counsel for the claimant alleged that the defendant had gotten the award through illegal means, hence such award should be revoked. The counsel argued that the defendant bribed some of Nigeria’s lawyers that helped with the drafting of the contract. The council also contended that P&ID had paid a particular lawyer, Ms. Grace Taiga, to keep quiet and not reveal the truth during the arbitration process. They also claimed that P&ID used the documents containing confidential information to their illicit advantage.

The counsel representing the defendant provided arguments to counter the claims brought forth by the claimant. In countering the bribery claim, P&ID argued that it was under no duty to disclose the payments made because the arbitration was adversarial and it also contended that failure to disclose payment was not a fraud. With regards to Nigeria's internal legal documents, the counsel claimed that by obtaining the documents, P&ID did not cause any substantial injustice because the documents did not give them any advantage.

Related Provisions:

● Section 1 of the Arbitration Act, 1996- General principles of arbitration.

● Section 66 of the Arbitration Act, 1996- Enforcement of the award.

● Section 67 of the Arbitration Act, 1996- Challenging the award: substantive jurisdiction.

● Section 68 of the Arbitration Act, 1996- Challenging the award: serious irregularity.

● Section 69 of the Arbitration Act, 1996- Appeal on point of law.

● Section 70 of the Arbitration Act, 1996- Challenge or appeal: supplementary provisions.

● Section 73 of the Arbitration Act, 1996- Loss of right to object.

● Section 80 of the Arbitration Act, 1996- Notice and other requirements in connection with legal proceedings.

● Section 81 of the Arbitration Act, 1996- Saving for certain matters governed by common law.

Decision:

The English court after carefully considering the exhibits and cross examinations ruled in favour of Nigeria. The court found out that P&ID was not deserving of the award that was awarded to them by the arbitration tribunal because the company was guilty of corrupt practices. P&ID had bribed a lawyer on the Nigerian team to help in awarding the contract. The company also bribed the lawyer not to reveal the truth during the arbitration process. The company was also guilty of using illegally obtained confidential documents belonging to Nigeria.

The court in its judgment reversed the decision of the arbitration tribunal whose judgment was in favour of P&ID, where it awarded US$ 6.6 billion (with the interest at the rate of 7%) to P&ID. The English court reversed the award and made the decision in favour of Nigeria.

Analysis:

The Federal Republic of Nigeria v Process & Industrial Developments Limited is a notable case because it speaks to the prevailing social scenes in the nation. It exemplifies the arbitration process; the international arbitration and the role of arbitration as a dispute resolution mechanism. This decision also prompts arbitration tribunals to do a careful consideration of material facts before arriving at a decision, and at the same time commends superior courts to do the same. It also explores the level of fraud and corruption in contract processes and arbitration processes, serving as a deterrent against fraud and corruption.

Alongside the positive reforms, there are also critical evaluations of the case. There have been discussions about the implication of the English court's judgment on international arbitration and the consideration of possible alternative dispute resolution mechanisms due to the perceived inefficiencies in the arbitration process.

Conclusion

Inconclusion, this case serves as a warning against bribery and corruption in international business or contract. It also serves as a judicial precedent for future disputes in arbitration matters and provides valuable insights to legal practitioners anda law students in the study of arbitration practice, dispute resolution, commercial litigation, corporate law, etc.