Arbitration & ADR, Insights

Nigeria Avoids Payment of Us$11 billion Dollar Arbitral Award Debt to P&ID: Is the Legal Battle Really Over?


In January 2010, the Nigerian Government entered into a Gas Supply and Processing Agreement (GSPA) with a company known as Process & Industrial Developments Limited (P&ID). Three years after, P&ID declared breach and commenced arbitration proceedings. In two awards issued 17th July 2015 and 31st January 2017, the arbitral tribunal – composed of Lord Hoffmann, Sir Anthony Evans and Chief Bayo Ojo, SAN – found that Nigeria had committed a repudiatory breach of the GSPA, that P&ID was entitled to the sum of US$6.6 billion as damages and 7% interest (Chief Ojo, SAN published a dissent with respect to the award of damages). Having regard to the interest awarded by the arbitral tribunal, as of 2023, Nigeria was an award-debtor in the sum of US$11 billion.

After a series of proceedings in English and Nigerian courts, Nigeria formally challenged the arbitral awards in proceedings commenced before the Commercial Court in England. In a 127-paged judgment – excluding the Annex – handed down on the 23rd day of October 2023, Hon. Mr. Justice Knowles upheld the Nigeria’s challenge to the awards. In his judgment, Knowles J found as a fact that among other elements of fraudulent conduct proved during the challenge proceeding: (a) P&ID had obtained the GSPA by bribing an official of the Nigerian government; (b) P&ID had knowingly provided false evidence to the arbitral tribunal; and (c) P&ID had corruptly obtained privileged documents pertaining to Nigeria’s conduct of the arbitral proceeding. Accordingly, Nigeria’s challenge under Section 68 of the Arbitration Act 1996 (applicable in England) succeeded because the awards were obtained by fraud and were contrary to public policy.

In a further ruling handed down on 21st December 2023, Knowles J set aside the awards and denied leave to P&ID to appeal against his judgment. With these decisions, Nigeria does not have to pay “a sum so vast that it is material to Nigeria’s entire federal budget”. The judgment of the Knowles J has been rightly described as a…

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