Introduction:
On 14th August 2024, Nigerians woke up to the news of the seizure of three (3) Nigeria’s presidential jets, as ordered by a French court. The seizure stems from an application by Zhongshan, a Chinese company whose export processing zone management contract was terminated by the Ogun State government in 2016. Before this time, Nigeria and China had entered a Bilateral Investment Treaty (BIT) in 2001 to encourage investment between both countries. Sometime in 2010, Zhongshan Fucheng Industrial Investment Co. Ltd. (Zhongshan) through its parent company (Zhuhai Zhongfu Industrial Group Co. Ltd), agreed with the Ogun State government to develop the Ogun Guangdong Free Trade Zone (OGFTZ). In 2011, Zhongshan set up a local entity – Zhongfu International Investment (NIG) FZE (Zhongfu) which was registered by the Nigeria Export Processing Zones Authority, to manage the development of the free trade zone. In 2013, the Ogun State government entered into a Joint Venture agreement with Zhongfu, appointing it as the permanent manager of the OGFTZ and giving it a majority shareholding in the OGFTZ project. Thereafter, Zhongfu commenced several works regarding the OGFTZ project.
However, it was reported that the Ogun State government abruptly terminated Zhongfu’s appointment and also took actions to expel the company from Nigeria, including harassment of its executives and revocation of immigration papers. Consequently, Zhongfu initiated an investment treaty arbitration against Nigeria, citing the bilateral investment treaty between the People’s Republic of China and Nigeria. On 26th March 2021, an arbitral tribunal issued a final award of $55,675,000 in addition to an interest of $9.4 million and costs of £2,864,445 payable by Nigeria to Zhongshan. It is in the realization of this arbitral award that the Nigeria’s presidential jets and other assets belonging to the Federal Republic of Nigeria, were seized.
From the above, several questions have been asked by Nigerians regarding the propriety or otherwise of the claim against Nigeria instead of Ogun State being the party that terminated the said agreement resulting in the final award that Zhongfu now seeks to enforce against Nigeria. Similarly, there are also questions as to whether a foreign country can seize the Federal Republic of Nigeria’s assets, which seems to be a violation of Nigeria’s sovereign immunity. The latter question will be addressed in full in our subsequent series on this case. However, this article seeks to address the rationale behind holding the Federal Republic of Nigeria accountable for the actions of its organ(s) in international investment arbitration.
