A U.S. appellate court has denied Nigeria’s claim of sovereign immunity, allowing a Chinese consortium to move forward with efforts to seize Nigerian assets abroad.
This ruling, delivered on August 9, 2024, has intensified a crisis that Bola Tinubu has been striving to contain in Europe and prevent from expanding to other regions.
The decision by the U.S. Court of Appeals for the District of Columbia came after judges determined that Nigeria had severely violated both fundamental and commercial rights of executives from a Chinese firm involved in a trade zone agreement with the country.
The Chinese employees of Zhongshan had turned to the U.S. courts to enforce an outstanding arbitration award for breach of contract, after winning their case in the United Kingdom in 2021.
The UK court awarded them $55.6 million in compensation, along with $75,000 in moral damages, interest, and legal fees, according to court documents.
The dispute originated from a failed contract between Zhongshan and the Ogun State government, which had agreed in 2007 to collaborate with the Chinese firm on developing a free trade zone.
After years of progress, the contract was abruptly terminated by former Governor Ibikunle Amosun, who allegedly employed questionable tactics to avoid adhering to the original agreement.
The Chinese workers also reported being unlawfully arrested, detained for weeks without charges, and tortured by Nigerian police officers. The UK court found the evidence compelling, leading to a significant financial award.
As the Chinese investors sought to enforce the judgment in the U.S., Nigeria argued before the United States District Court for the District of Columbia that its sovereign immunity protected it from such claims.
However, the judge rejected this defense, noting that Nigeria is a signatory to the New York Convention, which allows for arbitration between private parties and sovereign entities.
Nigeria appealed this decision on April 22, 2024, but a two-judge majority on the appellate panel ruled that the case should proceed.
The court held that Nigeria had forfeited its immunity by participating in the contractual breach alongside Ogun State. Since Ogun is a federating unit of Nigeria, the nation itself could be held accountable.
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The majority opinion, authored by Judges Patricia Millett and Michelle Childs, stated that the New York Convention applies in this case because the arbitration award arose from a commercial legal relationship between the parties.
They also noted that Nigeria had legal obligations to Zhongshan under the 2001 Investment Treaty signed between Nigeria and China, which facilitated the establishment of free trade zones.
Judge Greg Katsas dissented, arguing that Nigeria’s immunity should remain intact since the targeted assets fall under its sovereign control.
The case will now return to the lower court, which has already indicated it will allow the Chinese to pursue Nigerian assets in the U.S. Nigeria’s assets include fixed properties and oil revenue deposits with major financial institutions like JP Morgan.
This ruling follows closely on the heels of a French court decision permitting the Chinese investors to pursue Nigerian assets in Europe, leading to attempts to seize the country’s private jets across various European jurisdictions.
In response, both the federal government and Ogun State issued statements condemning the Chinese investors as fraudulent, likening the case to the notorious P&ID scandal.
They also announced efforts to overturn the French judgment, though neither government immediately commented on the U.S. ruling or indicated whether they would appeal to the U.S. Supreme Court.
(Peoplesgazette)
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