By Dr. Gbenga Oduntan,

Associate Professor of International Commercial law

University of Kent, Canterbury UK

 

On the 23rd of October, the international legal community and the Nigerian public received the news of the delivery of the judgement in the celebrated case before the Hon Mr Justice Robin Knowles, CBE between: The Federal Republic of Nigeria (Claimant) and Process & Industrial Developments Limited (P&ID) (Defendant). This case will, no doubt, in time come to stand as locus classicus on many significant points of law especially because of its relevance to international arbitration, commercial agreements, contract law, government procurements, corruption in arbitration and dispute settlement, anticorruption law and transparency in international business transactions among others. The P & ID case is a caution tale for every developing country, particularly Nigeria, on their multispectral vulnerability in the field of international business transaction, international trade, dispute resolution mechanisms, particularly arbitration and mediation. It is also a significant wake up call for all professionals and government departments that work on long term contracts, foreign investments, oil and gas transactions and international financial institutions. The case also exposed, the underbelly of the highly closed world of arbitration and alternative dispute resolution. It is also clear that there are also lessons for developed States and their courts and tribunals, about their imperfections and exposures in international commercial law and relations.

 

Background of the Case

The background of this highly interesting case, rests on a complex commercial arrangement that dates to the first decade of this century. There was a near catastrophic Award of $7 billion against Nigeria and of course, a challenge under Section 68 of the English Arbitration Act 1996. It is perhaps, important to recap some of the issues underlying the dispute. 

The underlying contract was based on a “Gas Supply and Processing Agreement for Accelerated Gas Development” (“the GSPA”) signed on 11 January, 2010 between two parties. In the event Nigeria did almost nothing to perform the GSPA after signing it, but, as Nigeria strenuously pointed out, neither did the other party. Yet, after a long drawn out high profile arbitration, the arbitral tribunal decided in 2017, that Nigeria owed P & ID US$6.6 billion. This sum is so vast, that it is material to Nigeria’s entire federal budget. With interest at the rate awarded by the Tribunal, the amount as at judgement day, if it had gone against Nigeria, would exceed US$11 billion (Paragraph 4).

Despite huge mineral resources, especially in the hydrocarbon sector, Nigeria notoriously has a huge problem of energy insecurity. The country has for a long time, been seeking innovative means to address this challenge. Under the GSPA, Nigeria was to supply specified quantities of “wet” gas to Gas Processing Facilities (GPFs) constructed by P & ID. P & ID was to strip the wet gas into “lean” gas, to be delivered to Nigeria to be used for power generation. The remaining natural gas liquids were to be retained by P & ID for onward sale, either domestically or by export. The stated duration of the GSPA was 20 years (or more, under one scenario). It is common ground that, in the event Nigeria did not in fact supply any wet gas to P & ID, and nor did P & ID construct any Gas Processing Facilities (Paragraph 8).

Needless to say, the contract as a commercial conceptual arrangement is exactly the kind of thing that Nigeria needs to further kickstart its development, especially in the very ambitious era of the new century when the country’s economy was raging and the governments of the period were bullish and audacious in their plans. It will perhaps, never be found out precisely why nothing moved on this arrangement, but red flags were abound.

An English court in 2020 ([2020] EWHC 2379 (Comm) Case No: CL-2019-0007), noted that the company as at the time it won the contract had “no assets, only a handful of employees, and was without a website or other presence”. The contract was given to P & ID without competitive tender, and this was despite several existing contractual disputes between other companies belonging to the very same directors and other Nigerian government departments.

It is fair to say that the required robust due diligence Nigeria ought to have done before entering this contract, was perhaps, only done eight years later in June 2018 when former President Buhari directed that Ministries should make available all relevant documentation and hand them over to the country’s Economic and Financial Crimes Commission (EFCC), so it could investigate the contract given to P & ID. Nigeria’s National Intelligence Agency was then involved, to investigate P & ID. The Nigeria Police and Federal Inland Revenue Service, eventually opened separate investigations into P & ID. 

Criminal proceedings then commenced against P & ID, and other principal actors. P & ID in Nigeria, thereafter, pleaded guilty to conspiracy to defraud Nigeria, money laundering, tax evasion and trading without authorisation.

 

The Major Grounds of Contention

In its challenge (of the arbitral award), Nigeria made allegations of bribery, corruption and perjury in several respects. The allegations extend to the GSPA, but they then extend further across the arbitral process from the Arbitration Agreement to Final Award. The allegations by Nigeria include allegations of bribery and corruption by P&ID before, at and after the time the parties entered into the GSPA. Nigeria alleged that some of its own Lawyers at the time of the arbitration, including two Leading Counsel, were corrupted by P & ID. The allegations extended, even to the early stages of the challenge before the Court. In turn, for its part, P & ID expressly refuted Nigeria’s main arguments, and described Nigeria’s case against it as “false and dishonest” (Paragraphs 12, 471).

 

A Cacophony of Illegal Actors Within Nigeria

It may be predicted that one of the enduring usefulness of this case is that it forced into the bright sunlight of national and international scrutiny the massive problem of corruption in Nigeria. The facts and unsavoury practices unearthed during the case and contained in the judgment indict for all to see named individuals and institutions. Without passing any particular judgment on guilt because that is not what the judgment itself did or even sought to do there is a balance of probability that shameful conducts and improper behaviour abound in Nigerian officialdom over the decades and perhaps till present.

The list is rich, and there can only be space and time to highlight a few. The facts revealed included previous deals the court considered indicative of a corrupt operation of Mr Michael Quinn and Mr Brendan Cahill, the businessmen operating as P & ID. For instance, multiple sets of murky transactions were highlighted at Nigeria’s Ministry of Police Affairs, Ministry of Defence, Nigerian National Petroleum Corporation (NNPC), among others.

(Whereby) An erstwhile Minister of Police Affairs, around 2003 and 2007 received several high sums of payments in Pounds Sterling ostensibly for medical treatment in a London Clinic, of which the Honourable Judge concluded as suspicious and indicative of money-laundering, and which probably explains the background of a 2007 contract for the supply of ammunition and bulletproof vests signed by a company and the Ministry of Police Affairs to a stated value of US$3,173,354.08. Other contracts laying the tone for the corruption that led to he debacle Nigeria found itself, date back to a Ministry of Defence contract in May 2002. This was for a contract for the refurbishment of 36 Scorpion tanks (the Scorpion Contract). Following a set of dodgy payments between highly placed workers in the Ministry of Defence, facts establishing grounds for a finding of grand-corruption were exposed.

 

The Temple of Arbitration on Trial

As the Honourable Judge correctly wrote “… this is a highly unusual case, although one that draws attention to matters of wider importance. Quite apart from the consequences for the parties, the matter touches the reputation of arbitration as a dispute resolution process”. At the arbitration stage, several clearly terrible things happened to provide the fertile and fortunate ground for challenge. There are allegations, and some were persuasive to the Court, showing a pattern of bribery of Nigerian officials.

The facts traversed throughout the long judgement, do establish serious grounds of impropriety on the part of Mr Shasore, SAN, Nigeria’s Leading Counsel at the Arbitration. These include 2019 admissions by Mr Shasore, SAN to the EFCC that he made personal gifts of US$100,000 each to a certain Ms Adelore (former Director of Legal Services at the Ministry of Petroleum Resources) and Mr Ikechukwu Oguine, General Counsel, Coordinator of Legal Services and Secretary to the NNPC. On 13 September, 2019, Mr Oguine equally gave a statement in which he said that he received US$100,000 from Mr Shasore, SAN.

Yet, the Court did not accept all these allegations easily as is true of every robust judgement, such as the one delivered by Mr Justice Robin Knowles. A testimony by Mr Tijani alleging that the Directors of P & ID bribed him with US$50,000 in a “black bag” in April 2009, while he attended a dinner with Mr Michael Quinn and Mr Hitchcock at the “Chopsticks” Restaurant in Abuja and was given a US$50,000 cash ‘gift’ was disputed by P & ID. The Judge was not prepared to rely on it, and he stated, “I am concerned, it cannot be tested satisfactorily.” In relation to a “statement of facts and documents concerning bribery” prepared by Nigeria, where it was alleged that a payment of US$300,000 by Mr Shasore, SAN to Mr Ukiri was a corrupt payment in return for which Mr Ukiri (who did not do any work on the P & ID case) “acted as one of Mr Shasore’s conduits in leaking [Nigeria’s Internal Legal Documents]” (Paragraph 444), the Judge concluded “[t]here is not the evidence before me at this trial, to substantiate this”.

Aside from that, the facts betray a very untidy system of legal instruction in the country. There were attempts to withdraw instruction, addition of co-Counsel, and disappearance of same for inexplicable reasons. Nigeria’s defence strategy as revealed in the judgement, was essentially chaotic in the main. In other words, Nigeria so obviously betrayed an undisciplined system of prosecuting even the most important trials and cases such as this, even though failure will certainly be catastrophic. Could this be why the country has been losing previous high-profile cases? Notably in July 2022, Nigeria unfortunately lost the UK Judgement in FRN v JP Morgan case, which arguably jeopardised international anticorruption works. More specifically, the case may have negatively impacted ongoing and future prosecutions relating to the notorious Oil Prospecting License 245 scandal, some of the indicted characters such as Mohammed Bello Adoke, SAN, a former Attorney-General of the Federation, who also turned up in the P & ID  case too. The 2022 London judgement brought sheer disappointment to anticorruption campaigners, both in Nigeria and abroad, and that experience contrasts very much with the P & ID case, where Nigeria clearly dodged a very dangerous bullet.

 

Murky World of Legal Services in the UK

The judgement revealed that even UK based providers of legal services are not beyond descent into the murky waters of greed and corruption, in the conduct of their services. For instance, Mr Andrew and Mr Burke KC allowed Nigeria’s internal legal documents that were privileged, to enter into the hands of the P & ID, despite knowing that P & ID was not entitled to see these documents. The Judge noted that “Their decision not to put a stop to it, at least, by informing Nigeria or immediately returning the documents they knew were received, was indefensible” (Paragraph 215). The damning conclusion reached by the Judge was that, “The reason Mr Andrew and Mr Burke KC behaved in this way, was because of the money they hoped to make”. There is the suggestion that Mr Andrew may have had a claim for up to £3 billion in the event of P & ID’s success, while Burke may have had a claim for up to £850 million, he said. It is worthy of note that, this is not the first time British Lawyers have been found seriously wanting in their rendering of legal services against Nigeria’s interests, in commercial transactions and during international proceedings. British Lawyer, Bhadresh Gohil received a conviction in 2010 over 13 counts of money laundering and other offences linked to his role helping James Ibori, a former Governor of Delta State from 1999 to 2007, to disguise illicit funds from criminal activities. The fines of around £28 million (around $36 million) was however, forfeited to the British State representing a further loss to Nigeria. It is fast becoming irrefutable that Britain remains a global money-laundering hub for foreign kleptocrats, who rely on a small but damaging crop of professional enablers that make the world of bribery, money laundering and illicit financial flows go round, and against the interests of developing States like Nigeria. This is an area worthy of closer, dedicated and specialist studies from within both countries, and collaboratively too.

Several heads will, of course, roll internationally, because of this judgement. Mr Justice Robin Knowles literally went to town in lambasting certain individuals within the UK’s jurisdiction, who were ‘driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others. 

The judgement has been formally referred to the Solicitors Regulation Authority and Bar Standards Board, in relation to the conduct of Solicitor, Seamus Andrew and Barrister, Trevor Burke KC. This is principally in relation to the handling of documents, which came into P & ID’s hands during the arbitration proceedings. As the Judge noted: ‘I trust that these two regulators of the legal profession in England & Wales will consider the professional consequences of the conduct of Mr Burke KC and Mr Andrew, in relation to Nigeria’s internal legal documents’ (Paragraph 593).

 

Recommendations

After all said and done, Nigeria has allowed itself to be played through a national trauma. As stated in Margaret Moses, The Principles and Practice of International Commercial Arbitration (Cambridge CUP, 2017) Page 216 persuasively put it “[a] party that has lost before an arbitral tribunal faces an uphill battle, if it wishes to set aside or vacate the award. Courts rarely overturn an arbitral award. Arbitral awards are considered to be final and binding”. Grounds of a successful challenge to an International arbitral award of this nature, are quite narrow by design. A final and binding award is often the aim of the parties, and rationale of most ICA proceedings. (See UNCITRAL Arb. Rules Art 32 (2) ICC Rules Art 28(6)) See also Section 52 English Arbitration Act, for form of award whereby parties and arbitrators must assist each other to ensure that a valid award emanates from the tribunal that is capable of enforcement internationally. 

Nigeria cannot always count on this kind of near miraculous but quite deserved exemption, from a manifestly unjust award based on illegalities. Thus, the imperatives are clear. A phase of introspection and re-strategising for success, is needed. A quick but effective audit of Nigeria’s Bilateral and Multilateral Investment Treaty commitments, is urgently required. Just as the military engages in periodic exercises and simulations for the country’s defence, so also must the Ministry of Justice carry out dedicated simulations of the country’s commercial vulnerabilities, based on international commitments. Ditto the Ministry of External Affairs, and Ministry of Trade and Investment.

There ought to be an increased capacity shown by bodies like the National Intelligence Agency to reflect the huge sums Nigeria expends on them, by pulling their weight in sniffing out foreign ‘cowboy’ businesses and their dodgy characters like the ones featured in this case. If Nigeria is to emerge as a serious player in this century, it must develop effective means of vetting out unserious and downright criminal operations that are abound in the international system. This is more so, in those areas and sectors of key importance to Nigeria. Businessmen with foreign convictions ought to be at least vetted again before being allowed to venture into business in Nigeria, and only specialist bodies like the NIA and Nigerian Embassies and High Commissions can do this job effectively. 

If this 21st Century is to become Nigeria’s century of accelerated development, it literally cannot be business as usual in terms of how the country interfaces with multinational corporations. Nigeria cannot afford to be a soft touch for crafty tax dodgers, bribe givers and part time crooks. More importantly, internal grand corruption will kill the country if the country does not kill it. The judgement by the Hon. Mr Justice Robin Knowles, is a treasure trove of legal hit list of shady characters of Nigerian civil servants to be investigated by multiple security agencies and brought to book. The judgement is also a good blueprint. to study the anatomy of business and official corruption in Nigeria. The 140 pages of the judgement has detailed the shady and dysfunctional institutions within Nigeria, that have made the country vulnerable to outside predators helping to generate illicit financial flows away from Nigeria. These institutions must be followed up, and indeed, ought to be mandated immediately by the new President H.E Bola Ahmed Tinubu to conduct internal reassessments, considering the revelations and implications of the judgement. 

The international community, including other unsavoury characters, will be watching carefully to see whether Nigeria realises the true importance of what it just went through and will be drawing the correct lessons. Complacency on this type of issues, is not really an option. It is bad for business, and worse for the commercial and economic destiny of the nation. This judgement literally gave Nigeria, a new lease of life. To whom much is given, much is expected.

This piece by Dr Oduntan is the first of a 3-part analysis of the impact of the judgment in  FRN vs Process & Industrial Developments ltd [2019] EWHC 2241 (Comm) Page 13, which struck down an earlier arbitral award against Nigeria as one which was fraudulently procured. The article was first published online by THISDAYLIVE https://www.thisdaylive.com/index.php/2023/10/31/p-id-a-conspiracy-against-nigeria

 


 

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