How Nigeria, as a sovereign nation, can repudiate the $9.6 billion judgment debt it incurred from a failed gas contract with Process and Industrial Developments (P&ID) remains unclear despite new reports suggesting that the Irish firm could have contracted the deal in less than transparent manner.
Yesterday, constitutional and international lawyers failed to agree on whether the P&ID owner’s alleged history of corruption and the Nigerian government’s plan to plead sovereign immunity are enough to save the nation from losing more than 20 percent of its foreign reserves in payment of the arbitration award as confirmed by an arbitration tribunal and an English court.
Meanwhile, P&ID in a statement mailed to The Guardian last night, said it had not “heard from anyone in government since the Commercial Court judgment was issued on 16 August 2019. The ball is in Nigeria’s court. If the Buhari Administration is ready to desist from its campaign of baseless slander and sham investigations against P&ID and its founders and come to the negotiating table, P&ID is ready for serious talks. In the meantime, P&ID will continue its efforts to identify and seize Nigerian assets to satisfy the debt.”
Although senior lawyers told The Guardian that the sovereign immunity which the Federal Government intends to claim in scuttling the $9.6 billion judgment debt was not tenable in international law, Professor of International Law and Jurisprudence, Akin Oyebode, said the rules pertaining to sovereign immunity were well-established in international law, and that “Nigeria can take full advantage of them.”
According to Oyebode, while Nigeria has consented to arbitration prior to the current situation, under international law, the P&ID is disabled from attaching any of Nigeria’s sovereign property without its express consent.
“It is true that international law bifurcated sovereign acts (jure imperii) and acts of a commercial nature (jure jestionis), but the private party suffers the disadvantage of non-enforcement of judgments against the sovereign. So, a private party that enters into a contract with a sovereign does so at its own risk.
“If Nigeria does not manage the loss it created well, it could endure loss of property and, or diminution of regard internationally, depriving it thereby of much-direct foreign investment.”
On how the country could suffer loss of property, when its property cannot be attached without its express consent, Oyebode said: “There could be assets jointly owned with private interests which can be where and when circumstances avail thereto.”
A Kano-based legal practitioner, Abubakar Sani, expressed a similar view. According to him, a well-established principle of international law holds that the property and sovereign/diplomatic staff and officials of a foreign state are immune from the legal process of other states, unless they submit to the latter’s jurisdiction or are deemed to have waived that immunity.
“This protection even extends to criminal charges – as graphically illustrated by the case of the fugitive blogger who was responsible for leaking the Wikileaks Papers, Julian Assange.
“It can be recalled that he sought and obtained sanctuary in the Ecuadorian Embassy in the U.K. for years, and was only apprehended when the Ecuadorian government waived its sovereign immunity, paving the way for the British police to enter the embassy and effect his arrest in connection with sexual assault charges in Sweden.”
But a diplomat and Professor of Political Science, Bolaji Akinyemi, expressed a slightly different view in a previous telephone interview with The Guardian. “The law is not so clear, yet Nigeria wants immunity. If the government is involved in this mess then, that’s no longer diplomacy; that’s now business. The law is clear, when sovereigns start operating businesses, there is no longer immunity, they are now open to risks,” Akinyemi explained.
Oyebode’s position on the matter also ran contrary to the views of some of his younger colleagues. A senior lecturer at the Department of Jurisprudence and International Law, University of Lagos, Dr. Dayo Ayoade, said the case between Trendtex Trading Corporation and the Central Bank of Nigeria (CBN) in 1977 had removed sovereign immunity in commercial transaction involving the state or state establishments.
He said: “There is no such thing as silver bullet. That should be very clear. So the government cannot rely on that. For a long time now under international law, there is ongoing debate over state sovereign immunity, whether to allow it or not to allow it. Traditionally, government had this immunity, which means that nobody could touch a government. Automatically, if you are government, nothing can happen to you.
“In the case of Trendtex Trading Corporation against the CBN in 1977, the CBN issued a letter of credit for the purchase of cement and when the case came up, the CBN said it could not be sued because she was part of government.
“So, the law is that you cannot touch the government when it borders on government issues, but when it is a commercial transaction, you would be held liable.”
He argued that the case of sovereign immunity does not apply in commercial transactions, adding that the case between Nigeria and P&ID is a commercial transaction because it borders on contract .
“So, it was the CBN case in UK that Lord Dennings used to establish the case that states do not enjoy sovereign immunity in commercial transactions. It was the commercial contract case in UK that actually ended that traditional deal that nobody can touch a country. So we may get it wrong if we are not careful,” he said.
A Lagos-based lawyer, Okechukwu Nna, agreed that the law on sovereign immunity has moved from strict application of the old rule. By the old rule, he said, a sovereign state was totally immune from and could not be impleaded in a foreign jurisdiction.
“A sovereign state could not be sued to appear before a foreign court. Thus, in whatever a sovereign and a sovereign state do on foreign soil, they had perfect defence, no matter how odious their conducts were. That was in the days when government restricted itself to the core functions of governance such as defence and foreign affairs.
“But when governments, beginning with the communist countries, started going into business and commercial areas of life and fused the core functions of governance with commerce, the rules changed.
The courts moved from the strict rules of immunity to restrictive immunity. Under the rule of restrictive immunity, if a sovereign goes into business or commercial area of life, for example, contract to build gas stations, and the business or agreement goes haywire, they cannot turn around and plead sovereign immunity.
“In other words, they would be treated like any other businessman, like any other trader in the market place. The sovereign would be impleaded before a foreign court and the court would decide its fate like those of other traders. This is the new legal position on the doctrine of sovereign immunity,” he stated.
A Professor of Law at the University of Benin, Edoba Omoregie, said the whole mess could have been avoided if the contract itself had provided that the venue of arbitration shall be in Nigeria.
“Far more importantly, since issues of fraud have been raised in the manner the contract was concluded ab initio (from the beginning), perhaps any further challenge to the court judgment should explore this too.
“Fraud can always be raised at any time in a judicial proceeding. In the end, we have a serious dispute before us. And I don’t think we should be talking of silver or magic or any other bullet anywhere. We should soberly look at all the options, including diplomatic intervention,” he admonished.
Chief Mike Ozekhome (SAN)
While the President Muhammadu Buhari administration believes it has found a way out of the logjam that could have the Irish company clamping down on Nigeria’s assets, Chief Mike Ozekhome (SAN) said the government might just still be dancing in circles.
According to reports, the Nigerian government may be relying on a UK law, that gives immunity to sovereign states. Going by the law, P&ID should not even have taken Nigeria to any arbitration or a commercial court in the first instance.
Sources close to the government disclosed that Nigeria intends to file a stay-of-execution of the judgment at the end of the month when the UK courts resume and has opted not to negotiate any deal with P&ID.
Thereafter, the government will file an appeal based on the extant law of the United Kingdom. UK’s State Immunity Act 1978 (the Act) which bars UK courts from confiscating assets of a foreign state without the consent of that state, is what the government says is providing it with a leeway in the matter.
Already, the decision by Nigeria to hinge its defence on this law, was said to have been taken at a meeting chaired by Vice President Yemi Osinbajo at the Presidential Villa in Abuja during the week.
In attendance at the meeting were the Finance, Budget and National Planning Minister Zainab Ahmed; Minister of Justice Abubakar Malami (SAN); Minister of Information Lai Mohammed; and the Minister of State for Petroleum, Timipre Sylva.
Others are Minister of State for Niger Delta Affairs, Festus Keyamo (SAN); Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kyari; Acting Chairman of the Economic and Financial Crimes Commission (EFCC) Ibrahim Magu; and the CBN Governor, Godwin Emefiele.
The Federal Government’s team, made up of many lawyers, met with an American lawyer alongside Mr. Bolaji Ayorinde (SAN), who has been central to the handling of the case with P&ID.
Ozekhome, however, picked holes in the fresh strategy of the government. “The opinion flies in the face but it would have been very useful if the government ab initio raised the issue of fraud. Not only that the government did not raise the issue of fraud, it has already entered into negotiation through the past and present government on the issue of quantum, how much should be paid,” he said.
According to Ozekhome, negotiating how much should be paid is already an acceptance that the award was proper and enforceable. He says that the legal opinion the government is relying on is to the extent that P&ID cannot go after the assets of a sovereign like embassy buildings, but not like money or cash.