Three jets owned by the Nigerian government have been ordered to be seized by a French court as part of a dispute with a Chinese company that has alleged breach of contract by the west African country, according to court documents obtained by the Financial Times.
The judgment is the latest arbitration effort against Nigeria by a foreign company alleging that Africa’s most populous nation reneged on an agreement. The Nigerian government won a more than a decade-old battle against a little-known Irish company last year at the London High Court after a judge found that the contract at the centre of the arbitration award that would have cost the country $11bn was fraudulent.
Global arbitration systems have long been criticised for their secrecy, which often obscures contentious decision-making processes and which anti-corruption advocates say could be an avenue for fraud. Companies have typically turned to such panels because they claim not to trust the judicial processes in some countries where they operate, and because they want to keep their disputes private and away from public courts.
The case at the heart of the latest award centres on a 2013 contract signed by Zhongfu, a subsidiary of Chinese investment company Zhongshan Fucheng Industrial Investment, and the government of the Nigerian region of Ogun to develop a free trade area. Zhongfu was to own 60 per cent of the joint venture under the terms of the deal.
However, three years later, Zhongfu alleged that Ogun had backed out of the deal and wanted to take over the “significant” Chinese investment in the free trade zone. The company said a “campaign of illegal acts” against it ultimately forced it out of the agreement.
Zhongshan initiated arbitration proceedings against Nigeria in 2018. A three-person arbitration panel in London awarded the company $70mn in damages to be paid by the Nigerian government in 2021. The award has since grown to about $81mn with interest.
The arbitration panel wrote that: “It is clear that Zhongsan is the effective winner in these arbitral proceedings, in that it has proved its version of events is accurate, it has successfully resisted Nigeria’s jurisdictional and preliminary objections, it has established that it has a valid claim against Nigeria under the Treaty and it has obtained an award for substantial damages.”
Nigeria has not indicated it is willing to pay the damages. A judge in the Commercial Court in the King’s Bench Division of London’s High Court of Justice granted Zhongshan an enforcement order against two properties owned by the Nigerian government in Liverpool, estimated to be worth between £1.3mn and £1.7mn in June.
The three jets to be seized are a Dassault Falcon 7X, a Boeing 737-7N6/BBJ and an Airbus A330-243 belonging to the federal government of Nigeria, stationed at Paris-Le Bourget and Basel-Mulhouse airports.
A person familiar with the case told the Financial Times that Zhongshan filed the enforcement order at the centre of the most recent ruling with the Paris Judicial Court because the jets were parked in France.
Spokespeople for Nigeria’s President Bola Tinubu and the country’s government did not respond to requests for comment. Zhongshan declined to comment.
