Nigeria has successfully reversed a United Kingdom arbitration decision that had awarded damages of $6.6 billion in 2017 – rising to $11 billion today – against the government.
This was over a failed oil and gas project.
The case arose out of a 20-year gas processing contract granted by Nigerian officials to Process & Industrial Developments Limited (P&ID), a British Virgin Island-based company founded by a former Irish record label manager and his associate.
Neither party performed the contract and P&ID sued for, and was awarded, 20 years worth of lost profits by way of arbitration.
However, the High Court in London ruled on Monday that P&ID paid bribes when brokering the lucrative gas processing contract, and then practised the most severe abuses of the arbitral process in order to procure awards in its favour from a London tribunal.
Given the secrecy of arbitration a way of privately resolving disputes outside the usual court process the corrupt payments remained hidden until the High Court gave Nigeria the green light in 2020 to challenge the awards.
A lengthy public trial earlier this year exposed the conspiracy involving Nigerian officials, Irish businessmen and London lawyers who stood to receive enormous sums under the arbitral awards, which was growing by $1.3 million every day in interest.
In his ruling, Mr Justice Knowles said the case as remarkable.
He found that P&ID had paid bribes to secure the underlying contract and then lied about that in its evidence to the tribunal; that payment of bribes continued throughout the arbitration; and that P&ID and its lawyers had secured access to a steady stream of Nigeria privileged documents during the proceedings which enabled P&ID to track Nigerias internal consideration of merits, strategy and settlement.
The recipients of those privileged documents included an English solicitor and a Kings Counsel (KC) who stood to benefit enormously from the outcome of the arbitration and were found to have given false evidence to the English court.
The judge has referred his judgment to the Solicitors Regulation Authority and the Bar Standards Board.
Mr Justice Knowles said that the case had sadly brought together a combination of examples of what some individuals will do for money. Driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others.
He praised the Nigerian government's legal team, Mark Howard KC and Tom Pascoe of Brick Court Chambers, for their expertise and tenacity, which made the difference in getting to the facts.
He said: The circumstances of this case, which are remarkable, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved.
The Nigerian governments lawyer said that Mr Justice Knowles' comments would “no doubt provoke debate amongst the arbitration community and beyond about safeguards that should be put in place to prevent similar abuses and corruption in the future”.
UK-based Spotlight on Corruption said after the case: “Todays judgment pulls the plug on P&IDs claim to enforce this $11 billion award against Nigeria, relieving the African nation of a bill equivalent to almost a third of its total annual budget for 2023 and over seven times its current health budget.”
Dr Helen Taylor, senior legal researcher at Spotlight on Corruption, said: It is difficult to overstate the importance of today's ruling for the Nigerian people, given the economic prospects of an entire country have been held hostage by a tainted arbitral award for a gas project that was built on bribes and lies.
“The prospect of a release from this $11 billion debt will come as a huge relief to Nigeria, while the courts damning findings about the conduct of London-based lawyers will weigh heavily on those who care about the integrity of our legal system.
“There must be further scrutiny of the role played by these lawyers and proper accountability for any professional misconduct that may have compromised the London arbitration,” she added.