The Federal Republic of Nigeria appeared in the English High Court today for a scheduled hearing relating to a U$200 million guarantee posted by Nigeria last year with respect to the Process & Industrial Developments Limited (“P&ID”) arbitral claim.
The fund was posted as security for the current proceedings in favour of P&ID. The hearing is part of FRN’s ongoing challenge to overturn the US$10 billion arbitration award obtained by P&ID. P&ID is owned by vulture fund VR Capital and an opaque shell entity Lismore Capital.
Today, Nigeria successfully secured the release of the guarantee with the Court rejecting P&ID’s belated application to double the guarantee to US$400 million. The Court also awarded Nigeria its costs of the applications. The judge, Cranston J, agreed with the FRN that there has been a fundamental change of circumstances since the security was ordered.
This arose from the English High Court’s conclusion that FRN had established strong prima facie evidence that P&ID and its associates attempted to defraud the FRN of billions of US Dollars through bribery, dishonest collusion, and perjured evidence.
In his reaction, the Governor of the Central Bank of Nigeria, Godwin Emefiele, said “Due to the substantial evidence of prima facie fraud established before the Court, we are pleased that the Judge has agreed to release the guarantee.
“We are also pleased that the Court has rejected P&ID’s application to increase the guarantee, which was clearly intended to be a diversionary tactic and entirely misconceived.
“This release which is an accretion into the reserves will further enhance the nation’s management of the exchange rate of its domestic currency, the Naira.”
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The CBN Governor said the development is a significant victory for Nigeria in her ongoing fight to overturn the US$10 billion award procured through fraud and corruption by P&ID and former government officials.
“P&ID and its backers, Lismore Capital and VR Advisory, are increasingly seeing their case slip between their fingers,” he said.
“They continue to resort to employing delay tactics, disseminating misleading claims, and taking every step to obstruct our investigations across multiple jurisdictions.
“The FRN will not rest until we secure justice for the people of Nigeria – no matter how long it takes. Investigations are ongoing, and we are confident that more of the truth will be revealed over the coming months.”
| IN CONTEXT
On January 11, 2010, P&ID signed a gas supply and processing agreement with the Ministry of Petroleum Resources on behalf of the Nigerian government. According to the terms of the agreement, P&ID would build and operate an Accelerated Gas Development project to be located at Adiabo in Odukpani Local Government Area of Cross River State while the Nigerian government would source for natural gas from oil mining leases (OMLs) 123 and 67 operated by Addax Petroleum. But P&ID alleged that after signing the agreement, the Nigerian government reneged on its obligation, noting that failure to construct the pipeline system to supply the gas frustrated the construction of the gas project. Nigeria said in its defense at the tribunal. “…the failure of P&ID to acquire the site and build Gas Processing Facilities was a fundamental breach and that no gas could be delivered until this has been done,”. But the tribunal ruled that Nigeria’s obligations under Article 6B were not conditional upon and in July 2015, it found that Nigeria had repudiated its obligations under the GSPA and that P&ID had been entitled to accept the repudiation and claim damages for breach. In 2015, the Nigerian government asked for the award to be set aside after it committed that the arbitration decision shall be binding upon the parties. By 2016, the tribunal noted that the damage suffered by P&ID was the loss of net income the company would have received if the government kept its side of the contract and two of its members held that P&ID’s expenditure and income should have been about $6.597 billion if the GSPA was duly performed by government. The tribunal thereafter said the award should be paid together with interest at the rate of 7 percent from March 20, 2013. The Nigerian government would later appeal the judgment. Last year, a U.K. judge ruled P&ID could enforce the arbitration tribunal’s 2017 ruling, now totaling $9.6 billion including interest. Today, Nigeria’s chance of annulling the penalty lies in its efforts to prove that the 2010 gas supply arrangement was a “corrupt” scheme designed to fail by both P&ID and colluding government officials. |
