UK Court Dismisses P&ID Appeal, Upholds £43m Award In Favour Of Nigeria

A Court of Appeal in the United Kingdom has rejected Process & Industrial Development’s (P&ID) appeal regarding a previous ruling that halted the enforcement of its $11 billion award against Nigeria.

In a unanimous decision, Lord Justice Snowden, the lead judge, allowed P&ID to appeal the judgment but ultimately dismissed the appeal. The other judges involved were Lord Justice Fraser and Julian Flaux.

P&ID had signed a deal in 2010 to construct a gas processing plant in Calabar, Cross River State, but the agreement fell through, with P&ID claiming the Nigerian government failed to fulfill its obligations. The Nigerian government, however, alleged the deal was a scam aimed at defrauding the country, which P&ID denied, accusing the government of making false allegations and conspiracy theories.

P&ID pursued legal action and secured an arbitral award against Nigeria. On January 31, 2017, a tribunal ordered Nigeria to pay P&ID $6.6 billion in damages, plus pre- and post-judgment interest at seven percent, totaling $11 billion.

In October 2023, Justice Robin Knowles of the commercial courts of England and Wales halted the award’s enforcement, agreeing with Nigeria’s claim that it was obtained through fraud and violating section 68 of the English Arbitration Act 1996. The judge found that P&ID had bribed Nigerian officials involved in drafting the gas supply and processing agreement (GSPA) in 2010 and had illegally accessed Nigeria’s privileged legal documents during arbitration hearings. P&ID was ordered to pay £43 million in compensation for Nigeria’s legal fees and disbursements.

The Court of Appeal’s judgment, delivered on Friday, addressed issues raised by P&ID, including whether the lower court was correct in ordering the £43 million legal cost to be paid in British pounds sterling instead of naira. P&ID argued that Nigeria funded its legal services by converting naira from its consolidated revenue fund.

The court judgment noted, “Although Nigeria was billed by its English lawyers in sterling and paid them in sterling, P&ID contends that Nigeria funded such payments by exchanging naira from its consolidated revenue fund, so that the Costs Order should have been in naira.” The depreciation of the naira against sterling meant that payment of the fees and disbursements at the relevant times would have cost Nigeria about 23 billion naira, while paying £43 million now would equate to approximately 76 billion naira.

Lead judge Snowden accepted Nigeria’s argument that since the legal costs were incurred and paid in sterling, the cost order should also be in sterling. He ruled, “The judge was right to accept Nigeria’s straightforward submission that because Nigeria had been invoiced and had incurred its liability to its solicitors in sterling and had paid those bills in sterling, the court ought to make its Costs Order in sterling.”

“I would therefore grant P&ID permission to appeal, but would dismiss the appeal,” the judge concluded.