A Chinese investor has obtained the authority to enforce a $70 million investment treaty award against Nigeria, and as a result, two Nigerian properties situated in the United Kingdom are about to be taken over by the investor.
After attaching a £20 million debt related to the well-known P&ID case, Zhongshan Fucheng Industrial Investment was given final charge orders against two residential properties in the UK that were owned by the Nigerian government.
On June 14, Master Sullivan of the Commercial Court in London issued an order that the Chinese company obtained. The orders were related to two properties in Liverpool that were valued at a total of £1.7 million.
According to the judge, the order was premised on the fact that the properties have been converted to commercial use outside Nigeria’s diplomatic or consular activities in the UK, stressing that enforcement of the order should prevail.
The high profile case was a gritty legal battle between Zhongshan represented before the court by Withers and barristers at 3VB, while Nigeria was represented by Squire Patton Boggs and a barrister at Atkin Chambers.
Sources said the underlying arbitration was in relation to a joint venture with Nigeria’s Ogun State to establish a free trade zone near Lagos in 2013. A Zhongshan subsidiary held a 60% stake in the project but Ogun terminated its participation three years later.
In 2021, a London-seated UNCITRAL tribunal chaired by Lord Neuberger including Matthew Gearing KC and Rotimi Oguneso SAN said Nigeria was guilty of expropriation and other breaches of the China-Nigeria bilateral investment treaty and ordered the country to to pay US$55.6 million plus interest and costs.
Nigeria in the same year put a challenge against the award in the Commercial Court on jurisdictional grounds. Nigeria’s position was that the arbitration clause in the BIT was invalid. But in later development, Nigeria withdrew the challenge before a hearing on Zhongshan’s application for security and security for costs was about to take place.
Mrs Justice Cockerill in the same court granted Zhongshan an ex parte enforcement order in December 2021, but Nigeria did not file againt this order within the 74-day deadline allowed by the law.
In July 2023, the Court of Appeal in London stopped Nigeria from bringing a late challenge to the enforcement order, stressing Cockerill’s provisional determination that state immunity did not apply had become final.
The investor reportedly got interim charging orders in June and August last year over the two properties in Liverpool, which are owned by the Nigerian government.
Nigeria’s efforts to dismiss these charging orders failed as Master Sullivan in her judgement, held that the properties are leased to residential tenants and that no “consular activities are actually taking place on the premises”.
She also dismissed Nigeria’s arguments that it had not been properly served with the interim charging order applications under the State Immunity Act and that Zhongshan had failed to give full and frank disclosure when seeking them.
Master Sullivan also dismissed Nigeria’s objection about parties bringing multiple enforcement action, saying that parties are “entitled to bring as many types of enforcement action as they see fit to recover their debt.” She noted that Nigeria had yet to pay any of the award and that the value of the properties represented a “small proportion of it”.
Timi Balogun of Squire Patton Boggs, counsel to Nigeria, said: “We respectfully disagree with the Master’s decision, which we believe somewhat brushes over complex public international law issues, including with respect to state immunity and the right of a foreign state’s High Commission to own and manage portfolios of fixed assets in England and Wales. We believe that such issues need to be weighed very carefully, and we intend to appeal this decision so that these complex and important issues can be considered by the higher courts.”
