Challenge to US $11bn arbitration award

24 October, 2023

The Commercial Court handed down judgment yesterday in Federal Republic of Nigeria v. Process & Industrial Developments Ltd [2023] EWHC 2638 (Comm), finding that arbitration awards against Nigeria had been obtained by fraud and contrary to public policy.

The case arose from a Gas Supply and Processing Agreement (“GSPA”) entered into in January 2010 between Process & Industrial Developments Ltd (“P&ID”) and the Ministry of Petroleum Affairs of the Federal Republic of Nigeria (“FRN), providing for P&ID to develop a processing plant in Calabar, the Cross River State capital. Neither party performed the contract and P&ID brought an arbitration claim against FRN resulting in it being awarded damages of US $6.6bn, together with interest (now accumulating to over US $11bn).

The Court found that FRN had established that the arbitration awards had been obtained by fraud and contrary to public policy within the meaning of section 68(2)(g) of the Arbitration Act 1996. Mr Justice Knowles in his judgment observed 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”.

In reaching this decision, Mr Justice Knowles found “without reluctance” that P&ID had obtained the arbitral awards “only by practising the most severe abuses of the arbitral process”. This included P&ID paying bribes in relation to the entry of the GSPA and then lying about that in its arbitration evidence; continuing to pay bribes during the arbitration; and the fact that P&ID and its lawyers secured access to Nigeria’s privileged documents during the arbitration, which “enabled P&ID to track Nigeria’s internal consideration of merits, strategy and settlement”.

Tom Ford and Sebastian Mellab, led by Mark Howard KC, and together with Philip Riches KC and Tom Pascoe, acted for the Federal Republic Nigeria instructed by lead partner Shaistah Akhtar and partners Andrew Short and Zachary Segal of Mishcon de Reya LLP.

Read the full judgment here.