JUST IN: US APPEALS COURT REJECTS NIGERIA’S SOVERIGN IMMUNITY, AUTHORISE CHINESE INVESTO TO PROCEED TOWARDS CONFISCATING NIGERIA’S ASSESTS ABROAD
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An appellate court in the United States has rejected Nigeria’s sovereign immunity and authorised a Chinese consortium to proceed with its efforts to confiscate Nigeria’s assets abroad, aggravating a crisis that President Bola Tinubu has been trying to manage in Europe and prevent from spilling over into other jurisdictions.
On August 9, 2024, the U.S. Court of Appeals for the District of Columbia in Washington ruled that Nigeria violated the fundamental and commercial rights of executives at a Chinese corporation that had engaged into a trade zone arrangement with Nigeria.
After winning their lawsuit in the United Kingdom in 2021, the Chinese workers of Zhongshan approached the United States judicial system to recover an overdue arbitration judgement for breach of contract. According to court records, the Chinese expats were given $55.6 million in compensation from Nigeria, as well as $75,000 in moral damages, interest, legal, and arbitration fees.
The process arose from the collapse of a contract between Zhongshan and the Ogun State government, which had engaged into an agreement with Chinese expats in 2007 to establish a free trade zone. According to court records, after years of constructing the project, former Governor Ibikunle Amosun unilaterally terminated the contract and used crude techniques to avoid obeying the requirements put out in the original paperwork signed by all parties.
COURT ORDERS FORFEITURE OF $2.045M, PROPERTIES, SHARES LINKED TO EMEFIELE
The Chinese claimed they were imprisoned for weeks without charges and subjected to torture by Nigerian police. Before giving the Chinese roughly $60 million, the UK court stated that it was satisfied with the evidence they had presented.
As the Chinese attempted to enforce the verdict in the United States, Nigeria contended before the United States District Court for the District of Columbia in Washington that its sovereign immunity prevented the case from being heard in a US court.
However, the federal judge rejected Nigeria’s position, stating that the country is a signatory to the New York Convention, which permits arbitration between individuals, including sovereign entities.
Nigeria filed an interlocutory appeal in the matter on April 22, 2024, and two of the three-man panel concluded that the case should proceed because Nigeria had lost its immunity grounds when it joined Ogun in violating the contractual agreement. The court ruled that because Ogun is a federating unit of Nigeria, the country can be held responsible for the breach against the Chinese.
“Whether the arbitration exception applies in this case therefore turns on whether a treaty-specifically, the New York Convention-governs the Final Award,” the majority, Patricia Millett and Michelle Childs, said. “We hold that it does because the Final Award arose from (1) a legal relationship, (2) that is considered as commercial, and (3) is between persons.”
The judges also concluded that “Zhongshan and Nigeria shared a legal relationship because Nigeria owed Zhongshan legal duties under the Investment Treaty.” The treaty was signed between Nigeria and China in 2001, allowing free trade zones to be established to promote the commercial interests of both country.
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