Malami: Nigeria’s Economy Would’ve Hit Total Collapse If Not for the Justice Sector

The Attorney General of the Federation (AGF) and Minister of Justice in Nigeria, Abubakar Malami has said the justice sector has been the one that saved the country’s economy from total collapse, which would have been brought about if P&ID had succeeded in enforcing an arbitral award of over $10billion.

The AGF said the several recoveries made by the ministry had also played major parts in keeping the economy afloat.

Speaking over the weekend at the maiden top management retreat of the Federal Ministry of Justice held in Kano, Malami said the sum of US$311million recovered funds were deployed into critical infrastructural projects, such as the Abuja-Kano and Lagos-Ibadan expressways, as well as the second Niger bridge.

“On economic front, we have been able to save our economy from total collapse, which would have been brought about if the P&ID had succeeded in enforcing an arbitral award of over US$10billion.

“We have also ensured the restoration of our country to the path of growth and development through the settlement of the multibillion-dollar adverse claims on the Ajaokuta steel plant.

“Our asset recovery drive has secured the sum of US$322million, which enabled the federal government to embark on empowerment programmes, which have taken over 100million persons out of poverty as part of the national social investment programmes,” he added.

The P&ID story

The Royal Courts of Justice Strand, London, WC2A 2LL presided over by Justice Sir Ross Cranston said following a review of written submissions by the Nigerian government after the arbitral award, which contained “new evidence” concerning the matter in dispute, the court decided to grant “Nigeria’s applications for an extension of time and relief from sanctions.”

The latest ruling is, however, a temporary reprieve for Nigeria, as it merely provides an opportunity for the court to review the new evidence of miscarriage of justice claimed by the Nigerian government and does not amount to a repeal of the award to Process & Industrial Development Limited (P&ID).

The UK Business & Property Courts (the Commercial Court), presided by Justice Butcher, had approved that P&ID should enforce a March 20, 2013 award against Nigeria by a District Circuit Court in Washington DC.

The initial award of $6.6 billion as damages in favour of P&ID followed accusations by the British engineering firm of an alleged breach by the Nigerian government of a 2010 gas contract agreement.

The damages calculated as the present value of 20-year income, minus certain capital and operating costs incurred from building and running the refining facility, was granted under the rules of the Arbitration Act 1996 (England and Wales) and the Nigerian Arbitration and Conciliation Act (CAP A18 LFN 2004).

Following Nigeria’s refusal to enter an appeal for over five years, the initial award accumulated to about $8.9billion, including an additional $2.3 billion in accumulated interest at 7 per cent rate per annum.

P&ID had commenced moves to enforce the award by targeting Nigerian assets abroad, a development most analysts said portended grave danger on Nigeria’s tottering economy.

In resisting P&ID’s attempt, the Nigerian government filed an appeal against the judgment of the English Court for a stay of execution, apart from other efforts in the courts of the United States of America to protect Nigeria’s interests.

The Office of the Attorney General of the Federation described the award as “clearly unreasonable and manifestly excessive and exorbitant, punitive and unjustifiable.”

The appeal court presided by Justice Christopher Cooper had denied Nigeria’s application on the ground that it was belated, as it was filed outside the 30 days period within which copies of the summons and complaint should be served on a foreign state.

The court however granted a part of the country’s motion that Nigeria was not properly served the process documents by addressing them to the “head of the ministry of foreign affairs” as is the practice under 28 U.S. Code section 1608(a)(3).

The code stipulates the order of service or delivery of a copy of the summons and complaint in U.S. courts to a foreign state or political subdivision of a foreign state.

The Nigerian government had argued in its appeal that the affirmation of the award by the tribunal on March 2018 to its January 2017 ruling was not enforceable as it was a “default entry by the clerk” rather than a “default judgement.”

The Attorney-General of the Federation, Abubakar Malami said that the arbitration court lacked the constitutional powers to issue such an order or award against a sovereign state like Nigeria.

Mr Malami said there were certain conditions that must be attained before the U.S. court could deliver such a judgement against Nigeria.

Under the Foreign Sovereign Immunities Act (FSIA), the AGF said, a default judgement cannot be entered against a foreign state like Nigeria, unless the presiding judge determines so after the petitioner/claimant must have established its entitlement to a default judgment.

Based on the presumption of sovereign immunity, he said the US District Court was still under obligation, despite default by a Foreign State, to determine whether the Foreign State was immune from the jurisdiction of the US Court under FSIA, or whether the case before it fell within one of the recognised exceptions.

He noted that even where the court had determined it has jurisdiction, a default judgment would not be granted automatically, or as a routine matter to be handled by a court clerk, as this could only be done after a formal trial.

Despite Nigeria’s position, the three-member tribunal led by the presiding arbitrator, Lord Hoffman, said its final award to P&ID against Nigeria was based on the laws of the Federal Republic of Nigeria.

Lord Hoffman said P&ID and Nigeria had agreed prior to the contract that in the event of any dispute, each may issue a notice of arbitration under the rules of the Arbitration Act 1996 (England and Wales) and the Nigerian Arbitration and Conciliation Act (Cap A18 LFN 2004.

Under the Act, the parties agreed that any “arbitration award shall be final and binding upon the parties.”

P&ID’s argument was that by virtue of the terms of agreement it signed, Nigeria’s agreement to be bound by the outcome of any arbitration meant it waived its right to immunity as a sovereign nation.


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