IN recent weeks, the Nigerian government has been embroiled in a dispute with a Chinese company, Zhongfu International Investment (Zhongfu), a subsidiary of the Zhongshan Fucheng Industrial Investment Co. Ltd (Zhongshan) over the seizure of three presidential jets by the latter following the ruling of a French court. The jets include a Dassault Falcon 7X at Le Bourget airport in Paris, a Boeing 737, and an Airbus 330 at Basel-Mulhouse airport in Switzerland, which was released by the Chinese company last Friday. Following the Bilateral Investment Treaty (BIT) entered into between the company and the Federal Republic of Nigeria, represented by the Ogun State government, in 2001, to actualise the Ogun Guongdon Free Trade Zone in Ogun State, Zhonshan had alleged that the Ogun State government unilaterally terminated the Joint Venture Agreement (JVA). The JVA created and executed in 2013 had reportedly lasted until 2016. It made Zhongfu the permanent manager of the OGFTZ and gave it a majority shareholding in the project. The company’s action followed the ruling by a Paris Judicial Tribunal on August 14 this year authorising it to seize the presidential jets in question.
The company had, on March 26, 2021, reportedly obtained an arbitral award in the sum of about $70 million against the Federal Republic of Nigeria following the dispute over the termination of the agreement. This followed the commencement of arbitration proceedings against Nigeria in August 2018, wherein the company claimed that Articles 2, 3 and 4 of its agreement with Ogun State had been breached. The alleged breaches related to the promotion and protection of investments, the treatment of investments, and prohibiting unlawful expropriation of the BIT. It sought compensation under Article 9 of the BIT which relates to the settlement of disputes between investors and the contracting state. Although Zhongshan had failed in Nigerian courts, its arbitral proceedings against Nigeria succeeded at the Arbitral Tribunal sitting in London, United Kingdom. Subsequently, it applied to enforce the arbitral award. Nigeria’s arguments relating to sovereign immunity were rejected by the United States Court of Appeals for the District of Columbia. On 23 April 2021, Nigeria filed a challenge in the English High Court against the final award on jurisdictional grounds, contending inter alia that the arbitration clause in the BIT was invalid. Nigeria also argued that court proceedings commenced in Nigeria deprived the arbitral tribunal of jurisdiction under Article 9(3) of the BIT. Last year, Nigeria’s arguments were rejected by the High Court, which ruled that the country had exceeded the time limit for appealing arbitral awards.
Reacting to the development, the Ogun State government described the legal process as a total charade, saying that the company possibly misled the Judicial Court of Paris as to the use and nature of the assets it sought to attach and did not made full disclosure to the court as required by law. It said it “learned of two orders of the Judicial Court of Paris dated 7 March 2024 and 12 August 2024 respectively, both obtained by Zhongshan without notice being duly given to the Federal Government or Nigeria, Ogun State or their legal counsel.” It added that it had made offers to Zhongshan, but that its initial readiness to consider its offer was surprisingly reversed. This, it said, led to a breakdown of the mediation, with parties agreeing to meet again in the first quarter of this year. The Federal Government, in its own reaction, toed the same path, although it urged states to carry it along in striking international deals. The Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi (SAN), later said his office and that of the National Security Adviser (NSA) had commenced legal and diplomatic moves to recover the presidential aircraft.
To say the least, this case is sad. For one thing, it highlights the absence of due diligence that tends to characterise agreements in this clime. It is disturbing that it has taken the seizure of presidential aircraft on the orders of a French court acting to enforce the decision of an Arbitration Panel on a contract dispute between the Ogun State government and a Chinese company to highlight the arbitrariness that has become commonplace in the running of public life in Nigeria. With the active connivance of the judicial system, the country has become notorious for the lack of rule of law and profound disregard and disrespect for procedure. Political leaders act as if they are oblivious of rules and regulations and behave with impunity. Evidence of this is provided by the vainglorious way new governors dissolve statutory bodies without regard to the rules setting them up and governing the appointment and removal of their members. This is the kind of mindset resulting in the present fiasco of termination of contract without observing rules and due processes as alleged against the Ogun State government, with the concerned governors who created the problem unable to offer any tangible, logical argument for their action. Once in office, many governors make it a point of duty to obliterate any traces of their predecessors, abandoning projects just because they did not start them.
The scenario speaks to the need for a reexamination and reevaluation of the processes of public governance in Nigeria to reemphasise the need to follow rules and due process in all undertakings. Arbitrariness and impunity are not part of public governance and we expect incidents such as the current one to send appropriate signals about the utter vacuity and the heavy cost of engaging in such negative acts in the long run.
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