A recent ruling by a United States (US) appellate court has rejected Nigeria’s claim of sovereign immunity, paving the way for a Chinese consortium to seize Nigerian assets abroad.
The decision exacerbates a crisis that President Bola Tinubu has been attempting to manage in Europe.
On August 9, 2024, the US Court of Appeals for the District of Columbia in Washington DC ruled that Nigeria had violated the fundamental and commercial rights of Chinese executives who had entered into a trade zone agreement with Nigeria.
It was said that the Chinese firm, Zhongshan, had won an arbitration award in the United Kingdom (UK) in 2021 for breach of contract and was seeking to enforce the judgment in the US.
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The dispute stems from a contract between Zhongshan and the Ogun State government in 2007 to develop a free trade zone.
However, the contract was unilaterally terminated by former Governor Ibikunle Amosun, leading to allegations of crude tactics, arrest, detention, and torture of Chinese expatriates.
The UK court awarded Zhongshan $55.6 million in compensation, $75,000 in moral damages, and interest and legal fees.
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Nigeria argued that its sovereign immunity prevented the matter from being heard in a US court, but the federal judge rejected the argument, citing the New York Convention, which allows arbitration between persons, including sovereign entities.
The appellate court upheld that Nigeria had lost its grounds for immunity by violating the contractual agreement.
It ruled that since Ogun is a federating unit of Nigeria, the country can be held liable for the breach.
The decision allows the Chinese consortium to proceed with its efforts to seize Nigerian assets in the US, including fixed assets and deposits with JP Morgan.
Reports also revealed that the development comes after the Chinese investors obtained court orders in France to pursue Nigeria’s European assets.
The Nigerian government and Ogun State have attacked the Chinese as fraudulent and compared the case to the infamous P&ID case.
However, it is unclear if they will appeal the decision to the US Supreme Court.
Stay tuned for more details…
