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P&ID: Why I Suspect That Something Must Be Wrong Somewhere!

By: Hameed Ajibola Jimoh Esq.


The failed power project leading to the award of $9.6 billion arbitral award against Nigeria by the English court in favour of P&ID: why I suspect that something must be wrong somewhere!

On the 16th day August, 2019, an English Court sitting in England granted leave to a Foreign Company by name ‘Process and Industrial Developments Limited’ (which had entered into an agreement with Nigeria in a ‘Gas Supply and Processing Agreement (GSPA), executed on the 11th day of January, 2010)’, to enforce the arbitral award held in its favour against Nigeria, the sum which has cumulatively risen to $9.6 billion as at the time of the English Court’s Judgment of the 16th day of August, 2019, inclusive of the accruing interests. The accruing interest daily is 7% of the arbitral award which is about $1.2 million daily. Having read the soft copy of the judgment delivered by the English Court (though, I have not been able to lay my hands on the said GSPA) and after considering those background, facts and figures expatiated by the Honourable, the Presiding Judge of the English Court, I then had nothing in my mind than to suspect that something is likely or must be wrong somewhere which must have given rise to the arbitral award against the Federal Republic of Nigeria, hence this paper to express my suspicion for necessary probe-action by the Federal Government against whosoever that had undertaken such likely unfortunate project that is aimed at crippling the nation’s economy and the heritage of the generations of Nigerians to come.

First and foremost, it must be pointed out that contracts and or agreements of this nature are of three stages vis-à-vis: the pre-contract; the contract and the post contract stages respectively. In my humble view, it is expected that necessary synergy and steps would be taken by the Federal Government of Nigeria-herein after referred to as the FGN- to ensure that various necessary government’s agencies participated in the draft of the agreement most importantly because of its likely consequences on the nation and its economy. I would have expected, with due respect to the FGN, that the Federal Ministry of Justice or the Office of the Attorney-General of the Federation (who is the Chief Law/Legal Officer of the Federation with pools of trained and experienced lawyers) would have been involved in the drafting, proof reading, study, analyses, etc. of the draft agreement before its execution to avoid the situation such as the one that we have found ourselves in as a country, because, I found it very unbelievable that any lawyer or the Office of the Attorney-General of the Federation actually participated or carried out these suggested recommendations before the agreement was finally executed by the parties to the agreement! Then, at the contract stage, I would have expected that feasibility test as done at the pre-contract stage would also be put in place at this stage wherein the contract was finally agreed to by the parties to the agreement. Then, at the post-contract agreement, it was for the FGN to carry out its voluntarily agreed obligations to the contracting foreign company. Also, I would have expected that a copy of such agreement is also handled by the Office of the Attorney-General of the Federation-herein after referred to as the AGF! Whether these tests were carried out became another issue!

Now, from the Judgment which I read and analysed, there was nothing which indicated that the FGN actually has any term in the agreement that it could withdraw from the said agreement after its execution (like I said, I have not been able to lay my hands on the said agreement but I am relying on the analysis made the Presiding Judge of the English Court in the Judgment), yet, the FGN withdrew! Why?!. The question also is: ‘why did the FGN fail to include this important term in the agrement?!’ In drafting an agreement, it is usual for parties to include that either of the parties can withdraw from the agreement since more so that ‘consideration’ (i.e. money or material) has not been transferred from one party to the other. Even in a tenancy agreement, it is typical and usual to have such a term. Why then did the representing officials fail to consider this clause of right to withdraw or repudiate?! This raises a suspicion in my mind (with due respect) that something must be wrong somewhere! What was the qualification, trainings, expertise and experiences of those who drafted or prepared the agreement?! Was the AGF too given the opportunity to make his contributions into the agreement as the Chief Law/Legal Officer of the Federation?! These are some questions that cross my mind!

Furthermore, in my humble view, with due respect to the FGN, I view that the award (which is somehow punitive to the Nigerian generations of present and those to come) was a self-inflicted harm coupled with avoidable gross negligence on the part of the Ministry of government and officials who were in charge as at the contracting stages, especially the Federal Ministry of Petroleum Resources and those legal counsel engaged to defend the suit at both the arbitration tribunal and the court. This is because, the agreement in my humble view, was a careless and reckless one which is likely to collapse the nation. I must also point out here that Clause 20 of the said agreement provides that ‘The Arbitration award shall be final and binding upon the parties’. Can one imagine?! So, if the Arbitration award (such as it is in this case) is final and binding, then, why is the FGN complaining about the award?! Also, the basis in the English Court could not have been able to succeed if the FGN were to challenge the Arbitral award but the FGN fails, with due respect, to also consider thoughtfully that the award is not only the money rather the entire decision of the Arbitration Tribunal. So, why did the FGN carelessly agree to such final and binding decision in its agreement initially without a condition or a saving clause?! At least, by now, students of contract in the undergraduate studying law would appreciate the importance of ‘Law of Contract’ by now and the need to digest and apply all its basic principles to practical life.

Furthermore, I observed that FGN’s objections in the whole Arbitration and the suit where based on technicalities and not on the substance of the claims, much more so that it was self-inflicted by the FGN. The first of it was that the initial contract was repudiated by the FGN as alleged by the foreign company/claimant. Also, I beg to disagree with those who hold the view that the award was as a result of a ‘lacuna’ which is contained in the agreement! The reason for my disagreement was because the FGN through its representatives, with due respect, was grossly negligent in the whole transactions. Some of these gross negligent conducts are:

The lack of diligently prosecuting the suit that it instituted in Nigerian Court in Lagos, on the 9th day of May, 2016, challenging misconduct on the part of the Arbitration Tribunal, which was later struck out by the Nigerian Court for lack of diligent prosecution;

The FGN never applied to set aside the Final Award of the Arbitration Tribunal decided on the 31st day of January, 2017, which in law, will mean that the FGN was or is not objecting to the Final Award. And the FGN never took such step or file any process to challenge and or set aside the said Arbitration Award in any court even since the said 31st day of January, 2017 till the 16th day of August, 2019, when the English Court delivered its Judgment confirming the Award with accruing interests (which was about two (2) years since the Arbitral award was made).

Apart from the agreed terms in the agreement, Clause 20 of the GSPA, provides that ‘The Arbitration award shall be final and binding on all the parties…’.

Therefore, I humbly disagree and submit, with due respect, that the Judgment of the English Court’s Judgment was not as a result of any legal lacuna whatsoever rather, it was much more strengthened by the gross negligence of the FGN and its representing officials. Also, the truth must be told! Appealing the Judgment or staying the execution will only result in a futile effort. More so, the Arbitral Award issue was resolved before the Arbitration Tribunal and not the English Court. The said award was not challenged for good two (2) years by the FGN and the issue before the English Court was for leave to enforce the said Arbitral Award. So, FGN cannot use its appeal at the appellate court to challenge the Arbitral Award made by the Arbitration Tribunal (which was not challenged for good two (2) years). In my humble view, such appeal is likely to amount to an abuse of court process to raise such issue of award which the Arbitration Tribunal awarded at the appellate Court. It is only unfortunate that there are several monetary judgments by the Nigerian courts against the FGN or its agencies which the government has made very difficult to enforce but just a foreigner will be able to enforce more than 3 trillion naira of the Nigerian money! It is well with us all!

I have also considered the reasoning of the  English Court at page: 18, paragraphs: 65 and 67 and page: 18, paragraph 87 of the soft copy of the Judgment which I was able to lay my hands on and perused, which was about 28 pages in all.

Finally, I therefore in all, suspect that something must definitely be wrong somewhere and I call on the FGN to carry out a detailed investigation into the whole saga and all the participants in the said agreement saga and to bring anyone found culpable to book in the interest of this nation and to deter such further act in the nearest future!

Email: hameed_ajibola@yahoo.com

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