Nigeria’s legal entanglement with the Chinese company Zhongshan Fucheng Industrial Investment Co. Ltd. has intensified following a recent US appellate court ruling. The court has upheld a $70 million arbitration award against the Nigerian government, allowing Zhongshan Fucheng to enforce the award by imposing final charging orders on two Nigerian-owned residential properties in the United States.
BACKGROUND OF THE DISPUTE
The conflict originated from a 2010 agreement between Zhongshan Fucheng and the Ogun State government in Nigeria, which granted the Chinese firm, through its parent company Zhuhai Zhongfu Industrial Group Co. Ltd., the rights to develop a free trade zone. However, disputes arose in 2016 when Zhongshan accused Ogun State of attempting to terminate its contract and replace the free trade zone management.
COURT RULING AND IMPACT
On August 9, 2024, the US appellate court confirmed the previous decision of the US District Court for the District of Columbia. The court’s ruling supports Zhongshan Fucheng’s right to enforce the $70 million arbitration award, despite Nigeria’s attempts to claim state immunity.
Judge Sara Cockerill had earlier dismissed Nigeria’s immunity claim, citing misuse of appeal timelines. The appellate court, with Judges Patricia Millett and Julianna Childs in the majority, ruled that the arbitration award was enforceable under the New York Convention. They reasoned that the dispute involved “persons” in a commercial relationship, and Nigeria was not protected by sovereign immunity under the Foreign Sovereign Immunities Act (FSIA).
DISSENTING OPINION
Judge Gregory Katsas dissented, arguing that the New York Convention should not include sovereign nations as “persons” and that Ogun State’s actions should not be imputed to the Nigerian government. Katsas maintained that the arbitration award pertained to Nigeria’s sovereign acts under international law.
ONGOING CONSEQUENCES
This ruling exacerbates Nigeria’s efforts to manage the fallout from the international dispute, which has already led to attempts to seize Nigerian assets in Europe. The case highlights the complexities of international investment disputes and the limitations of sovereign immunity in the face of enforceable arbitration awards.