By Francis Ugwu An appellate court in the United States authorised Zhongshan, a Chinese company, to proceed with its efforts to confis...
By Francis Ugwu
An appellate court in the United States authorised
Zhongshan, a Chinese company, to proceed with its efforts to confiscate
Nigeria’s assets abroad after it rejected Nigeria’s sovereign immunity
argument.
The decision on August 9, 2024, came after judges at the
U.S. Court of Appeals for the District of Columbia in Washington found that
Nigeria had violated both the fundamental and commercial rights of executives
at a Chinese firm that had entered into a trade zone agreement with Nigeria.
DAILY POST reports that the latest development worsens a
crisis that the Nigerian government has been attempting to manage in Europe and
prevent from spilling to other jurisdictions.
A French court had earlier authorised the seizure of the
three presidential jets due to the ongoing dispute between Zhongshan and the
Ogun State government.
The Chinese workers of Zhongshan proceeded to the US court
to retrieve an outstanding arbitration award for breach of contract after
initially winning their case in the United Kingdom in 2021.
They were awarded $55.6 million in compensation from Nigeria
and $75,000 in moral damages, along with interest and legal and arbitration
fees, court filings said. The UK court said it was satisfied with the evidence
submitted by the Chinese before awarding them nearly $60 million.
However, Nigeria argued before the United States District
Court for the District of Columbia in Washington that its sovereign immunity
forbade the matter from being entertained in a US court.
But the federal judge denied Nigeria’s argument, saying the
country is a signatory to the New York Convention that allows arbitration
between persons, which may include a sovereign entity.
Nigeria subsequently filed an interlocutory appeal in the
matter on April 22, 2024, and two of the three-man panel decided that the
matter should proceed because Nigeria had lost its immunity grounds when it
joined Ogun in violating the contractual agreement.
The court stated that Nigeria can be held liable for the
breach against the Chinese since Ogun is a federating unit of Nigeria.
“Whether the arbitration exception applies in this case
therefore turns on whether a treaty—specifically, the New York
Convention—governs the Final Award,” the majority, Patricia Millett and
Michelle Childs, said. “We hold that it does because the Final Award arose from
(1) a legal relationship, (2) that is considered as commercial, and (3) is
between persons.”
The judges also concluded that “Zhongshan and Nigeria shared
a legal relationship because Nigeria owed Zhongshan legal duties under the
Investment Treaty.”
The treaty was signed between Nigeria and China in 2001,
allowing free trade zones to be established to promote the commercial interests
of both countries.
Although the dissenting judge, Greg Katsas, said Nigeria
should not be stripped of its immunity because the targeted assets also came
under the country’s sovereign umbrella, the case can now proceed in the lower
court.
The Presidency on Thursday described as fraudulent the
attempts by the Chinese company to take over offshore assets of the Federal
Government of Nigeria.
Bayo Onanuga, Special Adviser to the President on
Information and Strategy, reacted on behalf of the government after Zhongshan
had successfully petitioned for the seizure of three Nigerian presidential
jets.
Onanuga stated that the Federal Government is not under any
contractual obligation with the company, noting that the case in which
Zhongshan tries to use every unorthodox means to strip the country’s offshore
assets is between the company and the Ogun State Government.
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