Ayodele Olalere
A US Appeal Court has thrown away a sovereign immunity claim filed by Nigeria government against a Chinese firm, Zhongshan Fucheng Industrial Investment Co. Ltd, over a $70m awarded to the firm.
Nigeria had appealed the judgment claiming sovereign immunity in a commercial dispute with the firm however the appeal court’s ruling in favour of the Chinese firm has now paved way for the enforcement of the judgment sum.
The Nigerian government has been battling the Chinese firm in various international courts over a business dispute between the firm and Ogun State.
On Wednesday, a court in France ordered the seizure of three Nigeria presidential jets in a suit filed by the Chinese company accusing the Nigerian government of breaching a contractual agreement.
The US Appeal Court ruling delivered on August 9 in Washington, D.C., affirmed a previous judgment by the U.S. District Court for the District of Columbia, which held that the arbitration award is enforceable under the New York Convention.
In 2010 Zhongshan company had invested in a free trade zone in Ogun State, Nigeria, but the contractual agreement was later terminated by the Ogun State government and given to the new operator in 2016. This action led to a dispute between Zhongshan and the state government.
Zhongshan went to court and sued the Nigerian government under the bilateral investment treaty arguing that Nigeria had breached its obligations under the treaty.
The arbitration tribunal upheld Zhongshan’s claim and awarded it $70 million in compensation.
In its appeal, Nigeria argued that it has sovereign immunity, and that the U.S. courts lacked jurisdiction to enforce the award against a sovereign state.
In the August 9 ruling, the U.S. court dismissed Nigeria’ s argument on the ground that Nigeria’s involvement in a commercial venture subjected it to the arbitration under the Foreign Sovereign Immunities Act (FSIA).
The court noted that the dispute arose from a legal, commercial relationship, thereby stripping Nigeria of its sovereign immunity in this case.
“The final award is enforceable under the New York convention because it arose out of differences between ‘persons’ that share a legal, commercial relationship. The district court therefore has jurisdiction over this case under the FSIA’s arbitration exception,”the court stated.