A Chinese firm wins yet again as a US court orders the seizure of two properties owned by Nigeria, marking a significant legal battle.
Final charging orders have been granted by a United States (US) appeal court to Zhongshan Fucheng Industrial Investment Co. Ltd, a Chinese company, for two residential properties that are owned by Nigeria.
The firm aims to implement a $70 million arbitration award against the Nigerian government, and this choice is part of its pursuit.
On August 9th, the court’s majority opinion upheld the previous ruling of the US District Court for the District of Columbia that affirmed enforceability of arbitration award.
The Nigerian government’s efforts to handle the situation and avoid further issues in other jurisdictions have been worsened by this ruling, thus increasing their existing legal challenges.
Earlier, a dispute between Zhongshan and the Ogun State government had led to the authorization of seizing three presidential jets by a French court.
Zhongshan has been criticized by the Presidency for allegedly trying to secretly take control of Nigeria’s offshore assets.
Beryl Howell, the lower court’s presiding judge, dismissed Nigeria’s claim of sovereign immunity in January 2023. She cited the UK being a signatory to the New York Convention as basis for jurisdiction over the case.
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In 2010, Zhongshan Fucheng obtained the authority to develop a free trade zone in Ogun State via its parent company Zhuhai Zhongfu Industrial Group Co. Ltd.
However, conflicts with the government of Ogun State caused friction and led to arbitration under the China-Nigeria Bilateral Investment Treaty initiated by Zhongshan. As a result thereofan award was granted worth $70 million for their dispute resolution process .
In January 2022, Zhongshan attempted to enforce the award. Nigeria argued for state immunity but was denied by High Court Judge Sara Cockerill due to their improper use of appeal timelines.
The appeals court of the United States has ruled, with a majority opinion delivered by Patricia Millett and Julianna Childs, that enforcement of the arbitration award is permissible according to the New York Convention.
It was decided by the court that Nigeria’s exemption from sovereign immunity for this case is eliminated due to the application of the arbitration exception under Foreign Sovereign Immunities Act.
On the contrary, Judge Gregory Katsas dissented and claimed that sovereign nations were not covered under the term “persons” in the New York Convention. He argued that Nigeria’s actions as a sovereign state caused this dispute.
The district court’s decision was upheld by the majority opinion, determining that the arbitration award is legitimate and can be executed.
