INTRODUCTION
In January 2010, the Nigerian Government entered into a Gas Supply and Processing Agreement (GSPA) with a company known as Process & Industrial Developments Limited (P&ID). Three years after, P&ID declared breach and commenced arbitration proceedings. In two awards th st issued 17 July 2015 and 31 January 2017, the arbitral tribunal – composed of Lord Hoffmann, Sir Anthony Evans and Chief Bayo Ojo, SAN – found that Nigeria had committed a repudiatory breach of the GSPA, that P&ID was entitled to the sum of US$6.6 billion as damages and 7% interest (Chief Ojo, SAN published a dissent with respect to the award of damages). Having regard to the interest awarded by the arbitral tribunal, as of 2023, Nigeria was an award-debtor in the sum of US$11 billion.
After a series of proceedings in English and Nigerian courts, Nigeria formally challenged the arbitral awards in proceedings commenced before the Commercial Court in England. In a 127- paged judgment – excluding the Annex – handed down on the 23rd day of October 2023,1 Hon. Mr.
Justice Knowles upheld the Nigeria's challenge to the awards. In his judgment, Knowles J found as a fact that among other elements of fraudulent conduct proved during the challenge proceeding: (a) P&ID had obtained the GSPA by bribing an oficial of the Nigerian government; (b) P&ID had knowingly provided false evidence to the arbitral tribunal; and (c) P&ID had corruptly obtained privileged documents pertaining to Nigeria's conduct of the arbitral proceeding.2 Accordingly, Nigeria's challenge under SECTION 68 of the Arbitration Act 1996 (applicable in England) succeeded because the awards were obtained by fraud and were contrary to public policy.3
In a further ruling handed down on 21st December 2023, Knowles J set aside the awards and denied leave to P&ID to appeal against his judgment.5 With these decisions, Nigeria does not have to pay "a sum so vast that it is material to Nigeria's entire federal budget".6 The judgment of the Knowles J has been rightly described as a landmark decision,7 and traditional news media has reported that the decision has effectively terminated Nigeria's obligation to pay the award debt.8 However, is it legally correct to state that arising from the order of Mr. Justice Knowles setting aside the arbitral awards, P&ID can no longer seek to enforce the award of US$11 billion against the funds and assets of the Federal Republic of Nigeria? That is the premise of this article.
THE POSSIBILITY OF ENFORCING ARBITRAL AWARDS THAT HAVE BEEN SET ASIDE BY THE COURT OF THE SEAT OF ARBITRATION
It is important to state that although in arbitration, the rights and obligations of the disputing parties are determined by an arbitral tribunal, arbitral proceeding remains a contractual dispute resolution mechanism, presided over by adjudicators selected in the manner agreed by the parties, with an expectation that the rigour and technicalities associated with regular court proceedings will not apply to the arbitral process.9 As such, the court of the seat of arbitration only exercises supervisory (not appellate) jurisdiction over the arbitral process.10 This is because at the foundation of the arbitral process is the presumption that an arbitral award is valid, binding and liable to be summarily enforced, locally and internationally.11
Accordingly, an arbitral award retains its nature as an award, even when the awardcreditor, for the purposes of enforcement, successfully moves a court to adopt the award as its judgment.12 Traditionally, the arbitration laws of various countries tend to adopt one of four ways of enforcing an award: (a) by depositing or registering the award with the court as is obtainable in Switzerland and Egypt; (b) by obtaining leave of court to have the award enforced directly, as is obtainable in Nigeria, England and Australia; (c) by applying to the court to recognize the award, which is usually referred to as the grant of exequatur, as is obtainable in France and Argentina; and (d) by using the arbitral award as evidence of a debt owed to the award-creditor, in judicial proceedings for the recovery of the debt.13
Even though a great majority of arbitral awards are performed without recourse to judicial proceedings for the purposes of enforcement,14 the incidence of full-blown hostilities tend to arise when the awarddebtor challenges the award. The law is that the court of the seat of arbitration – applying its municipal laws15 - has the exclusive jurisdiction to set aside or annul an award.16 Being the court with exclusive supervisory jurisdiction over the arbitral tribunal, the decision of the court of the seat should ordinarily be determinative of the continued validity of the award, for purposes of enforcement.17
However, in international arbitration, there a r e d i ff e r e n t a p p r o a c h e s t o t h e enforceability of an arbitral award that has been set aside or annulled by the court of the seat of arbitration. They are: (a) the delocalised or internationalist approach; and (b) the territorialist or classic approach. Unsurprisingly, the courts of the States that adopt both approaches anchor their approach on interpretations of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, popularly referred to as the New York Convention.18
ARTICLE I of the New York Convention provides that the Convention applies to "awards made in the territory of a State other than the State where the recognition and enforcement of such awards are sought" or "awards not considered as domestic awards in the State where their recognition and enforcement are sought". Accordingly, for the purpose of the application of the Convention, the critical question is where the award was made – i.e., the seat of arbitration. If the award was made in a State that is a signatory to the Convention, then applying the requirements of the New York Convention, the award is enforceable in the territory of all other signatory States.19 As such, when the award-creditor seeks enforcement of an award in a signatory State, the enforcing court can only decline to enforce the arbitral award on the grounds explicitly outlined in the Convention.20
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Footnotes
1. THE FEDERAL REPUBLIC OF NIGERIA V. PROCESS & INDUSTRIAL DEVELOPMENTS LIMITED [2023] EWHC 2638 (Comm).
2. Ibid at [493] – [497].
3 Ibid at [574] – [575].
4 THE FEDERAL REPUBLIC OF NIGERIA V. PROCESS & INDUSTRIAL DEVELOPMENTS LIMITED [2023] EWHC 3320 (Comm)
5. Ibid at [45] to [48].
6. Op. cit., note 1, at [4].
7. Hanna Marunych and Bohdan Prybora "Nigeria v P&ID Ltd: The Battle Between Fraud and Justice In The English Court" Mondaq (Online) [https://www.mondaq.com/nigeria/arbitration --dispute-resolution/1386962/nigeria-v-pid-ltd-the-battle-between-fraud-and-justice-in-the-english-court] (accessed: 12th January, 2024). https://punchng.com/efcc-and-facts-of-pid-case/> (accessed: 12th January 2024).
8. Akin Popoola "EFCC and facts of P&ID case" Punch (Online) [https://punchng.com/efcc-and-facts-of-pid-case/] (accessed: 12th January 2024).
9. C. N. ONUSELOGU ENT. LTD. V. AFRIBANK (NIG.) LTD. [2005] 1 NWLR (Pt. 940) 577; GATES V. ARIZONA BREWING COMPANY (1939) 54 Ariz. 266 and STABILINI VISINONI LTD V. MALLINSON & PARTNERS LTD. [2014] 12 NWLR (Pt. 1420) 134.
10. N.N.P.C. V. FUNG TAI ENG. CO. LTD. (2023) 15 NWLR (Pt. 1906) 117; MTN COMM. V. HANSON (2017) 18 NWLR (Pt. 1598) 394; MAJOR LEAGUE UMPIRES ASS'N V. AM. LEAGUE OF PROF'L BASEBALL CLUBS, 357 F.3d 272 (3rd Cir. 2004) and LESOTHO HIGHLANDS DEV. AUTH. V. IMPREGILO SPA [2005] UKHL 43.
11. Article 35 UNCITRAL Model Law on International Commercial Arbitration, 1985. See: Gary B. Born, International Commercial Arbitration (Third Edition), §25.03[A] (Kluwer Law International, Updated August 2022).
12. It is important to state that unlike what is obtainable in some foreign jurisdictions such as the United Kingdom (see: SECTION 66(2) OF THE ARBITRATION ACT 1996), in Nigeria, during enforcement proceedings, an arbitral award is "enforced in the same manner as a judgment". So, the award does not metamorphose into a judgment of the court, the award retains its character, albeit given the force of law accorded to a judgment of a Nigerian court, see: SECTION 57(3) OF THE ARBITRATION AND MEDIATION ACT, 2023 and RAS PAL GAZI CONST. CO. V. FCDA (2001) 10 NWLR (Pt. 722) 559. Internationally, there was a developing school of thought that as soon as an award is adopted as the judgment of a court, it mergers into the judgment and it loses its character as an award. This concept was known as the doctrine of merger. However, this concept has been rejected, and the correct position of the law is that an award retains its character for the purposes of enforcement, irrespective of how many times it is adopted or enforced as the judgment of a court, see: BRALI V. HYUNDAI CORPORATION (1988) 15 NSWLR 734 and COSID, INC. V. STEEL AUTHORITY OF INDIA, LTD. [1985] 11 Y.B. Comm. Arb. 502.
13. Nigel Blackaby, Constantine Partasides, et al., Redfern and Hunter on International Arbitration (7th Edition, Kluwer Law International, Oxford University Press, 2023) at §11.11.
14. Ibid. at §11.02 and §11.04.
15. ARIO V. UNDERWRITING MEMBERS OF SYNDICATE 53 AT LLOYDS, 618 F.3d 277 (3d Cir. 2010); GULF PETRO TRADING CO., INC. V. NIGERIAN NATIONAL PETROLEUM CORP., 512 F.3d 742, 747 (5th Cir. 2008) and ALOE VERA OF AM. INC. V. ASIANIC FOOD (S) PTE LTD. [2006] SGHC 78.
16. BELIZE SOC. DEV. LTD. V. GOV'T OF BELIZE, 668 F.3d 724 (D.C. Cir. 2012) and RESORT CONDOMINIUMS INTERNATIONAL INC V BOLWELL [1993] QSC 351.
17. KARAHA BODAS CO. LLC V. PERUSAHAAN PERTAMBANGAN MINYAK DAN GAS BUMI NEGARA, 364 F.3d 274 (5th Cir. 2004).
18. The New York Convention has been domesticated into Nigerian law by SECTION 60 AND THE SECOND SCHEDULE TO THE ARBITRATION AND MEDIATION ACT, 2023.
19. TERMORIO V. ELECTRANTA, 487 F.3d 928 (D.C. Cir. 2007) and CONTI. TRANSFERT TECHNIQUE V. FED. GOV. OF NIGERIA, 697 F. Supp. 2d 46 (D.D.C. 2010).
20. YUSUF AHMED ALGHANIM SONS V. TOYS "R" US, INC., 126 F.3d 15 (2d Cir. 1997).
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