A British court has granted an Irish Firm, Process and Industrial Developments Ltd (P&ID) the right to seize $9 billion in assets from the Nigerian Government over a failed gas project.
Justice Butcher of the British Commercial Court reportedly delivered the ruling on Friday.
The details: P&ID, an Irish Firm has been awarded $6.6 billion in an arbitration decision over a failed project to build a gas processing plant in the Southern Nigerian city of Calabar. With the accumulated interest payments, the sum now tops $9 billion, which amounts to 20% of Nigeria’s foreign reserves.
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During the court proceedings, lawyers representing the Nigerian Government argued that the award should not be enforced because England was not the correct place for the case, and even if it were, the amount awarded was “manifestly excessive.”
However, Mr Justice Butcher of the Commercial Court dismissed the arguments and received submissions from the parties involved.
The decision of the judge converted the arbitration award to a legal judgement, and this allowed P&ID to try to seize international assets.
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The backstory: According to reports, the case dated back to 2010 under the administration of Nigeria’s former President, Dr Goodluck Jonathan. The Nigerian government had struck a deal with the Irish firm to supply gas to a processing plant built and run by P&ID in Calabar.
Specifically, the deal was supposed to span 20 years. However, the Nigerian government failed to keep its side of the agreement, prompting the firm to seek legal action against Nigeria.
Earlier in 2013, P&ID reportedly won a $6.6 billion arbitration case against Nigeria. Basically, the figure was calculated based on what the company is estimated to earn over the course of the 20-years agreement.
Reacting to the judgement, P&ID’s lawyer, Andrew Stafford QC, disclosed that, “We are pleased that the Court has rejected Nigeria’s objections both to the arbitration process and to the amount of the award and that it will grant permission to P&ID to begin enforcement of the award in the United Kingdom.
“P&ID is committed to vigorously enforcing its rights, and we intend to begin the process of seizing Nigerian assets in order to satisfy this award as soon as possible.”
What Next? This is a huge setback for the Nigerian economy as a report suggests the country’s foreign reserves may once again come under pressure. Also, the ruling may likely raise concerns among foreign investors and dampen their confidence in Nigeria’s investment atmosphere.