Ololade Adeyanju/
The Federal Government said it had taken immediate steps to prevent Irish firm, Process and Industrial Developments Ltd (P&ID) from enforcing today’s judgment of a British court, which empowered it to take 20 percent of Nigeria’s foreign reserves, estimated at $9 billion.
Solicitor General of the Federation and
Permanent Secretary, Federal Ministry of Justice, Abuja, Mr. Dayo Apata, disclosed this in a statement in Abuja this evening.
The statement reads in part: “As regards the recent Judgment of the English Court of 16 August 2019, the Federal Government’s Counsel have been instructed to pursue an appeal on the judgment of the English Court dated 16 August, 2019 and at the same time seek for a Stay of Execution of the said judgment.
“In view of the above, please be informed that the Federal Government of Nigeria is making vigorous efforts to defend its interest in this matter and would not relent in exploring every viable option in doing so.”
The decision of the British judge is expected to raise concerns among foreign investors.
The saga dates back to a 2010 deal for the Nigerian government to supply gas to a processing plant built and run by P&ID.
Read full statement:
PRESS STATEMENT
PROCESS & INDUSTRIAL DEVELOPMENT LIMITED (P&ID) V. FGN
Issued by the Solicitor General of the Federation and Permanent Secretary, Federal Ministry of Justice, Abuja.
Please recall the dispute that led to Arbitration between Federal Government of Nigeria (FGN) and Process and Industrial Development Ltd which arose from a 20 year Gas Supply and Processing Agreement (GSPA) entered in 2010 …… between FGN (through the Ministry of Petroleum Resources) and P & ID in respect of an accelerated gas development project in Nigeria’s OMLs 67 & 123. P&ID never began the construction of the project facility although it alleges it incurred about $40m in preliminary expenses.
P & ID’s claim in the arbitration proceedings was mainly for loss of profit for the entire twenty-year term of the GSPA, initially claiming the sum of US$1.9 Billion and later increasing its claim to US$5.9 Billion.
The Arbitral Tribunal on 31 Jan 2017 rendered its Final Award against the Min of Petr. Resources in the sum of US$6.597 Billion together with pre-award interest at the rate of 7% per annum effective from 20 March 2013 & post award interest at the same rate till date of payment.
In granting the huge arbitration award against Nigeria the tribunal decided the following:
i. that the project would operate at 93% uptime during the twenty year of the GSPA despite the well-known risks of operating such a project in the Niger-Delta.
ii. that the average price of Natural Gas Liquids (the main revenue earner for P&ID assuming the GSPA had been implemented), should be based on an average oil price in excess of $100 per barrel over the twenty-year life of the project;
iii. to apply a discount rate to P&ID’s supposed lost profits of 2.65%, the same interest rate paid on United States treasury notes …… thereby adjudging P&ID, a start-up company that never commenced any physical work on the project but planned to operate in the midst of the Niger-Delta crisis, using a novel and unproven technology, a virtually “risk free” investment.
Upon the Award, P & ID commenced recognition and enforcement proceedings of the arbitration award against FGN in March 2018 in both the United Kingdom (“UK”) and the United States of America (the “United States”).
The FGN is duly represented in the proceedings in the United States by the Law Firm of Curtis, Mallet-Prevost, Colt & Mosle LLP which also represented it in the UK proceedings …… of which judgement was given on 16th August, 2019 in favour of the P&ID to commence enforcement proceeding against the FGN assets in the UK.
Recall further that this matter was inherited from the previous Administration by the present one. Upon inheriting this matter, this Government engaged the renowned US Law Firm of Curtis, Mallet-Prevost, Colt & Mosle LLP to defend the interest of the FGN.
The Law Firm has taken steps to defend proceedings in the US by urging the District Court to dismiss P&ID application for enforcement of the award on ground that Nigeria as a sovereign state has an absolute right to obtain an authoritative determination of its sovereign immunity.
The FGN therefore demanded that the jurisdictional issue must be conclusively resolved before Nigeria may be required to litigate the merits of P&ID’s petition.
P&ID has variously challenged Nigeria’s position urging the District Court to direct Nigeria to file both its jurisdiction and merit defenses as a consolidated defense so that the proceedings may be disposed of by the District Court summarily.
The FGN has however pursued the validity of its jurisdictional defense as a preliminary matter which must be conclusively resolved prior to any consideration of the merit argument up to the Court of Appeal.
In a ruling on 9th October 2018, the District Court granted a stay of proceedings pending a determination of the appeal.
P&ID has also subsequently filed motions to have Nigeria’s appeal certified as frivolous and to have proceedings in the District Court continue pending determination of the appeal at the Court of Appeal.
On 1st November 2018, the US District Court issued a decision in favour of FGN denying P & ID’s further attempt to certify Nigeria’s appeal as frivolous and denied P&ID’s attempt to lift the stay of proceedings.
On 15 February 2019, the Court of Appeal issued a decision in favour of FGN by dismissing P&ID’s motion requesting the court to dismiss Nigeria’s appeal for lack of jurisdiction or to summarily affirm the scheduling order of the District Court.
The proceedings therefore are currently on-going in the United States and the FGN will ensure that its interest and that of the people of Nigeria are vigorously defended.
As regards the recent Judgment of the English Court of 16 August 2019, the Federal Government’s Counsel have been instructed to pursue an appeal on the judgment of the English Court dated 16 August, 2019 and at the same time seek for a Stay of Execution of the said judgment.
In view of the above, please be informed that the Federal Government of Nigeria is making vigorous efforts to defend its interest in this matter and would not relent in exploring every viable option in doing so.
Signed.
Dayo Apata, Esq.
Solicitor General of the Federation and
Permanent Secretary, Federal Ministry of Justice, Abuja.