Contract at heart of $11bn claim on Nigeria found to be fraudulent

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A judge in London has found that the contract at the centre of a long-running saga involving Nigeria and a little-known energy company was fraudulent, following years of legal wrangling that put Africa’s largest economy at risk of having to pay out $11bn in compensation.

The ruling comes after a tribunal in 2017 ordered Nigeria to pay $6.6bn to energy company Process and Industrial Developments following the collapse of a contract between the group and Nigeria’s petroleum ministry. The award ballooned to $11bn with interest.

On Monday, the judge overseeing the appeal at the high court in London said the awards “were obtained by fraud” and “the way in which they were procured was, contrary to public policy”.

P&ID won a contract in 2010 to run a natural gas processing plant but the Nigerian government failed to build the pipeline that would have supplied it. The company began arbitration proceedings in 2012 alleging a breach of contract.

Five years later, a panel of three arbitrators in London decided 2-1 to award a $6.6bn judgment against Nigeria for what P&ID claimed was the full value of losses it incurred on the project. The award was one of the largest publicly known sums granted against a country.

Nigeria maintained the contract and the subsequent arbitration case were fraudulent schemes designed to cheat the nation of billions.

P&ID can seek permission to appeal against Monday’s ruling.

The court has yet to decide on the consequence of Nigeria’s successful challenge. Sir Robin Knowles, the judge in the case, said he wanted to hear more arguments from both parties before deciding on whether to dismiss the award entirely or return the dispute to arbitration.

The chances of Nigeria overturning the award were initially considered to be slim and its lawyers repeatedly missed deadlines to file an appeal. But in 2020 Sir Ross Cranston, a London High Court judge, gave it more time to prove its allegations of corruption in the case.

He found there was also a “strong prima facie case” that one of the company’s founders, Michael Quinn had given “perjured evidence to the tribunal” to “give the impression that P&ID was a legitimate business and was able and willing to perform the [contract]”.

The size of the award against Nigeria put a spotlight on the role of London’s arbitration courts in resolving multibillion-dollar disputes. Monday’s judgment highlighted concerns around the wide use of arbitration, a confidential process, to settle such important suits.

“The facts and circumstances of this case, which are remarkable but very real, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved,” said Knowles.

A spokesperson for Nigeria described the ruling as a “historic victory” for the country.

“The brazen fraud perpetrated by P&ID has finally been revealed for all to see, despite their consistent attempts to frustrate the passage of justice. Let this be a lesson to any party that would seek to defraud the Nigerian people for their own benefit,” the spokesperson said.

“Nigeria is confident that this judgment will draw a line in the sand, ensuring that any parties who think African nations are an easy target for exploitation are forced to think again,” they added.

A lawyer for P&ID said the company was “considering the steps available to it” following the judgment.

“Whilst P&ID fully respects the judgment of the English Court, it is of course disappointed with the outcome,” said Nick Marsh, P&ID’s lawyer at Quinn Emanuel.

Helen Taylor, senior legal researcher at anti-corruption group Spotlight on Corruption, said: “It is difficult to overstate the importance of today’s ruling for the Nigerian people, given the economic prospects of an entire country have been held hostage by a tainted arbitral award for a gas project that was built on bribes and lies.”

“The prospect of a release from this $11bn debt will come as a huge relief to Nigeria,” she added.