4 weeks ago
50
Where, in your estimation, did things go wrong between the Ogun State Government and the Chinese firm?
Things actually went wrong when the company and the state government, who were supposed to be partners, became opponents and started litigating. It is normal to have these partnership as the country is looking for investment internationally. But sometimes, these businesses outlast the tenure of an incumbent governor and the successor might not understand the seriousness of the contract and decide to terminate it. But internationally, when you engage investors and you sign these contracts, you are not only signing commercial contracts. You are also signing treaties in some situations where if there is a dispute between government and the investor, the investor may decide to sue on their own in a regular court, or it may go into arbitration. It may go into state treaty arbitration where by, you come from Nigeria and you are doing business in China, there is an agreement internationally in which Nigeria is a signatory and China is a signatory where they say if our citizen is doing business in the other country, then they can do arbitration through the mechanism of the treaty.
So, the issue we need to understand, however, is that the dispute is not originally a federal government obligation, it is an obligation for Ogun State. But under public international law, subdivisions, subsidiaries, sub-nationals are not recognised internationally. So, if a state out of the 36 states in Nigeria has an international obligation, Nigeria will be the one to hold to account. That is where Nigeria is implicated in the matter. We also need to know that it is not a loan, it is not as if Nigeria took a loan and used any of these national assets as collateral. No, it was business that was supposed to be done between Ogun State Government and the Chinese private firm which has gone to arbitration to allege that the Ogun State Government breached the contract by stopping them from making progress and they have suffered losses and both parties went to arbitration.
The second stage where it went wrong is that when you go to arbitration and the arbitration award is against you, you should try for the sake of your reputation to pay. But on some occasions, the state entity involved may be advised by the lawyers that the arbitrators made a mistake, that the arbitrators misconducted themselves, that they went outside their jurisdiction, so, some of these things may go into litigation. And sometimes, it is just a lack of political will to deal with the issue and they are dealing with it casually. The interim attachment of the presidential jets doesn’t mean that the jets have been lost because under international law, assets of the federal government used by the government for diplomacy and monies kept in our central bank for central banking activities are immune. No court, at any time, can attach them. I want us to understand that clearly. So, when you go to court for an interim order, typically only one side is heard, the court has not heard from Nigeria’s side, so the Chinese firm going to court to say that these are aircrafts like any other aircraft, they are for maintenance in France and any person, whether you are in government or not can bring your aircraft for maintenance and seize the aircraft. So the court might be inclined to just put a temporary seizure and serve notice on Nigeria to come and appear. I believe that as the law stands, once Nigeria appears there and can demonstrate especially with the assistance of the foreign ministry of the French government that these are diplomatic assets, the court will lift the seizure.
That does not mean you should not settle your counterparty, it doesn’t mean you should not pay your judgement debt when you have gotten finality in litigation but typically, you do not attach monies or asset belonging to central banks and you do not attach asset or money or property belonging to sovereign, and Nigeria is a sovereign headed by the president who is using it for diplomacy.
What then is the worst case scenario for Nigeria in terms of payment?
The worst case scenario is that Nigeria will receive the arbitration award or a portion of it. As lawyers, it is very difficult to second guess when you are not the one handling the matter because you will assume that the lawyers to the federal government know that they became an arbitrator internationally and the lawyers to the Ogun State government will know enough law to advise them. But from my experience, because of the position where the Chinese company is now, I have been in that position against the attorney general of Nigeria on many occasions such that I have threatened to seize assets before. In fact, in the past, I have seized the assets of this same government before in London. What I can say generally as a citizen, if I can advice the government is that, be careful of your commercial reputation, because you are running a neo-liberal government and most of your macroeconomic policies are dependent on attracting foreign direct investment and foreign portfolio investment and in that kind of situation you don’t want be seen as a tough cookie, difficult people to do business with, because Nigeria has very good lawyers. Nigeria is highly litigious. It has been like that for many years. There is a case where Paul Danny of England passed some negative comments about Nigeria on our attitude towards meeting our obligation.
So, Nigeria is known to be a tough customer such that when they owe you they don’t want to pay as they will argue it to the end. On many occasions, they get it right, like the case of PandID. It would have been a disservice to the country to pay all that humongous amount of money without scrutiny. That scrutiny saved the country massive income, saved the country a lot of our wealth and saved millions of people from going into poverty for having to pay that 13 billion dollars which we did not have. But occasionally when you also challenge other ones you get into tough situations but it is an embarrassment that is temporary. I believe that in the next proceeding following this, these aircrafts will be released but that doesn’t mean that releasing the aircrafts will extinguish the obligation to pay any judgement debt. No, it means that Nigeria can breathe easy and then can now focus on how to negotiate. Additionally, the attorney general should be careful in advising the attorneys general that if they are entering into any obligation with international people, sometimes even with Nigerians, if they agree to arbitration, they should be careful to realise the implications because I think the attorney general of Nigeria should have advised Ogun State, one way or the other, on how to resolve this matter because all these 36 states, none of them are known in the international arena. So we must have a system whereby we are able to convince the international community that we are serious people, one governor should not come and sign and another governor comes, either because of politics, or other problems not associated with the investor, you cancel the investment. Many Nigerians have lost assets and many international people have lost assets. I have been a victim of such. On many occasions you bring investors to the country, they are doing well and being applauded, then the next government comes, whether due to non attention, or politics, or malice or mischief, then they throw the people out and then trouble starts. The most important lesson to learn is to make our courts to be fair and respected so that investors and partners can agree to do their litigation in Nigeria because the tendency is that people just believe that the Nigeria court system is too slow and the system is not going to give you justice and everybody insists on having international arbitration clauses in their agreement. That is making us lose money, reputation and lose an opportunity to resolve issues domestically.
It appears Nigeria is battling in multiple jurisdictions as the Chinese firm is threatening to take the battle to other countries like the UK. Legally, how difficult could this be for Ogun and Nigeria?
For Ogun State, Nigeria is the father and is the guarantor. Internationally, nobody knows Ogun State, I don’t think it has any assets internationally that can be exposed. The most that can happen to Ogun State is that the attorney general may insist that I am going to deduct the money from your money from the FAAC. That is it. But these are pressure tactics, so it doesn’t mean that going to the UK, America and everywhere, is going to get you the asset because the laws are very clear. It is very difficult to attach asset of a sovereign in the UK, even the US, the judgement they got at the court of appeal have got similar judgement in the past, just recognising the fact that Nigeria agreed not to assert immunity when you are enforcing, particular asset do not lose their immune status just because of that. But because they are putting pressure, trying to embarrass Nigeria everywhere, their aim is not necessarily to keep the asset but that Nigeria will be in the negative news all the time. So, if you are raising bonds, you are talking to investors everywhere, everybody will be asking you about your debt and if you are being rated globally, some of the rating agencies will consider it, these are pressure tactics. Nigeria is a very difficult country to recover from. I have been in litigation before where we spent 60 million dollars in litigation just to recover from Nigeria and it took years. So, Nigeria is very tough. I have tried to recover from other countries. Once you make a little effort here and there, they will call you, they will negotiate, Nigeria is a very tough customer internationally. Maybe, the lawyers in the Ministry of Justice will be happy to say people will think twice before they sue Nigeria but if you want to do business and you see Singapore, UAE where people carry their business to, then, you don’t want to be seen as a guy who is tough, who will argue, litigate and be excessive to the end. I think what the Ogun State governor should be doing is to show how Ogun State is good for business not arguing legally, that is for the lawyer to do in Paris because you must continue to assure the investors because you are not only this investor.
English (US) ·