High Court of Justice sets aside two arbitration awards against Nigeria totalling US$11 billion for fraud and breach of public policy

The High Court of Justice of England and Wales (the “High Court”) has upheld a challenge by Nigeria against two arbitration awards on the grounds that they were obtained by fraud and contrary to public policy pursuant to section 68(2)(g) of the Arbitration Act 1996.

The awards arose out of a dispute relating to a Gas Supply and Purchase Agreement (“GSPA”) between Nigeria and an offshore company registered in the British Virgin Islands, Process & Industrial Developments Limited (“P&ID”). Under the GSPA, Nigeria was to supply P&ID with gas, which P&ID undertook to process in facilities that it never built. In the end, neither party fulfilled its contractual undertakings. As a result, P&ID initiated ad hoc arbitration proceedings, based in London, seeking the termination of the GSPA because of Nigeria’s failure to fulfil its obligation to supply gas and the alleged damages that it would have caused.

The arbitral tribunal issued a first award in 2015, finding that Nigeria had breached its obligations under the GSPA and was liable for the damage suffered by P&ID. In a second award in 2017 on the quantification of damages, the arbitral tribunal ordered Nigeria to pay P&ID the equivalent of US$6.6 billion in damages, plus interest at the rate of 7%.

In 2018, a series of investigations by Nigeria revealed that P&ID had secured the GSPA by bribing senior Nigerian officials. In light of these findings, Nigeria challenged the awards before the High Court.  Evidence submitted before the High Court showed that P&ID had also used fraud during the arbitration to present false evidence and secure the silence of a key witness. Furthermore, throughout the arbitration, P&ID and its lawyers had managed to obtain Nigeria’s internal and privileged legal documents in order to monitor its defence.

Although the High Court did not rule on the corruption affecting the GSPA, it found that P&ID and its counsel had obtained the awards challenged “only by practising the most severe abuses of the arbitral process”. The High Court further criticised the arbitral tribunal, without questioning its probity, for not doing “all that it could” to detect the deception. The High Court also issued a stern warning to arbitration practitioners, arbitrators and counsel alike, regarding the vulnerabilities of  arbitration proceedings and the risk that they could be misused to perpetrate such frauds.




Inscrivez-vous à notre newsletter.


Subscribe to our newsletter.