07/09/2020

“Unprecedented” extension of time for Nigeria in US$10 billion award set aside application

The Commercial Court has granted the Federal Republic of Nigeria (FRN) a huge extension of time in its dispute with Process and Industrial Developments Limited (P&ID) over the enforcement of a US$6.6 billion arbitration award (now worth US$10 billion with interest).

The award was rendered by a panel of arbitrators including Lord Hoffmann and Sir Anthony Evans in 2017 (following earlier awards on jurisdiction and liability) in an arbitration arising out of a gas processing contract concluded in 2010. P&ID began enforcement proceedings in early 2018. Permission to enforce the award was given by Butcher J in August 2019 ([2019] EWHC 2241 (Comm)) but stayed pending appeal. In December 2019 Nigeria applied to set aside the award and to challenge enforcement on the basis of new evidence that the award and the contract itself had been procured by way of a massive fraud on Nigeria. The fraud included bribery of officials involved in awarding the contract, perjury in the arbitration by P&ID’s main witness and collusion with P&ID by Nigeria’s counsel in the arbitration. The dispute is described as “one of the world’s biggest lawsuits”.

Nigeria sought what was described by P&ID as an “unprecedented” extension of time under section 70(3) of the Arbitration Act 1996 (well beyond the 28-day time limit) to apply to set aside the award. Nigeria also sought relief from sanctions to rely on new evidence in resisting P&ID’s enforcement action. P&ID had opposed the applications being decided at a “rolled-up” hearing along with the fraud challenge itself, so the matter came before Sir Ross Cranston at a threshold hearing.

Sir Ross Cranston gave judgment in favour of Nigeria, granting the extension of time and relief from sanctions and permitting the fraud challenge to continue to trial. He decided that there was a “strong prima facie case” of fraud and, contrary to what P&ID had argued, that Nigeria had acted with reasonable diligence and had not made any deliberate decision not to investigate the fraud. As a result, he did not need to decide the issue of whether Takhar v Gracefield Developments Ltd [2019] UKSC 13 applies to arbitration but said that had it been necessary for him to decide the point, the best of the arguments is that it does. The effect is that a party applying to set aside an award on grounds of fraud does not need to show that it could not with “reasonable diligence” have uncovered the fraud earlier. The application of Takhar to arbitration had been described by Cockerill J  as “by no means clear” in ZCCM v Kansanshi Holdings plc [2019] EWHC 1285.

Sir Ross Cranston’s judgment can be found here.

Press coverage so far includes Bloomberg and Financial Times on Friday 4 September 2020.

Philip Riches QC acted for Nigeria, along with Mark Howard QC and Tom Pascoe, instructed by Mishcon de Reya.