British Virgin Islands Court Grants Chinese Firm Right to Seize $25 Million of Nigerian Assets
A court in the British Virgin Islands (BVI) has authorized Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese firm, to seize an additional $25 million from Nigeria’s foreign-denominated assets. This decision stems from a failed trade zone agreement in Ogun State during the early 2000s under former Governor Ibikunle Amosun.
Court Decision and Basis
Paul Webster, a judge at the BVI High Court, ruled on November 8, 2024, that Nigeria was not immune to the enforcement of an arbitral award under the terms of the China-Nigeria Bilateral Investment Treaty (BIT).
- The BIT’s clause requiring both nations to enforce arbitration awards was interpreted as Nigeria’s consent to the judgment.
- The judge dismissed Nigeria’s argument of sovereign immunity, citing Section 13(3) of the UK’s State Immunity Act 1978.
This ruling aligns with earlier decisions by courts in France, Belgium, Canada, the US, and the UK, marking another loss for Nigeria in international disputes.
Legal and Historical Background
The dispute traces back to a 2010 agreement in which Zhongshan, via its parent company Zhuhai Zhongfu Industrial Group Co. Ltd., secured rights to develop a free trade zone in Ogun State. In 2011, Zhongshan established Zhongfu International Investment (NIG) FZE to manage the project.
- In 2016, the Ogun State government terminated Zhongshan’s appointment, leading to arbitration under the China-Nigeria BIT.
- The tribunal awarded Zhongshan $70 million in compensation for Nigeria’s breach of its BIT obligations.
In July 2023, the UK Court of Appeal upheld this arbitration award after rejecting Nigeria’s claims of state immunity and procedural abuse.
Nigeria’s Response
The Nigerian government has vowed to contest the ruling.
- Daniel Bwala, Special Adviser to the President on Policy Communication, stated that the judgment is not enforceable immediately.
- He emphasized that Nigeria will appeal and work to vacate the judgment, ensuring a robust defense.
Implications for Nigeria
This development adds to a series of unfavorable rulings against Nigeria in foreign jurisdictions, highlighting challenges in international arbitration and the protection of sovereign assets abroad. The federal government is under pressure to adopt stronger legal strategies to mitigate such losses and prevent further financial exposure.
This case also underscores the importance of carefully navigating bilateral agreements and investment treaties to avoid costly disputes in the future.
