Today Nigeria prevailed in its monumental challenge to arbitral awards worth more than $11 billion that were obtained by a small offshore company following a failed gas project in Nigeria. The High Court ruled that Process & Industrial Developments Limited (P&ID) paid bribes when brokering the lucrative gas processing contract, and then “practised the most severe abuses of the arbitral process” in order to procure awards in their favour from a London tribunal.
Given the secrecy of arbitration – a way of privately resolving disputes outside the usual court process – these corrupt payments remained hidden until the High Court gave Nigeria the green light in 2020 to challenge the awards. A lengthy public trial earlier this year lifted the lid on an audacious conspiracy involving Nigerian officials, Irish businessmen and London lawyers who stood to receive eye-watering sums under the arbitral awards, which have grown by $1.3 million every day in interest. Today’s judgment pulls the plug on P&ID’s claim to enforce this $11 billion award against Nigeria, relieving the African nation of a bill equivalent to almost a third of its total annual budget for 2023 and over seven times its current health budget.
The court found that P&ID not only made corrupt payments to a key Nigerian official who helped broker the gas deal, but also colluded to cash out the profits through an arbitration that was compromised by false evidence and conflicted lawyers. Far from being a fair fight, the court found that continued concealment of the truth by dishonest witnesses and the improper conduct by lawyers acting for P&ID meant the arbitration was “a shell that got nowhere near the truth”.
Describing Nigeria’s challenge as “a stand-out example of a case where ‘justice calls out for’ correction”, the court has unravelled an elaborate conspiracy to use a London arbitration as the unwitting vehicle for defrauding the Nigerian people. This near-miss exposes the vulnerability of arbitration to fraud and the need for more robust safeguards in high-stake commercial disputes involving state parties.
The court also made damning findings against two English lawyers acting for P&ID in the arbitration whose conduct in retaining legally privileged Nigerian documents was described as “indefensible”. Following the court’s referral of its judgment to the relevant legal regulators, it is imperative that appropriate steps are taken to ensure any professional misconduct is robustly sanctioned. This extraordinary case should also be a wake-up call about the need for urgent reforms to ensure lawyers and other professional enablers are not enlisted as accomplices, unwitting or otherwise, to corrupt schemes that undermine the integrity of our financial and legal systems.
Dr Helen Taylor, senior legal researcher at 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 $11 billion debt will come as a huge relief to Nigeria, while the court’s damning findings about the conduct of London-based lawyers will weigh heavily on those who care about the integrity of our legal system. There must be further scrutiny of the role played by these lawyers and proper accountability for any professional misconduct that may have compromised the London arbitration.”