The Supreme Court in the United Kingdom (UK) has dismissed the appeal filed by Process & Industrial Development (P&ID) that the £43m award in favour of Nigeria should be paid in Nigerian currency and not pound sterling.
In a unanimous decision delivered by a five-member panel on
Wednesday, the UK Supreme Court held that P&ID should pay the £43m award in
pound, the currency used by Nigeria to pay its lawyers in the case.
The justices in the panel are Robert Reed, Dame Simler,
David Richards, Ben Stephens, and Patrick Hodge.
BACKGROUND
P&ID had entered into a deal in 2010 to build a gas
processing plant in Calabar, Cross River state, but the company said the
agreement collapsed because the Nigerian government did not fulfil its end of
the bargain.
The Nigerian government alleged that the gas deal was a scam
conceived to defraud the country.
But P&ID denied the allegation and accused the Nigerian
government of “false allegations and wild conspiracy theories”.
Consequently, P&ID took legal recourse and secured an
arbitral award against the country.
On January 31, 2017, a tribunal ruled that Nigeria should
pay P&ID $6.6 billion as damages, as well as pre and post-judgment interest
at seven percent, which later amounted to $11 billion.
In October 2023, Robin Knowles, justice of the commercial
courts of England and Wales, halted the enforcement of the award by upholding
Nigeria’s prayer that it was obtained by fraud and in violation of section 68
of the English Arbitration Act 1996.
The judge found that P&ID paid bribes to Nigerian
officials involved in the drafting of the gas supply and processing agreement
(GSPA) in 2010.
He also found that P&ID was illegally in possession of
Nigeria’s privileged legal documents during the arbitration hearings.
The judge ordered that the company pay £43 million in
compensation to Nigeria as legal fees and disbursements.
Displeased with the judgment, P&ID approached the UK
court of appeal.
One of the issues raised in the P&ID appeal bordered on
whether the lower court was wrong to order the £43 million legal cost to be
paid in British pound sterling and not in naira.
The company argued that Nigeria funded its legal services by
exchanging naira from its consolidated revenue fund.
In July 2024, the UK court of appeal dismissed the appeal of
P&ID and held that since Nigeria paid the legal costs in pound sterling,
the cost order should be paid in the same currency.
THE JUDGEMENT
Delivering the judgment, the UK supreme court held that
there are no reasons for the award costs to be awarded in any other currency
aside from sterling since English solicitors charged in that currency and the
disbursements were made by Nigeria in sterling.
The supreme court panel refused to investigate how Nigeria
funded the legal costs after P&ID argued that Nigeria converted naira to
sterling to meet the financial obligations to its English solicitors.
The supreme court rejected the argument of P&ID that if
the award sum is paid in sterling, Nigeria “would gain a substantial windfall
at its expense because the sterling sums which Nigeria paid to its solicitors
were the equivalent of approximately 25 billion naira when they were paid
whereas they are now the equivalent of 95 billion naira”.
The panel held that depreciation of naira has “resulted in a
substantial diminution of the domestic purchasing power of the naira in Nigeria
since 2019 and especially since 2023”.
“For all these reasons, which are essentially the same as
those given by the Court of Appeal, we conclude that Knowles did not err in law
in the exercise of his discretion,” the supreme court said.
“We add as a postscript that, contrary to P&ID’s
submission, Nigeria does not enjoy a large windfall from this decision. The
depreciation of its currency internationally has resulted in a substantial
diminution of the domestic purchasing power of the naira in Nigeria since 2019
and especially since 2023.
“Since the hearing, the court has received submissions from
the parties on costs. We would dismiss the appeal and award Nigeria their costs
on the standard basis.”
The judgment of the UK supreme court can be downloaded here.
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