Friday, July 19, 2024

Chinese Investor Takes Over Nigerian Government Properties in the UK

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Two Nigerian government-owned properties situated in the United Kingdom are currently facing potential acquisition by a Chinese investor, Zhongshan Fucheng Industrial Investment. This follows a recent legal ruling granting Zhongshan enforcement rights over a $70 million investment treaty award against Nigeria, related to the notorious P&ID case. The properties, located in Liverpool and collectively valued at £1.7 million, have become focal points in a complex legal battle.

On June 14, Master Sullivan of the Commercial Court in London issued final charging orders on these residential properties. The court determined that these properties had been converted for commercial use unrelated to Nigeria’s diplomatic functions in the UK, thus justifying their enforcement.

Legal teams representing Zhongshan from Withers and 3VB confronted Nigeria’s defense mounted by Squire Patton Boggs and Atkin Chambers in a heated courtroom dispute. The conflict stems from a joint venture initiated in 2013 between Zhongshan’s subsidiary and Nigeria’s Ogun State to establish a free trade zone near Lagos. Despite initially having a majority stake, Ogun State terminated its involvement three years later, leading to subsequent arbitration.

In 2021, a London-seated UNCITRAL tribunal chaired by Lord Neuberger, with Matthew Gearing KC and Rotimi Oguneso SAN, ruled against Nigeria, citing breaches of the China-Nigeria bilateral investment treaty. The tribunal ordered Nigeria to pay $55.6 million plus interest and costs. Nigeria initially contested the tribunal’s jurisdiction but withdrew its objection before a scheduled hearing, resulting in an enforcement order granted by Mrs. Justice Cockerill in December 2021. Nigeria’s subsequent challenge to this order was dismissed by the Court of Appeal in July 2023, which upheld the decision that state immunity did not apply in this context.

Zhongshan’s pursuit of its claims extended beyond the UK, securing interim charging orders over the Liverpool properties and initiating actions in jurisdictions such as Washington, DC, Quebec, and Belgium. These efforts underscore Zhongshan’s determination to recover its debts despite Nigeria’s assertions of sovereign immunity and other legal defenses.

Timi Balogun of Squire Patton Boggs, representing Nigeria, expressed disagreement with the court’s rulings, highlighting the intricate international law issues at stake, particularly concerning the management of foreign state assets. Balogun indicated Nigeria’s intention to appeal, emphasizing the significance of these legal precedents.

Zhongshan’s legal maneuvers also targeted assets in Washington, DC, where Nigeria contested the application on grounds of sovereign immunity. Similar challenges arose in Quebec and Belgium, reflecting a broader international legal standoff.

Concurrently, Zhongshan pursued a separate Commercial Court ruling related to the P&ID case, targeting a £20 million liability owed to Nigeria by a BVI-registered company. This multi-jurisdictional strategy underscored Zhongshan’s systematic approach to recovering owed funds despite legal setbacks.

As of the latest update, Nigeria’s Ministry of Foreign Affairs had not provided comments on these developments, highlighting ongoing diplomatic and legal sensitivities surrounding the enforcement actions and their implications for international relations and legal frameworks.

This legal saga illuminates the complexities of sovereign immunity, international arbitration, and the enforcement of investment treaty awards. It establishes a precedent for future cases involving state entities and private investors on the global stage, underscoring the intricate interplay between national sovereignty and international legal obligations.

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