A US appeals court has upheld a $70 million arbitration award against Nigeria in favor of Chinese firm Zhongshan Fucheng Industrial Investment Co. Ltd. The court ruled that the award is enforceable under the New York Convention, despite Nigeria's claims of sovereign immunity.
The dispute began in 2010 when Zhongshan acquired rights to develop a free trade zone in Ogun state through its Nigerian entity, Zhongfu International Investment. However, the project was terminated in 2016, leading Zhongfu to initiate investment treaty arbitration against Nigeria under the China-Nigeria BIT.
The arbitrators ruled that Nigeria breached its obligations under the treaty and awarded Zhongshan $70 million in compensation. Nigeria attempted to appeal the award but was denied by a UK high court judge, who said the country had abused the time frame for appealing arbitral awards.
The US appeals court majority judgment held that the final award is enforceable under the New York Convention, as the dispute involves "persons" with a legal commercial relationship. The court ruled that Nigeria's sovereign immunity was stripped under the Foreign Sovereign Immunities Act (FSIA) arbitration exception.
This ruling comes after a Paris court in France ordered the seizure of three Nigerian government jets over the dispute, and a UK court of appeal ruled that Nigeria is liable for the $70 million arbitration award. Nigeria has accused the Chinese firm of attempting to use deceptive means to acquire its offshore assets.
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