A court in the United States has granted an appeal sought by Zhongshan, the Chinese company which obtained an order to seize Nigeria’s presidential jets in France, an order to initiate a process to seize other assets of Nigeria abroad.
Recall a French court had granted the Chinese company orders to seize Nigeria’s European assets following a breach of contract between the company and the Ogun State government to develop a free trade zone.
As soon as the orders were granted, the Chinese company immediately initiated attempts to seize Nigeria’s private jets in Switzerland and France including a $100m newly acquired jet.
In the appeal in the US, Nigeria reportedly argued in vain claiming sovereign immunity, the same argument the Nigerian government put up on Thursday against the seizure of its jets in different jurisdictions in Europe.
The US rejected the sovereign immunity argument and subsequently authorised the Chinese consortium to proceed with its efforts to confiscate Nigeria’s assets abroad.
Records showed the court arrived at the decision on August 9, 2024, after judges in the US Court of Appeals for the District of Columbia in Washington found that Nigeria had indeed violated the agreement it entered with the Chinese firm to establish the trade zone agreement in Ogun state, Nigeria.
Court papers showed that Zhongshan approached the US Court in order to retrieve an arbitration award for breach of contract after initially winning their case in the United Kingdom in 2021 during the administration of Muhammadu Buhari.
The court in the UK awarded the Chinese company $55.6m in compensation and $75,000 in moral damages, alongside interest, legal and arbitration fees.
The UK court had ruled that the Chinese company had presented clear evidence which it noted was satisfactory and therefore awarded the company almost $60m against Nigeria.
The company moved to enforce the court judgement in the US forcing Nigeria to argue that it had sovereign immunity, which forbade the matter from being heard in a US court.
Unfortunately, the judge ruled that Nigeria is a signatory to the New York Convention, which allows arbitration between persons, which may include a sovereign entity.
Having lost out, Nigeria immediately filed an interlocutory appeal in the matter on April 22, 2024, court findings showed.
Unfortunately, two of the three-man panel voted in favour of the Chinese company granting approval that the case should proceed because Nigeria had lost its grounds for immunity when it joined Ogun in violating the contractual agreement.
The court stated that since Ogun lacked sovereign immunity as an entity in Nigeria and having offered Ogun a sovereign guarantee, the country is liable for any fallout and can be held liable for a breach.
The judges Patricia Millett and Michelle Childs, said in their majority decision that, “Whether the arbitration exception applies in this case therefore turns on whether a treaty—specifically, the New York Convention—governs the Final Award.”
They added, “We hold that it does because the Final Award arose from (1) a legal relationship, (2) that is considered as commercial, and (3) is between persons.”
In their final ruling, they stressed that, “Zhongshan and Nigeria shared a legal relationship because Nigeria owed Zhongshan legal duties under the Investment Treaty.”
However, the minority opinion from judge Greg Katsas, argued that the targeted assets also came under the country’s sovereign umbrella and so the country should not be denied that.
Nigeria has not issued any statement regarding the latest development from the US and reserves the right to appeal to the US supreme court.
In the event it fails to appeal or it appeals and fails, the matter can proceed in the lower court leading to a possible order to seize assets belonging to the country.