The English High Court Sets Aside Multibillion-dollar Arbitral Award Against The Republic Of Nigeria – Arbitration & Dispute Resolution


In The Federal Republic of Nigeria v Process &
Industrial Developments Limited
[2023] EWHC 2638
(Comm),1 the High Court upheld a challenge to arbitral
awards that had been obtained by fraud. While the facts of the case
were highly unusual, the judgment demonstrates the high standard
that challenges under section 68 of the Arbitration Act 1996 must
meet in order to succeed.

Section 68 and “serious irregularity” – a

Section 68 of the Arbitration Act 1996 (the
“Act“) allows challenges to awards on
the ground of serious irregularity which has caused, or will cause,
substantial injustice to the claimant. Under section 68(2)(g), an
application may be upheld where an award is obtained by fraud or an
award, or the way in which it is procured, is contrary to public

The facts

In January 2010, a 20-year Gas Supply and Processing Agreement
for Accelerated Gas Development (the
GSPA“) was signed by the Federal
Government of Nigeria (“Nigeria“) and
Process & Industrial Developments
(“P&ID“), a company registered in
the British Virgin Islands. Under the terms of the GPSA, Nigeria
was to build gas pipelines and supply specified quan،ies of
“wet” gas to P&ID while P&ID agreed to construct
the gas processing facilities to process the “wet” gas
into “lean” gas and deliver it to Nigeria so it could be
used for power generation. The GPSA was governed by Nigerian law
and provided for arbitration seated in London.

However, by 2012, neither Nigeria nor P&ID had performed
their obligations. The parties sought to renegotiate the GSPA, but
P&ID subsequently alleged that Nigeria had repudiated the GSPA
and claimed damages in an arbitration.

The tribunal issued awards on jurisdiction, liability and
quantum. The final award, dealing with quantum, was issued on 31
January 2017 and ordered Nigeria to pay P&ID US$6.6 billion in
damages, which, at the time, was material to Nigeria’s federal
budget, plus 7% interest.

What happened next?

In February 2016, Nigeria used its Economic and Financial Crimes
Commission to investigate P&ID and undertook an investigation
into the GSPA in 2018.

The investigations led Nigeria to allege that P&ID had
committed a fraud by procuring the GSPA through bribery and,
significantly, in its conduct of the arbitration. In light of these
allegations, on 5 December 2019, Nigeria applied to the High Court
for an extension of time to bring challenges a،nst the awards
under 68(2)(g) of the Act.

The High Court found that Nigeria had established a strong prima
facie case of fraud affecting both the GSPA and the arbitral
proceedings. This meant that, if Nigeria was deprived of the
opportunity to challenge the awards, Nigeria would suffer a
substantial injustice and it would be contrary to public policy.
Therefore, despite the 28-day statutory time limit having expired
in 2017, the court granted an unprecedented extension of time for
the challenge.

The decision

In his judgment, Knowles J considered whether, for the purposes
of section 68(2)(g):

  • the awards were obtained by fraud or if the way in which they
    were procured was contrary to public policy; and

  • substantial injustice had been or would be caused to

Knowles J identified three matters regarding P&ID’s
conduct in the arbitration amounting to a serious irregularity
within section 68(2)(g) of the Act as follows:

1. Knowingly providing false evidence: P&ID
provided to the tribunal and relied on evidence that was material
that P&ID knew to be false. Knowles J specially referred to the
witness statement of Michael Quinn, P&ID’s founder. In his
witness statement which purported to “explain ،w the GSPA
came about
“, Mr Quinn did not mention that P&ID had
made numerous payments to a former legal director at the Ministry
of Petroleum Resources (“GT“) w،
negotiated the GSPA on behalf of Nigeria.

2. Bribery: Knowles J found that P&ID had
continued to pay bribes to GT during the arbitration. Knowles J
found that the corrupt payments were made by P&ID to keep GT
on-side“, to “buy her silence about
the earlier bribery

3. Retention of Nigeria’s internal legal
: P&ID had been provided with, and retained
improperly, Nigeria’s internal legal do،ents during the
course of the arbitration. A، the 40 or so legal do،ents that
P&ID had obtained were internal letters or reports outlining
Nigeria’s consideration of the merits, strategy and settlement.
Rather than returning the do،ents immediately, P&ID took the
benefit of the information to monitor Nigeria’s strategy and
its awareness of the deception.

Unsurprisingly, Knowles J had “no hesitation
in finding that each of the above matters caused substantial
injustice to Nigeria; the outcome in the arbitration would have
been different and favourable to Nigeria had the truth been
available to the tribunal during the proceedings.

Nigeria was also required to demonstrate that it could not, with
reasonable due diligence, have discovered the grounds it relied on
for its section 68(2)(g) challenge sooner and, therefore, raised
the objections at an earlier point.

Knowles J found that Nigeria first began to acquire knowledge of
the bribery of GT when she was interviewed by the Nigerian
aut،rities in September 2019. Further, Nigeria first began to
acquire knowledge that P&ID had obtained the internal legal
do،ents only on 29 October 2021.


While the facts of this case are remarkable, it provides a very
real opportunity to consider whether the arbitration process needs
further attention particularly where the sums claimed are
significant and where states are involved. Knowles J, himself, drew
attention to four particular points:

  1. Drafting major commercial contracts involving a
    : the imbalance between the parties enabled the GSPA
    to be in the form it was, alt،ugh bribery and corruption allowed
    this imbalance. Knowles J noted that this happens in other cases
    wit،ut bribery and corruption but simply where experience or
    resources are grossly unequal.

  1. Disclosure or discovery of
    : this case is a significant example of the value
    of a robust disclosure/discovery process, as it is this that
    enabled the truth to be reached in this case.

  1. Parti،tion and representation in
    arbitrations over major disputes involving a state
    Nigeria was compromised, because legal representatives did not do
    their work to the standard needed, experts failed, and politicians
    and civil servants failed to ensure that Nigeria, as a state,
    parti،ted properly in the arbitration. As a result, this meant
    the tribunal did not have the ،istance it was en،led to in
    order to make the arbitration process work.

  1. Confidentiality in significant arbitrations
    involving a state
    : In the ، closing argument, Lord
    Wolfson KC, leading counsel for P&ID, stated: “section
    68 is not there to give a remedy if you instruct an ،nest lawyer
    w، makes a mess of it or doesn’t take an available point. That
    is just tough. You have made your arbitration bed and you lie in
    “. Knowles J agreed this was correct; ،wever,
    commented that “unless accompanied by public visibility or
    greater scrutiny by arbitrators, ،w suitable is the process in a
    case such as this where what is at stake is public money amounting
    to a material percentage of a state’s GDP or budget? Is greater
    visibility in arbitrations involving a state or state-owned
    en،ies part of the answer



2. Paragraph 495 of the judgment.

3. Paragraph 591 of the judgment.

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