“Driven by greed and prepared to use corruption”: Commercial Court overturns US$11 billion arbitral award against Nigeria

23/10/23

Mark Howard KC and Tom Pascoe appeared for Nigeria in what Mr Justice Knowles has described as a “remarkable” case in which he allowed Nigeria’s challenge to a series of arbitral awards given by a tribunal which included Lord Hoffmann and Sir Anthony Evans. The case arose out of a 20-year gas processing contract granted by Nigerian officials to P&ID, a BVI company founded by a former Irish record label manager and his associate. Neither party performed the contract and P&ID sued for, and was awarded, 20 years’ worth of lost profits by way of arbitration.

The judge found “without reluctance” that P&ID had obtained the arbitral awards “only by practising the most severe abuses of the arbitral process”. This included P&ID paying bribes to secure the underlying contract and then lying about that in its evidence to the tribunal; the continued payment of bribes throughout the arbitration; and the fact that P&ID and its lawyers secured access to a steady stream of Nigeria’s privileged documents during the proceedings which “enabled P&ID to track Nigeria’s internal consideration of merits, strategy and settlement”. The recipients of those privileged documents included an English solicitor and a Kings Counsel, who held stakes in the outcome of the arbitration worth billions of dollars and were found to have given false evidence to the English court. The judge has referred his judgment to the SRA and the BSB.

Mr Justice Knowles said that the case had “sadly brought together a combination of examples of what some individuals will do for money. Driven by greed and prepared to use corruption; giving no thought to what their enrichment would mean in terms of harm for others”. He praised FRN’s legal team for their “expertise and tenacity” which “made the difference in getting to the facts”.

The judge concluded with some wider reflections on the integrity of arbitration. He said “the circumstances of this case, which are remarkable, provide an opportunity to consider whether the arbitration process, which is of outstanding importance and value in the world, needs further attention where the value involved is so large and where a state is involved …”. His comments will no doubt provoke debate amongst the arbitration community and beyond about safeguards that should be put in place to prevent similar abuses and corruption in the future.

The judgment is here.