UK Supreme Court dismisses P&ID appeal, affirms Nigeria’s £43m award

The Supreme Court in the United Kingdom (UK) has dismissedthe appeal filed by Process & Industrial Development (P&ID) that the£43m award in favour of Nigeria should be paid in Nigerian currency and notpound sterling. In a unanimous decision delivered by a five-member panel onWednesday, the UK Supreme Court held that P&ID should pay the £43m award inpound, the currency used by Nigeria to pay its lawyers in the case. The justices in the panel are Robert Reed, Dame Simler,David Richards, Ben Stephens, and Patrick Hodge. BACKGROUNDP&ID had entered into a deal in 2010 to build a gasprocessing plant in Calabar, Cross River state, but the company said theagreement collapsed because the Nigerian government did not fulfil its end ofthe bargain. The Nigerian government alleged that the gas deal was a scamconceived to defraud the country. But P&ID denied the allegation and accused the Nigeriangovernment of “false allegations and wild conspiracy theories”. Consequently, P&ID took legal recourse and secured anarbitral award against the country. On January 31, 2017, a tribunal ruled that Nigeria shouldpay P&ID $6.6 billion as damages, as well as pre and post-judgment interestat seven percent, which later amounted to $11 billion. In October 2023, Robin Knowles, justice of the commercialcourts of England and Wales, halted the enforcement of the award by upholdingNigeria’s prayer that it was obtained by fraud and in violation of section 68of the English Arbitration Act 1996. The judge found that P&ID paid bribes to Nigerianofficials involved in the drafting of the gas supply and processing agreement(GSPA) in 2010. He also found that P&ID was illegally in possession ofNigeria’s privileged legal documents during the arbitration hearings. The judge ordered that the company pay £43 million incompensation to Nigeria as legal fees and disbursements. Displeased with the judgment, P&ID approached the UKcourt of appeal. One of the issues raised in the P&ID appeal bordered onwhether the lower court was wrong to order the £43 million legal cost to bepaid in British pound sterling and not in naira. The company argued that Nigeria funded its legal services byexchanging naira from its consolidated revenue fund. In July 2024, the UK court of appeal dismissed the appeal ofP&ID and held that since Nigeria paid the legal costs in pound sterling,the cost order should be paid in the same currency. THE JUDGEMENT Delivering the judgment, the UK supreme court held thatthere are no reasons for the award costs to be awarded in any other currencyaside from sterling since English solicitors charged in that currency and thedisbursements were made by Nigeria in sterling. The supreme court panel refused to investigate how Nigeriafunded the legal costs after P&ID argued that Nigeria converted naira tosterling to meet the financial obligations to its English solicitors. The supreme court rejected the argument of P&ID that ifthe award sum is paid in sterling, Nigeria “would gain a substantial windfallat its expense because the sterling sums which Nigeria paid to its solicitorswere the equivalent of approximately 25 billion naira when they were paidwhereas they are now the equivalent of 95 billion naira”. The panel held that depreciation of naira has “resulted in asubstantial diminution of the domestic purchasing power of the naira in Nigeriasince 2019 and especially since 2023”. “For all these reasons, which are essentially the same asthose given by the Court of Appeal, we conclude that Knowles did not err in lawin the exercise of his discretion,” the supreme court said. “We add as a postscript that, contrary to P&ID’ssubmission, Nigeria does not enjoy a large windfall from this decision. Thedepreciation of its currency internationally has resulted in a substantialdiminution of the domestic purchasing power of the naira in Nigeria since 2019and especially since 2023. “Since the hearing, the court has received submissions fromthe parties on costs. We would dismiss the appeal and award Nigeria their costson the standard basis.” The judgment of the UK supreme court can be downloaded here.

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