Process and Industrial Developments Ltd v. Nigeria Ministry of Petroleum Resources

Case summary

At a glance

Parties: Process and Industrial Developments Limited (P&ID) v. Federal Republic of Nigeria and Ministry of Petroleum Resources of the Federal Republic of Nigeria
Case no.: D.C. Cir. No. 21-7003 (appeal from D.D.C. No. 1:18-cv-00594); S.D.N.Y. No. 1:21-mc-00007 (JGK) (VF)
Forum and rules: US federal courts: petition to confirm a London-seated arbitral award under the New York Convention and the Federal Arbitration Act; 28 U.S.C. § 1782 discovery application
Treaty: New York Convention (contract arbitration clause in the Gas Supply and Processing Agreement)
Court: D.C. Circuit: Henderson (opinion), Millett and Walker, Circuit Judges; S.D.N.Y.: Valerie Figueredo, Magistrate Judge
Underlying award(s): 2014 jurisdiction ruling, July 2015 liability award and 2017 final award of a London-seated tribunal
Sector: Natural gas processing
Outcome: The D.C. Circuit affirmed subject-matter jurisdiction over the confirmation petition under the FSIA arbitration exception (11 March 2022). The S.D.N.Y. granted Nigeria's § 1782 application for discovery for use in the English fraud challenge (14 September 2022).
Amount: Final award of nearly USD 6.6 billion plus interest for lost profits. With interest, the award stands at more than USD 10 billion.

The dispute

P&ID is an engineering and project management company set up by two Irish nationals in 2006. In January 2010 it entered into a 20-year Gas Supply and Processing Agreement with Nigeria. The agreement was governed by Nigerian law and provided for arbitration in London. P&ID began arbitration in August 2012, alleging that Nigeria had failed to supply the agreed gas and to build the pipeline infrastructure. The tribunal found Nigeria liable in 2015 and in 2017 awarded nearly USD 6.6 billion plus interest. P&ID petitioned the US District Court for the District of Columbia to confirm the award. Nigeria claimed sovereign immunity under the FSIA and argued that the award was invalid because the Federal High Court of Nigeria had set aside the liability award. Nigeria separately alleged that the agreement and the award were procured by fraud and bribery, which it is pursuing before the English High Court, and it sought US discovery for those proceedings.

Key holdings

The FSIA arbitration exception (28 U.S.C. § 1605(a)(6)) applies. There was an agreement to arbitrate and an award, and the New York Convention governs the award because Nigeria, the United States and the United Kingdom are all parties to it. Nigeria's immunity is therefore abrogated and the district court has subject-matter jurisdiction. D.C. Cir. Opinion, pp. 9–11
Whether an arbitral award is valid or enforceable is a merits question, not a jurisdictional one. A foreign court's order that purports to set the award aside under Article V(1)(e) of the New York Convention is an affirmative defense for the merits stage. The court did not decide whether the Nigerian court had authority to set aside the liability award. D.C. Cir. Opinion, pp. 2, 10–11 & n.4
The court declined to address the district court's ruling that Nigeria had impliedly waived immunity under § 1605(a)(1) by joining the New York Convention and agreeing to arbitrate in a Convention state. It cited the policy concerns raised by the United States as amicus. D.C. Cir. Opinion, pp. 8–9 & n.3
As amicus curiae, the United States urged affirmance on the arbitration exception alone. It took no position on whether the United States impliedly waives its own immunity by being a party to the New York Convention, citing reciprocity concerns. US Amicus Brief, pp. 5–16
Nigeria's § 1782 application meets the statutory requirements. All four Intel factors favour granting it, and parallel § 1782 applications for different foreign proceedings are not barred by res judicata. The respondents must begin producing documents by 15 October 2022 and complete production by 30 November 2022. S.D.N.Y. Opinion & Order, pp. 6–14

Procedural history

January 2010P&ID and Nigeria enter into the 20-year Gas Supply and Processing Agreement.
August 2012P&ID begins arbitration in London.
July 2015Liability award: the tribunal finds that Nigeria breached the agreement. The tribunal had upheld its jurisdiction in July 2014.
February 2016The English High Court dismisses Nigeria's set-aside application as untimely. In May 2016 the Federal High Court of Nigeria issues an order setting aside and/or remitting the award.
2017Final award of nearly USD 6.6 billion plus interest.
2018P&ID petitions the US District Court for the District of Columbia to confirm the award.
August 2019The English High Court holds the award enforceable. On 5 December 2019 Nigeria applies to challenge it for fraud; in September 2020 the English court finds a strong prima facie case of fraud.
4 December 2020The district court denies Nigeria's motion to dismiss, relying on the FSIA waiver exception.
20 January 2022The United States files an amicus brief at the D.C. Circuit's invitation.
11 March 2022The D.C. Circuit affirms jurisdiction on the basis of the arbitration exception.
14 September 2022The S.D.N.Y. grants Nigeria's § 1782 application and authorises subpoenas to the VR entities, Jeffrey Johnson and Ashok Raju for use in the English proceeding, where trial is scheduled for January 2023.

Tribunal, counsel and experts

Decided by: Karen LeCraft Henderson Judge, US Court of Appeals for the D.C. Circuit (author of opinion)
Valerie Figueredo Judge, US District Court for the Southern District of New York (Magistrate Judge)
For the claimant: Josef M. Klazen · Darryl G. Stein · Michael S. Kim
For the respondent: Christopher J. Major · David F. Geneson · Alexander Pencu
For other participants: Department of Justice
Experts: Shaistah Akhtar (respondent)