Process and Industrial Developments Limited v. Federal Republic of Nigeria

At a glance

Parties

Process and Industrial Developments Limited (P&ID) v. the Federal Republic of Nigeria and its Ministry of Petroleum Resources

Case no.

U.S. District Court, District of Columbia, No. 18-cv-594 (CRC); High Court of England and Wales, CL-2018-000182, [2019] EWHC 2241 (Comm)

Court

U.S. District Court for the District of Columbia (Judge Christopher R. Cooper); High Court of Justice, Commercial Court (Butcher J)

Underlying award(s)

Part Final Award (3 July 2014), Liability Award (17 July 2015) and Final Award (31 January 2017), by a tribunal of Lord Hoffmann (chairman), Sir Anthony Evans and Chief Bayo Ojo SAN (who dissented from the Final Award)

Treaty

New York Convention (Arts. V(1)(e), VI); arbitration clause 20 of the Gas Supply and Processing Agreement of 11 January 2010

Sector

Natural gas processing

Outcome

The English High Court granted leave to enforce the Final Award as a judgment (16 August 2019). The D.C. court refused to lift its stay while Nigeria's appeal was pending (1 November 2018). It later held that Nigeria had waived its immunity under the FSIA and declined to stay the case for the time being (4 December 2020).

Amount

Awarded: USD 6,597,000,000 plus interest at 7% a year from 20 March 2013. The D.C. court described the award as worth roughly USD 10 billion.

The dispute

On 11 January 2010 P&ID and Nigeria, acting through its Ministry of Petroleum Resources, signed a Gas Supply and Processing Agreement (GSPA). Nigeria was to supply wet gas free of charge. P&ID was to build a facility to strip out the natural gas liquids, keep those liquids, and return lean gas to Nigeria, for 20 years. The GSPA was governed by Nigerian law, applied the Nigerian Arbitration and Conciliation Act, and stated that "the venue of the arbitration shall be London, England". P&ID began arbitration in 2012, alleging that Nigeria had failed to supply the gas. The tribunal found Nigeria liable for repudiation, and by majority awarded USD 6,597,000,000 plus interest. A Lagos court then purported to set aside the Liability Award. P&ID sought enforcement in England under s. 66 of the Arbitration Act 1996 and confirmation in Washington, D.C. under the New York Convention. Nigeria argued that the seat of the arbitration was Nigeria, that the award was contrary to public policy as penal, that pre-award interest was outside the tribunal's jurisdiction, and, in the United States, that it was immune under the FSIA.

Key holdings

1. The D.C. court refused to certify Nigeria's interlocutory appeal as frivolous. The appeal challenged a scheduling order that required Nigeria to file all its jurisdictional and merits defences in a single response. Nigeria's theory that the order in effect abrogated its immunity was not baseless, so the stay remained in place. Opinion and Order (1 November 2018), pp. 3–5
2. The English court held that Procedural Order No. 12, which fixed the seat in London, binds Nigeria. Neither that order nor the Final Award had been set aside by any court, so Nigeria cannot reopen the question of the seat on a s. 66 application. The order also created an issue estoppel. Nigeria's Lagos injunction did not bind the arbitrators. [2019] EWHC 2241 (Comm), ¶¶ 58, 67, 83
3. Even if the question were open, the English court would construe clause 20 of the GSPA as choosing England as the seat. In addition, Nigeria had agreed by its conduct that London was the seat: it raised no objection when the earlier awards stated London as the place of arbitration. [2019] EWHC 2241 (Comm), ¶¶ 85–87
4. The English court rejected the public policy objection. The award states, and was intended to award, compensatory damages. Any excess resulting from an error of fact or law by the arbitrators does not justify refusing enforcement, and calling the damages "penal" does not change this. [2019] EWHC 2241 (Comm), ¶¶ 95–102
5. The English court also rejected the objection to pre-award interest. Nigeria could have challenged the tribunal's jurisdiction under s. 67 and did not. In any case, interest was claimed in the Notice of Arbitration, so the point was not jurisdictional. Leave to enforce was granted. [2019] EWHC 2241 (Comm), ¶¶ 108–110
6. The D.C. court declined to stay the case pending Nigeria's fraud challenge in England. Applying the Europcar factors, it did so without prejudice to a later request for a stay. Memorandum Opinion (4 December 2020), pp. 6–8
7. Nigeria waived its immunity under the FSIA waiver exception (28 U.S.C. § 1605(a)(1)). It did so by joining the New York Convention and agreeing to arbitrate in the territory of another Convention state, following Seetransport, Creighton and Tatneft. The court did not decide whether the arbitration exception also applies. Whether the Nigerian court lawfully set the award aside is left to the merits stage. Memorandum Opinion (4 December 2020), pp. 8–16

Procedural history

1. 22 August 2012P&ID served its Notice of Arbitration.
2. 17 July 2015Liability Award: the tribunal unanimously found that Nigeria had repudiated the GSPA.
3. 10 February 2016Phillips J refused Nigeria an extension of time to challenge the Liability Award in England under s. 68.
4. 26 April 2016Procedural Order No. 12: the tribunal held that the seat of the arbitration was London.
5. 24 May 2016The Federal High Court in Lagos made an order setting aside and/or remitting the Liability Award.
6. 31 January 2017Final Award: the majority awarded USD 6,597,000,000 plus interest; Chief Bayo Ojo dissented.
7. March 2018P&ID filed its petition in D.C. to confirm the award; on 16 March 2018 it began enforcement proceedings in England.
8. 1 November 2018The D.C. court denied P&ID's motion to certify Nigeria's appeal as frivolous and to lift the stay.
9. 16 August 2019The English High Court granted leave to enforce the Final Award as a judgment.
10. 4 December 2020After the D.C. Circuit's ruling in Nigeria's appeal and the case's return to it, the D.C. court denied Nigeria's motion to dismiss on immunity grounds and declined a stay. It noted that in September 2020 the English court had extended Nigeria's time to challenge the award for fraud.

Tribunal, counsel and experts

Decided by

• Christopher R. Cooper Judge, U.S. District Court for the District of Columbia

For the claimant

Kobre & Kim

For the respondent

Curtis, Mallet-Prevost, Colt & Mosle LLP

Experts

Louis T. Wells (respondent)

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Keywords

• P&ID
• Nigeria
• gas supply and processing agreement
• New York Convention
• FSIA
• sovereign immunity
• implied waiver
• Seetransport
• seat of arbitration
• venue clause
• issue estoppel
• public policy
• pre-award interest
• stay of enforcement
• Europcar factors
• set-aside
• enforcement
• Arbitration Act 1996 s. 66
• fraud

Summary generated with AI from the published documents — refer to the award for the authoritative text.