Process and Industrial Developments Limited v. Federal Republic of Nigeria and Ministry of Petroleum Resources of the Federal Republic of Nigeria

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.

U.S. Court of Appeals, D.C. Circuit, No. 18-7154 (appeal from D.D.C. No. 1:18-cv-00594)

Court

U.S. Court of Appeals for the District of Columbia Circuit

Treaty

New York Convention (Art. V(1)(e)); Foreign Sovereign Immunities Act; Federal Arbitration Act

Court

Circuit Judges Pillard, Wilkins and Katsas (opinion by Katsas)

Underlying award(s)

London-seated arbitration under the Nigerian Arbitration and Conciliation Act; liability award set aside by the Federal High Court of Nigeria; damages award of USD 6.597 billion plus interest

Sector

Natural gas processing

Outcome

P&ID's motion to dismiss the appeal denied. The district court's order requiring Nigeria to brief the merits before its immunity defence was decided was reversed, and the case was remanded (19 June 2020).

Amount

Award of USD 6.597 billion plus interest, now about USD 9 billion (the dissenting arbitrator would have limited damages to USD 250 million)

The dispute

In 2010 P&ID contracted with Nigeria to build and operate a natural gas processing facility in the Niger Delta. Nigeria was to supply gas and build supporting infrastructure. The plant was never built and Nigeria never supplied gas. A London-seated tribunal applying Nigerian law found Nigeria liable. Nigeria lost its challenge in the London Commercial Court, but the Federal High Court of Nigeria set the liability award aside. The tribunal then held that the Nigerian court had no jurisdiction to do so and awarded USD 6.597 billion plus interest. P&ID petitioned the U.S. District Court for the District of Columbia to confirm the award, relying on the arbitration and waiver exceptions to the FSIA. Nigeria moved to dismiss on grounds of sovereign immunity. The district court ordered Nigeria to file its merits defences together with its immunity defences, and Nigeria appealed that order.

Key holdings

1. Under the collateral-order doctrine, the court of appeals can hear an immediate appeal from an order requiring a foreign sovereign to brief the merits before its immunity defence is decided. In effect the order conclusively rejected Nigeria's claim to immunity from having to defend the merits. Mandamus was therefore not the proper route. pp. 4–8
2. Appellate jurisdiction requires the underlying immunity defence to be colorable, and Nigeria's is. Nigeria can argue that an award set aside by a competent court is not a confirmable 'award' under the FSIA arbitration exception, given New York Convention Art. V(1)(e). Under Art. V(1)(e), the courts of the country whose law governs the arbitration, here Nigeria, may set an award aside. The waiver exception is also unsettled, because Tatneft v. Ukraine is unpublished and does not bind later panels. pp. 8–10
3. The court did not decide whether Nigeria will ultimately succeed on immunity. The district court had not addressed the question, and the issues are complex. p. 10 n. 1
4. Foreign sovereign immunity protects against the burdens of litigation, not only against adverse judgments. A colorable immunity defence must therefore be decided at the threshold, before the sovereign is made to address the merits. pp. 10–11
5. The FAA (9 U.S.C. § 6) treats a petition to confirm as a motion. It does not require immunity and merits to be briefed together, and it does not bar a sovereign from filing its own motion to dismiss. TermoRio does not hold otherwise. pp. 12–13
6. The district court understated the burden on Nigeria: it had to present its complete merits defence against a claim for a USD 9 billion judgment. In any event, immunity does not depend on how heavy the litigation burden is. pp. 14–15

Procedural history

1. 2010P&ID and Nigeria conclude a contract for a gas processing facility, with arbitration in London.
2. Not statedIn a bifurcated arbitration the tribunal finds Nigeria liable. Nigeria's challenge in the London Commercial Court fails. The Federal High Court of Nigeria sets the liability award aside. The tribunal proceeds anyway and awards USD 6.597 billion plus interest, with a dissent.
3. 2018P&ID petitions the U.S. District Court for the District of Columbia to confirm the award. Nigeria moves to dismiss on grounds of sovereign immunity under the FSIA.
4. 1 October 2018The district court orders Nigeria to file a single response containing both its merits and its jurisdictional defences. Nigeria appeals, and the district court declines to proceed while the appeal is pending.
5. 4 October 2019Oral argument before the D.C. Circuit.
6. 19 June 2020The D.C. Circuit denies P&ID's motion to dismiss the appeal, reverses the order and remands.

Tribunal, counsel and experts

For the claimant

Michael S. Kim · Josef M. Klazen · Darryl G. Stein

For the respondent

Joseph D. Pizzurro · Kevin A. Meehan · Juan O. Perla

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Keywords

• P&ID
• Nigeria
• foreign sovereign immunity
• FSIA arbitration exception
• FSIA waiver exception
• collateral-order doctrine
• New York Convention Article V(1)(e)
• award set aside at seat
• confirmation of foreign award
• Federal Arbitration Act
• natural gas processing
• Niger Delta
• TermoRio
• enforcement
• threshold immunity determination
• mandamus

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