FEDERAL REPUBLIC OF NIGERIA V PROCESS & INDUSTRIAL DEVELOPMENTS LTD

[2023] EWHC 2638 (Comm), King's Bench Division, Commercial Court, Mr Justice Robin Knowles, 23 October 2023

Arbitration – Serious irregularity – Whether award obtained by fraud or contrary to public policy – Substantial injustice – Loss of the right to object – Arbitration Act 1996, sections 68 and 73

On 11 January 2010 the Republic of Nigeria signed a gas supply and processing agreement for accelerated gas development (GSPA) with Process & Industrial Developments (P&ID).

The GSPA was to last for 20 years. Nigeria was to supply "wet gas" to gas processing facilities (GPFs) to be constructed by P&ID. The wet gas was to be stripped into "lean gas", which was to be delivered to Nigeria for power generation while the remaining natural gas liquids were to be retained by P&ID for onward sale. Nigeria did not supply any wet gas, and P&ID did not construct any GPFs.

In 2012 P&ID commenced arbitration against Nigeria. The tribunal held initially that it possessed jurisdiction to determine the claims. In July 2015 the tribunal produced a final partial award on liability, holding that Nigeria had repudiated its obligations under the GSPA and that P&ID had been entitled to accept the repudiation and claim damages for breach. By a quantum award in January 2017 the tribunal by a majority ruled in 2017 that Nigeria owed P&ID the sum of US$6.6 billion.

From September 2019 Nigeria obtained evidence that one of its officials had received bribes in relation to the making of the GSPA and during the arbitration. From October 2019 Nigeria obtained evidence that Nigeria's internal legal documents had been deliberately leaked to P&ID. Nigeria sought to overturn the awards for serious irregularity under section 68(2)(g) of the Arbitration Act 1996, on the ground that the awards had been obtained by fraud or contrary to public policy.

It was held by Robin Knowles J that the awards would be set aside.

(1) There had been serious irregularity, on three grounds.

(a) There had been a fraudulent misrepresentation on behalf of P&ID in a witness statement in the arbitration. The witness had sought to explain exactly how the GSPA came into being, but had deliberately and dishonestly excluded any mention of bribery.

(b) P&ID had continued to bribe the official in the course of the arbitration in order to suppress from the tribunal and Nigeria the fact that she had been bribed when the GSPA came about.

(c) P&ID had improperly retained Nigeria's internal legal documents that it had received during the arbitration. Those documents should have been returned unread.

(2) The fraud had given rise to substantial injustice. Had the bribery been disclosed, the arbitration would have been completely different and would have raised the question whether the GSPA was voidable for fraud. It would also have affected the tribunal's view of the remaining evidence presented by the witness. Further, the retention by P&ID of the documents meant that Nigeria's right to confidential access to legal advice had been utterly compromised.

(3) There had been no loss of the right to challenge the awards. By section 73 of the 1996 Act, a party who continued to take part in arbitration proceeding without raising any objection could not raise it later unless that party showed that he did not know and could not with reasonable diligence have discovered the grounds for the objection. The grounds of objection were unknown before the end of 2019.