LAGOS, Nigeria (VOICE OF NAIJA)- In London, UK, a commercial court has issued final charging orders against two residential properties owned by Nigeria, in favour of Zhongshan Fucheng Industrial Investment Co. Ltd.
A master at the court, Lisa Sullivan issued the final charging orders to the Chinese firm despite Nigeria’s earlier objection to the jurisdiction of the orders.
In the case of Zhongshan Fucheng versus Nigeria, the Chinese firm aims to enforce a $70 million investment treaty award.
In 2010, Zhongshan, via its Chinese parent company Zhuhai Zhongfu Industrial Group Co. Ltd (Zhuhai), obtained development rights for a free trade zone in Ogun state.
The following year, Zhongshan established Zhongfu International Investment (NIG) FZE (Zhongfu), a Nigerian entity, with permission from the Ogun state government to oversee the project.
In July 2016, the situation shifted when the company accused the state government of Ogun of abruptly terminating its appointment and trying to install a new manager for the free trade zone.
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Following this, Zhongfu launched an investment treaty arbitration against Nigeria under the bilateral investment treaty between China and Nigeria (the China-Nigeria BIT).
The arbitrators determined that Nigeria had violated its obligations under the China-Nigeria BIT and granted Zhongshan approximately $70 million in compensation.
In January 2022, the Chinese company began proceedings to enforce the arbitration award.
Nigeria claimed state immunity but was denied by High Court Judge Sara Cockerill, who stated that Nigeria had abused the time frame for appealing arbitral awards.
Nigeria invoked state immunity but was denied by High Court Judge Sara Cockerill, who ruled that the country had exceeded the time limit for appealing arbitral awards.
In July 2023, the UK Court of Appeal held Nigeria accountable for a $70 million arbitration award in favor of Zhongshan Fucheng.
The Chinese company had secured interim charging orders in June and August the previous year on two properties in Liverpool owned by the Nigerian government.
Nigeria contested the finalization of the charging orders, asserting that the properties were protected by sovereign immunity.
The country said this is because they are “available to serve as… premises for providing consular services to Nigerians in the Northwest of England” as well as serving as residences for Nigerian officials, citizens, or diplomatic events.
Despite renting out the properties at below-market rates, Nigeria clarified that the proceeds were not utilized for commercial purposes.
In her ruling, Sullivan determined that the properties are leased to residential tenants and that there are no actual “consular activities are actually taking place on the premises.”
She referred to evidence of the dilapidated condition of one property, noting large electrical home appliances scattered across the front lawn.
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Sullivan stated that based on the balance of probabilities, the properties had not been used for diplomatic purposes in the past 34 years.
She also rejected Nigeria’s claims that it had not been appropriately served with the interim charging order applications under the State Immunity Act and that Zhongshan had not fully disclosed all relevant information when applying for them.
On its part, Nigeria argued that Zhongshan was bringing a “multiplicity of enforcement actions” and that it was uncertain how much money it would ultimately recover regarding the same award.
However, Sullivan said parties are “entitled to bring as many types of enforcement action as they see fit to recover their debt”.
She noted that Nigeria had not yet made any payment toward the award, and that the value of the properties constituted “small proportion of it”.
Timi Balogun of Squire Patton Boggs, counsel to Nigeria, disagreed with the Master’s decision, which “we believe somewhat brushes over complex public international law issues, including with respect to state immunity and the right of a foreign state’s High Commission to own and manage portfolios of fixed assets in England and Wales”.
Balogun emphasized the need for careful consideration of such issues, mentioning plans to appeal the decision for higher courts to review “these complex and important issues”.