Chinese Firm Zhongshan Fucheng Moves to Seize Nigeria’s £20 Million P&ID Award
Chinese company Zhongshan Fucheng Industrial Investment Co. Limited is taking steps to seize Nigeria’s £20 million P&ID award, following a recent UK appeal court decision in favor of Nigeria. The company, which previously secured a French court judgment allowing the seizure of two Nigerian presidential jets, is now targeting Nigerian government properties in Liverpool as part of its ongoing dispute with Ogun State.
Attorney-General of the Federation and Minister of Justice, Lateef Fagbemi, has accused Zhongshan of employing coercive tactics to seize Nigerian assets abroad. Former Ogun State Governor Senator Ibikunle Amosun has denounced Zhongshan as an imposter, comparing their actions to the P&ID case where Nigeria ultimately prevailed, and labeling their asset seizure attempts as unlawful.
In March 2021, an arbitration tribunal, led by the president of the UK Supreme Court, awarded Zhongshan $74.5 million (£57.8 million) in compensation. Ogun State’s refusal to pay this amount has contributed to the current situation. Nigeria’s failure to substantiate claims of misrepresentation and concealment against Zhongshan has been cited as a factor in losing the appeal.
Ogun State had previously revoked a joint venture agreement with Zhongshan, citing issues with the company’s alleged lack of capacity to execute the free trade zone project, due to information about the liquidation of its parent company.
In the ongoing dispute between Nigeria and Zhongshan Fucheng Industrial Investment Co. Limited, Mr. Adeoluwa, a key witness for Nigeria, provided testimony regarding letters he wrote in 2011 and 2012. These letters, he stated, were based on Zhongshan’s compelling representations about their capability to manage the Zone and concerns about CAI’s inability to manage the Zone due to its criminal investigation in China.
However, the tribunal found that Adeoluwa failed to present evidence proving that CAI had been liquidated or ceased to exist by the time he wrote the letters. The tribunal noted that Adeoluwa’s actions were influenced by his belief in Zhongshan’s promises and CAI’s poor performance, rather than evidence of misrepresentation.
The tribunal concluded that Ogun State signed the 2013 Joint Venture Agreement (JVA) based on its own assessment of Zhongshan’s capabilities. Regarding the alleged concealment of material facts, the tribunal determined that Zhongshan’s failure to disclose the Equity Management Agreement between Zhuhai and GXIG did not constitute wrongdoing. It ruled that Zhongshan was not legally required to disclose such information during its contract negotiations with Ogun State.
The US appellate court agreed with the district court’s finding that the Foreign Sovereign Immunities Act (FSIA) arbitration exception applied to Nigeria’s case. The court identified three key jurisdictional facts: the existence of an arbitration agreement, an arbitration award, and a treaty governing the award. It confirmed that the FSIA exception applies because the dispute arose from a legal relationship under the New York Convention, which governs commercial arbitration agreements.
