Nigeria’s attempt to claim sovereign immunity in a legal battle with Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese firm, has been rejected by the US Court of Appeals in Washington, DC. The court upheld a $70 million arbitration award granted to Zhongshan, which had been involved in developing the Ogun Free Trade Zone in Nigeria. The decision, delivered on August 9, 2024, affirmed a lower court’s ruling that the award is enforceable under the New York Convention, stripping Nigeria of its sovereign immunity in this case.
The dispute originated from a 2010 agreement that granted Zhongshan rights to develop the Ogun Free Trade Zone. By 2016, tensions between the firm and the Ogun State government had escalated, leading to an arbitration case. The arbitrators determined that Nigeria had breached its obligations under the bilateral investment treaty with China, resulting in a $70 million compensation award to Zhongshan. Despite Nigeria’s efforts to contest the ruling, the US court’s decision marks a significant victory for the Chinese firm.
The situation escalated further when, in March and August 2024, the Judicial Court of Paris issued ex parte orders for the seizure of three Nigerian presidential aircraft undergoing routine maintenance in France and Switzerland. These orders were part of Zhongshan’s enforcement efforts. Despite Nigerian objections that these aircraft were sovereign assets protected by diplomatic immunity, the seizure went ahead, including that of a newly acquired Airbus A330.
In response, Nigeria announced that it had initiated both legal and diplomatic measures to secure the release of the seized aircraft, arguing that the dispute solely involved the Ogun State government and should not impact federal assets. The Nigerian government accused Zhongshan of misleading the Paris court and emphasized that the aircraft were immune from attachment due to their status as sovereign assets used exclusively for government purposes. Nonetheless, Zhongshan remains confident in the arbitration panel’s decision, which has been upheld in multiple countries.
While Nigeria continues to resist the enforcement of the arbitration award, Zhongshan has expressed a willingness to engage in negotiations to resolve the matter amicably, while firmly maintaining its right to enforce the award under international law.
Madukwe B. Nwabuisi is an accomplished journalist renown for his fearless reporting style and extensive expertise in the field. He is an investigative journalist, who has established himself as a kamikaze reporter.
