Concerns have been raised by the Nigerian Federal Government regarding Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese corporation that is allegedly trying to use a Paris court case to obtain Nigeria’s presidential jets and other offshore assets. The Chinese company is using dishonest methods to take advantage of Nigeria’s resources in this case, which is similar to the well-known PI&D case in the UK, according to Bayo Onanuga, Special Advisor to the President on Information and Strategy. The 2007 agreement between Zhongshan and Ogun State to manage a free-trade zone is the source of the conflict.
More so, this dispute, which was first settled by Nigeria’s legal system, has been reopened in Paris without giving the Nigerian government the appropriate notice. The firm was permitted to proceed with asset seizure by two orders given by the Paris Judicial Court in March and August of 2024. The Nigerian government maintains that the matter is between Zhongshan and Ogun State and that it is not under any direct contractual duty to either party. Zhongshan has pursued aggressive legal action in several nations, including France, the UK, and the USA, despite attempts at settlement, including recent conversations in London.
These kinds of litigation take advantage of the intricacies of int’l law.
According to the Nigerian government, diplomatic immunity safeguards the disputed assets, especially the presidential jets. Legal analysts have pointed out that the Zhongshan and Nigerian government case is a part of a larger pattern where businesses use international arbitration to coerce sovereign authorities into paying substantial settlements. International law expert Professor Matthew Kynoch of Oxford University believes that these kinds of litigation frequently take advantage of the intricacies of international law and the challenges governments encounter when fending off claims made in several different jurisdictions.
There are concerns over the fairness and transparency of the processes given that Zhongshan was able to acquire ex-parte rulings in Paris without giving Nigeria enough notice. According to legal analysts, Nigeria may be able to overturn the Paris orders with the support of a strong precedent set by their successful fight to such demands in the UK and the USA. Significant operational and diplomatic ramifications could result from the possible seizure of Nigeria’s presidential jets and other offshore assets. As it implies a disregard for Nigeria’s sovereign immunity and diplomatic procedure, such measures might potentially damage Nigeria’s diplomatic relations with China and France.
Zhongshan’s activities are nothing less of economic sabotage—Bayo Onanuga.
Aside from having an adverse effect on the upkeep and use of these assets, the economic seizure of government property might also pose a threat to Nigeria’s international operations by creating a precedent that might lead other creditors to take similar legal action. Investor confidence may be damaged as a result, and the Nigerian government may find it more expensive to borrow money or conduct business abroad. Zhongshan’s activities are nothing less of economic sabotage, according to Bayo Onanuga, the President’s Special Advisor on Information and Strategy. It is an outright violation of international law and blatant exploitation when they try to take away Nigeria’s sovereign assets.
However, a Zhongshan Fucheng representative defended the company’s course of action, stating, “Zhongshan has merely sought to enforce its Legal Rights under the contract.” We have been prepared to negotiate and patient, but we are forced to pursue enforcement through legal means due to Nigeria’s unwillingness to respect the arbitral judgment. The case emphasizes the risks that governments face when they enter into relationships with foreign firms without strong legal safeguards, according to international law expert Dr. Sarah Khan. Strengthening contractual and legal frameworks is essential for nations like Nigeria to keep these kinds of disputes from getting to this point.
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Given that Ogun State’s 2023 budget was almost $1.1 billion, the arbitration verdict in favour of Zhongshan—which totalled more than $60 million—represents a substantial financial hardship. Given that the state’s finances are already heavily burdened by numerous development initiatives, this sum puts a significant strain on them. In addition, the government of Nigeria spends more than $10 billion a year repaying its debt, which makes taking on new financial responsibilities very difficult. Nigeria’s total debt servicing expenses have also been rising.