A Chinese Investment firm, Zhongshan Fucheng Industrial Investment Ltd, has moved to enforce a $70 million arbitration judgment against Nigeria by seizing and threatening to sell two properties in Liverpool, UK, connected to the Nigerian government. This comes at the back of a protracted court battle related to a failed free Trade zone project in Ogun State that culminated in Nigeria breaching a bilateral investment treaty with China. The properties, located at 15 Aigburth Hall Avenue and 49 Calderstones Road, were seized in June 2024 following the arbitration award in 2021. The Nigerian government had attempted to appeal on the grounds of state immunity.
However, British courts ruled that the properties could be taken because they did not have diplomatic status and therefore were vulnerable to enforcement measures. These assets are now listed for sale on websites like eBay for a worth of $2.2 million. This case simply demonstrates what a chore it is for Nigeria to keep its international commitments in line and its assets intact outside its country. In comparison with the earlier P&ID scandal, the Zhongshan case is considered quite cut and dried by the European courts, which have also granted enforcement orders against Nigeria in a number of countries. The clear implication of this situation is to serve as a warning about the risks associated with international arbitration and likely penalties if the commitments under the treaty are not kept in check.
$55M arbitration over Ogun Free Trade Zone dispute.
According to court papers, the decision on arbitration was taken on March 26, 2021, in which Zhongshan was awarded $55,675,000 and another $9,400,000 in interest, in addition to £2,864,445 to cover legal costs. Central to the disagreements have been allegations that the actions of the Ogun State Government contravened a Nigeria-China trade agreement dating back to 2001 when it scrapped Zhongshan’s rights granted in that same year to a free trade zone in 2016 In 2018, Zhongshan had sued Nigeria in the UK arbitral panel over government involvement on behalf of Ogun State, using police, immigration, Export processing authorities on the company. Court documents indicated that in the middle and late 2016, two Zhongshan executive members were deported from Nigeria to the then Republic of Benin, detained and tortured by the Nigerian police.
Also, it comes within months of another arbitration award for over $11 billion against Nigeria, which has since been overturned after bribery and Corruption were implicated in the case against the owners of a consortium known as P&ID. By contrast, the Zhongshan case sounds far more straightforward: the UK, Belgium, and France, alongside dozens of other European courts, have issued enforcement orders, and Nigerian assets, including jets, are being traced in various jurisdictions. For example, an appeal was recently heard in the US by the Nigerian government to a case where it was denied sovereign immunity against collection efforts by Zhongshan.
Seized Nigerian properties listed on eBay for $2.2m.
In a further development, a source close to Zhongshan revealed that the company was set to proceed in selling off two repossessed properties in Liverpool, through auction sites like eBay, where they have been listed together for about $2.2 million. He did not want to be identified. He said eBay would be faster compared with others. Inasmuch as these pieces of property were the assets of Nigeria, they were far from immune from being seized, since they did not fall under such a protection blanket as diplomatic or consular privileges. According to the Gazette, the properties in Liverpool were reportedly held by individuals acting as non-service ambassadors for Nigeria’s mission in the UK. While the date of acquisition of these assets by Nigeria was not known, a senior judge stated that they were made to serve guests on a regular basis by Nigerian officials.
At the UK High Court, King’s Bench Division, Master Lisa Sullivan in a judgment on June 14, 2024 indicated that the properties were for commercial purposes, that is to say, residential leases that have nothing to do with Nigeria’s diplomatic mission and therefore state immunity laws could not prevent enforcement of the seizure. A source had also said that the sale of the assets would be conducted transparently, with Zhongshan reassuring that Nigerians would be kept posted on what would be realized until after the total sum owed is fully recovered. The consultant maintained that the company was doing this to keep transparency in the case, which has earned significant publicity.
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Zhongshan’s actions, such as selling the properties on eBay, are part of an elaborate plan towards the recovery of the money owed to it by Nigeria. This seems to attract a lot of attention, not only in Nigeria but also at the international level, due to the precedence this will create over other such similar cases of sovereign debt and the execution of international arbitration awards. The Nigerian government is said to already be lining up appeals in higher courts, which may create important case law on sovereign immunity and investment treaty award enforcement. It might change the face of future disputes over state assets and raise very difficult questions—above all, in countries like the UK—about the separation of commercial and diplomatic assets.