Contract dispute: Chinese firm trying to fraudulently seize Nigeria’s assets, says presidency

The presidency says the federal government is not under any contractual obligation with Zhongshan Fucheng Industrial Investment Co. Ltd, a Chinese firm.

Bayo Onanuga, presidential aide, said this on Thursday in reaction to a contract dispute between the Ogun state government and the Chinese firm.

Onanuga accused the Chinese firm of using “unorthodox and subterfuge” means to take away Nigeria’s offshore assets.

BACKGROUND

A Paris court recently ordered the seizure of three jets belonging to the Nigerian government over the dispute involving an arbitration award in favour of the Chinese firm.

The court ruled that the Chinese firm should use the three jets at the Paris-Le Bourget and Basel-Mulhouse international airports “as security for its claim of EUR 74,459,221”.

In 2010, Zhongshan, through Zhuhai Zhongfu Industrial Group Co. Ltd. (Zhuhai), its Chinese parent company, acquired rights to develop a free trade zone in Ogun state.

A year later, Zhongshan set up Zhongfu International Investment (NIG) FZE (Zhongfu), a Nigerian entity, to manage the project under the permission of the Ogun state government.

However, things took a different turn in July 2016 when the company accused the state government of “abruptly” moving to terminate its appointment while attempting to install a new manager for the free trade zone.

Subsequently, Zhongfu initiated an investment treaty arbitration against Nigeria under the bilateral investment agreement between the People’s Republic of China and Nigeria (the China-Nigeria BIT).

The arbitrators ruled that Nigeria was in breach of its obligations under the China-Nigeria BIT and awarded Zhongshan compensation of around $70 million.

Nigeria pleaded state immunity which was turned down by Sara Cockerill, a high court judge in the United Kingdom (UK), who said the country abused the time frame for appealing arbitral awards.

In 2023, a court of appeal in the UK ruled that Nigeria was liable for a $70 million arbitration award in favour of the Chinese firm.

Julian Flaux, the presiding judge, ruled Nigeria had failed to comply with the “generous” time limit of two and a-half months to raise the issue of state immunity.

In June, a commercial court in London granted the Chinese firm the final order to seize two residential properties owned by Nigeria in the UK.

‘WE’RE WORKING WITH OGUN GOVERNMENT ON FRIVOLOUS ORDER’

In the statement, the presidency said the Chinese firm had “no solid ground” to demand restitution from the Ogun government based on the 2007 contract.

The presidency said the Chinese firm “misled” the Paris court to issue the seizure order for the presidential jets.

The presidency added that the nature of presidential jets as assets of sovereign entity is “protected by diplomatic immunity and forbids any foreign court from issuing an order against them”.

“The federal government is not under any contractual obligation with the company,” the statement reads.

“The case in which Zhongshan is trying to use every unorthodox means to strip our offshore assets is between the company and the Ogun state government.

“The federal government is fully aware of efforts being made by the Ogun state government to reach an amicable resolution on the matter.

“This arm-twisting tactic by the Chinese company is the latest in a long list of failed moves to attach Nigerian government-owned assets in foreign jurisdictions.

“The material facts in the transaction between the Ogun State Government and Zhongshan point to another P&ID case in which unscrupulous and questionable individuals falsely present themselves as investors with the sole objective of undercutting and scamming governments in Africa.

“Undoubtedly, Zhongshan withheld vital information and misled the Judicial Court in Paris into attaching the Nigerian government’s presidential jets, which are on routine maintenance in France.

“The use and nature of the Presidential jets as assets of a Sovereign entity whose assets are protected by diplomatic immunity forbid any foreign court from issuing an order against them.

“We want to assure Nigerians that the federal government is working with the Ogun state government to discharge this frivolous order in Paris immediately.”