That $9bn judgment: A case of ‘volenti non fit iniuria’

BY AUDU ISMAIL

Nigerians are infuriated by the judgment of an English high court which affirmed an arbitral award of $9 billion against Nigeria for breach of contract.

Patriotism demands that we should be angry. Even though the country stood to benefit from the contract if it was properly executed, contrary to insinuations now making the rounds, those who  signed the agreement on our behalf should have been more circumspect.

However, we ought not to lose our sense of reasoning to anger. We cannot afford to. Like the sword of Damocles, a judgment of $9 billions is already hanging on our neck.

ANGER DIRECTED AT THE WRONG ENTITIES 

Unfortunately, many have directed their anger at the wrong people. A writer has attempted to discredit the British judiciary and has gone as far as castigating the judge, Justice  Butcher. Others have been unsparing in their attacks on the company in whose favour the judgment was given – Process and Industrial Developments Limited (P&ID). Both are wrong. It is neither the fault of the English court nor that of the company. Painful as it may sound, we must admit that it is our fault. We are all entitled to our opinions, but facts remain sacred.

In their anger, many have ignored the facts. Others have attempted to twist the facts to suit their opinions. But that is not the way the law works.

No judicial system is hundred percent perfect. Nevertheless, the  English judicial system is still regarded as one of the best. The appeal system makes it difficult for any judge to sabotage the system.

For those who are not familiar with the case, a summary of the facts will help.

In 2010,  P&ID and the Federal Government of Nigeria entered into a 20-year Agreement – known as the Gas Supply and Processing Agreement (GSPA) – to refine natural gas for powering Nigeria’s electricity grid.

Under the agreement, Nigeria was to receive 85 per cent of the refined non-associated gas, free of charge, for power generation and industrialisation. P&ID would retain the remaining 15 per cent and the by-products – namely methane, propane and butane – which it would export. Nigeria would also benefit from the export proceeds through its 10 per cent stake in P&ID. As in all agreements, there were obligations on both parties: the Nigerian government was to supply 150 million standard cubic feet (scf) of gas per day to the plant. This was to rise to 400 million scf in the life of the project. The gas was otherwise being flared by the oil-producing companies.

But there was an initial obligation on the country — the GSPA required the government to build a gas supply pipeline to the P&ID facility to be located in Adiabo, Odukpani LGA, Cross River state. The gas was to be sourced by the government from OMLs 67 and 123 operated by Addax Petroleum. Nigeria did not build the pipeline. P&ID said it had spent about $40 million on the project and the failure of Nigeria to build the gas pipeline had breached the agreement. A dispute arose.

This dispute was not resolved, following which the company invoked  the arbitration clause, filing a case of breach of contract against Nigeria in London.

Many of the arguments now being raised by commentators were raised by Nigeria and rejected by both the tribunal and the court.

Whether wrongly or rightly, Nigeria and P&ID entered into a valid agreement. It is difficult to dispute that fact.

For those who are angry at the judgment of the English court, the proper question to ask is whether the contract between Nigeria and this company was valid. And the answer is ‘yes’. This is because all the conditions that make a contact valid are present.

ELEMENTS OF A VALID CONTRACT 

The requisite elements that must be established to demonstrate the formation of a legally binding contract are (1) offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in certain circumstances, (6) a written instrument.

If any of these elements was lacking, Nigeria would not have had any trouble setting aside the arbitral award in the first instance.

The question may he asked why Nigeria, a sovereign country, would sign an agreement without blocking all the necessary loopholes. Whatever the answer is, it still does not invalidate the contract.

CAPACITY TO CONTRACT 

Nigeria as a country has the legal capacity to enter into a valid contract and so does P&ID.

The argument that the Federal Executive Council did not approve the contract was ludicrous.  Which law says FEC must approve a contract for it to be valid?

The truth is that those who negotiated the agreement on behalf of Nigeria failed their country. Period.

The arbitral tribunal based its decision on the agreement. For instance, the tribunal determined that the Government had to secure the supply of wet gas, first, before P&ID were obliged to start construction (paragraphs 63-66 of the liability award). It is therefore not accurate to state that P&ID had any requirement to undertake construction before the supply of wet gas was secured by the government.

JURISDICTION 

In the contract, both parties envisaged that dispute might arise and consequently agreed on how to resolve any such disputes. It was agreed that resolution of dispute would be by arbitration. Those who signed on behalf of Nigeria agreed that United Kingdom would be the forum for jurisdiction. They could have chosen Nigeria. But they didn’t.

Why we may not know for sure why those who signed on behalf of Nigeria chose to surrender jurisdiction to overseas, we can not blame the court in England for assuming jurisdiction after we had willingly chosen that country. Perhaps, in order to earn estacodes,  Nigerian officials were eager to externalize choice of law. Even now, we are still externalizing choice of law.

This is clearly a case of volenti non fit iniuria. For non lawyers, this is a common law doctrine which states that if someone willingly places themselves in a position where harm might result, knowing that some degree of harm might result, they are not able to bring a claim against the other party in tort or delict.

Nigeria has willingly placed herself in harm’s way. First, by signing this contract and second, by failing to fulfill her own part of the bargain.

When a new government wins an election, it inherits both the assets and the liabilitiea of the previous government. Today, President Muhammadu Buhari flies around the world in an airplane  he inherited from the previous government. The president did not say he would not fly the plane because it was bought by a Peoples Democratic Party-led administration. Conversely, If the previous government leaves some liabilities, the Buhari government must take steps to discharge such liabilities.

Instead of directing our anger at the arbitration panel and the English court, we should explore possible ways to wriggle out with minimum liability possible. In the case of a judgment debt, with interest accruing on daily basis, time is of essence. The insinuation that the English judiciary has teamed up with some elements to defraud Nigeria is preposterous. When it helped us convict a former governor of Delta State, James Ibori, we hailed it. It was the best. When it rules against us, we cry foul!

Many of those impugning the integrity of the English court have done so largely due to ignorance of the law and failure to appreciate the facts.  They forget the well established principle:Ignorantia juris non excusat or ignorantia legis neminem excusat  (“ignorance of the law excuses not” and “ignorance of law excuses no one” respectively). It is a legal principle holding that a person who is unaware of a law may not escape liability for violating that law merely because one was unaware of its  existence.

In this particular case, a careful reading of the judgment reveals that the delay in setting up government in 2015 was a major factor too. Everything that could go wrong went wrong.

It is time to apply the brakes and embrace reason.

Ismail, a Legal practitioner, wrote in from Kano