Nigeria has lost its sovereign immunity claim in a US court, which upheld a $70 million arbitration award in favor of Chinese firm Zhongshan Fucheng. The court ruled the award enforceable under the New York Convention, despite Nigeria's arguments of state immunity. This follows similar outcomes in the UK and France.
In a recent legal development, the US Court of Appeals has upheld a $70 million arbitration award against Nigeria, dismissing the country's claim to sovereign immunity. This decision, delivered on August 9, 2024, affirms a previous ruling by the US District Court for the District of Columbia. The case stems from a dispute involving Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese firm that had invested in a free trade zone in Ogun State, Nigeria.
Zhongshan had accused the Ogun State government of abruptly terminating its management rights in 2016 and subsequently initiated arbitration under the China-Nigeria bilateral investment treaty. The arbitration tribunal ruled in favor of Zhongshan, awarding the company $70 million in damages.
Nigeria's attempt to use sovereign immunity as a defense was rejected by the US Court of Appeals, which ruled that the Foreign Sovereign Immunities Act's arbitration exception applied, making the award enforceable. The court emphasized that the dispute was commercial and thus fell under the New York Convention's jurisdiction.
This ruling aligns with recent decisions in other jurisdictions, including the UK and France, where Nigeria has faced similar legal setbacks. The Nigerian government has criticized the Chinese firm, accusing it of deceptive practices in its attempts to claim Nigerian assets. The case highlights ongoing challenges Nigeria faces in international arbitration and sovereign immunity disputes.
