An $11 billion damages bill against Nigeria for a collapsed gas processing project which was procured by bribery has been thrown out by London’s High Court, Reuters reported yesterday.
The West African country was on the hook for the sum – representing around a third of its foreign exchange reserves – after a little-known British Virgin Islands-based company took Nigeria to arbitration over the deal.
But the High Court ruled in October that the contract was procured by Process & Industrial Developments (P&ID) paying bribes to a Nigerian oil ministry official.
Judge Robin Knowles also found that P&ID failed to disclose the bribery when it later took Nigeria to arbitration.
He said in a further ruling yesterday that the damages award should be thrown out immediately, rejecting P&ID’s argument that the case should be sent back to arbitration.
P&ID was also refused permission to appeal against the ruling, though the company can apply directly to the Court of Appeal, Reuters said.
Earlier this month, Knowles ordered P&ID to pay the Nigerian government £20 million in damages and compensation.
The company had filed for fresh arbitration to revive their claims against Nigeria for alleged breach of a 2010 gas supply agreement.
However, the High Court in London ruled that the arbitration could not proceed as long as the 2023 judgment remained in place.
The judge found that P&ID had paid bribes to Nigerian officials involved in the drafting of the gas supply and processing agreement (GSPA) in 2010.
On January 31, 2017, a tribunal had issued a ruling requiring Nigeria to compensate P&ID with $6.6 billion in damages, in addition to both pre-and post-judgment interest at a rate of 7 per cent. The sum later hit over $11 billion after bearing interests.
Ross Cranston, a judge within the Business and Property Courts of England and Wales, granted the application in September 2020, but lawyers representing the federal government alleged that P&ID executives had resorted to bribery to obtain the contract.
P&ID refuted the accusation and levelled claims against the Nigerian government, stating that they were making “unfounded allegations and unsubstantiated conspiracy theories.” Recently, Knowles sitting in a court in the UK court, ruled in favour of Nigeria.
The judge held that: “ The arbitration awards were obtained by fraud and the awards were, and the way in which they were procured was, contrary to public policy”.
Meanwhile, Angola yesterday said that it was leaving the Organisation of Petroleum Exporting Countries (OPEC) because membership was not serving its interests, according to its Oil Minister, Diamantino Azevedo.
Angola, which joined OPEC in 2007, produces about 1.1 million barrels of oil per day, compared with 28 million bpd for the whole group.
Confirming an earlier report by local news agency ANGOP, Azevedo told public television the decision to leave was because OPEC membership was not serving Angola’s interests, but did not give further details.
Oil prices extended losses on the news, with Brent prices down over $1 to $78.50 a barrel yesterday, Reuters said.
Angola’s exit is a setback for OPEC and its allies, just as the group tries to get members to cut output to support prices.
Last month, Azevedo’s office protested a decision by OPEC to cut its production quota for 2024. Bloomberg also quoted Angola’s OPEC Governor, Estevao Pedro, as saying the country was unhappy with its 2024 target and did not plan to stick to it.
Although Nigeria earlier disagreed with OPEC on the 2024 quota handed down to it, it however made a U-turn, agreeing to abide by the 1.5 million bpd production allocation for next year even though its proposed budget has over 1.7 million bpd for 2024.
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