A U.S. appellate court has granted Zhongshan Fucheng Industrial Investment Co. Ltd., a Chinese firm, final charging orders over two residential properties owned by Nigeria.
This decision supports Zhongshan’s efforts to enforce a $70 million arbitration award against the Nigerian government.
The court’s majority ruling, issued on August 9, upheld the judgment of the U.S. District Court for the District of Columbia, which confirmed the enforceability of the arbitration award.
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This development exacerbates the ongoing crisis that the Nigerian government has been trying to manage within Europe and prevent from extending to other jurisdictions.
Previously, a French court had authorized the seizure of three Nigerian presidential jets due to the dispute between Zhongshan and the Ogun State government.
The Nigerian Presidency has acknowledged the situation, accusing Zhongshan of attempting to seize offshore assets of the country through underhanded means.
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In January 2023, Beryl Howell, the presiding judge at the lower court, rejected Nigeria’s claim of sovereign immunity, asserting that the court had jurisdiction because the United Kingdom, where the $70 million arbitration award was issued, is a signatory to the New York Convention.
Zhongshan Fucheng, through its parent company Zhuhai Zhongfu Industrial Group Co. Ltd., acquired rights in 2010 to develop a free trade zone in Ogun State, Nigeria. In 2011, Zhongshan established Zhongfu International Investment (NIG) FZE to manage the project with Ogun State’s approval.
In July 2016, Zhongshan alleged that Ogun State was trying to terminate its management contract and replace it with a new manager. Zhongshan then initiated an investment treaty arbitration under the China-Nigeria bilateral investment treaty (BIT).
The arbitration panel ruled in favor of Zhongshan, awarding approximately $70 million in damages. In January 2022, Zhongshan sought to enforce the arbitration award.
Nigeria’s claim of state immunity was rejected by High Court Judge Sara Cockerill, who noted Nigeria’s failure to adhere to the appeal timeframe for arbitral awards.
The U.S. appellate court’s majority opinion, delivered by Patricia Millett and Julianna Childs, confirmed the enforceability of the arbitration award under the New York Convention. The court ruled that the Foreign Sovereign Immunities Act (FSIA) arbitration exception removed Nigeria’s sovereign immunity in this case.
The majority judgment reads: “For the foregoing reasons, we hold that the final award is enforceable under the New York convention because it arose out of differences between ‘persons’ that share a legal, commercial relationship.
“The district court therefore has jurisdiction over this case under the FSIA’s arbitration exception. The judgment of the district court is affirmed.”
In the dissenting opinion, Judge Gregory Katsas argued that when the New York Convention was drafted, the term “persons” did not encompass sovereign nations.
Katsas contended that the actions of Ogun State should not be attributed to Nigeria as a whole, emphasizing that the arbitration award “arises solely out of Nigeria’s sovereign acts governed by public international law.”
