A U.S. appellate court has dealt a significant blow to Nigeria by allowing a Chinese consortium to move forward with seizing the country’s assets abroad.
This ruling, made on August 9, 2024, by the U.S. Court of Appeals for the District of Columbia, rejects Nigeria’s claim of sovereign immunity.
The case stems from a dispute between a Chinese company, Zhongshan, and the Ogun State government over a failed trade zone agreement.
The conflict began in 2007 when Zhongshan entered into a contract with Ogun State to develop a free trade zone.
However, the agreement was abruptly terminated by former Governor Ibikunle Amosun, leading to a legal battle that resulted in the Chinese company being awarded $55.6 million in compensation by a UK court in 2021.
The Chinese workers alleged that they were unlawfully detained and tortured by Nigerian authorities, further complicating the situation.
Nigeria attempted to block the enforcement of the UK judgment in the U.S. by claiming sovereign immunity, but this argument was dismissed by the federal court.
The court ruled that Nigeria, as a signatory to the New York Convention, could not use sovereign immunity as a defense in this case.
The ruling also stated that since Ogun State, a federating unit of Nigeria, violated the contract, the entire country could be held accountable.
The appellate court’s decision allows the Chinese consortium to pursue Nigeria’s assets in the U.S., including fixed assets and deposits from crude earnings with major financial institutions like JP Morgan.
This ruling comes just days after the Chinese investors secured similar court orders in France, where they have begun efforts to seize Nigeria’s assets in Europe.
The Nigerian federal government and Ogun State have condemned the Chinese investors as fraudulent, drawing comparisons to the controversial P&ID case.
They have vowed to challenge the judgment in France but have not yet indicated whether they will appeal the U.S. court’s decision to the Supreme Court.
