Numerous articles have been written about the way Nigeria was hit with an initial $6.6 billion judgement debt which was subsequently overturned by Mr Justice Robin Knowles CBE of the Business and Property Courts in London, so I will just give a brief overview.
Essentially, Nigerian government officials signed a 20-year contract with P&ID in which Nigeria promised to deliver “wet gas” and construct a pipeline to a plant to be constructed by P&ID. In addition to purchasing the land and building the plant, P&ID undertook to transform the wet gas into lean gas for sale. Two years after signing this contract, neither party had fulfilled their promises.
P&ID took the Nigerian government to arbitration and the arbitral tribunal unanimously found that Nigeria breached its obligations under the contract. Only after this award did Nigeria wake up to the enormity of this debt and its possible impact on its economy.
I want to briefly examine how such an obvious injustice can be remedied through the device of a private process (arbitration) and a public process (litigation) working seamlessly together, and the necessity of having a vigilant court.
In the arbitration, the legal representation by and for the Nigerian government can fairly be described as shambolic, and it’s clear that the Nigerian government did not fully defend the arbitration as it could have done. It is possible that if the tribunal had awarded $1 billion or less, the Nigerian government may have paid, and the Nigerian citizens would not have been any the wiser.
The injustice was, how can any business make a supposed “investment” of $40 million and in two years recoup $6.6 billion of state funds, for basically doing nothing under the contract? How can arbitration enable such injustice?
Arbitration relies on party autonomy, which is the ability of the parties to defend the claim against them as strongly as they possibly can because of their self-interest and preservation. Arbitration does not expect that the parties will not have a fair fight, yet that is what happened in the P&ID v Nigeria arbitration. In addition to the weaknesses exhibited by the Nigerian government in the arbitration, the P&ID officials lied to the tribunal.
The tribunal is a referee and should maintain the reins as the parties conduct their battle; arbitrators must maintain that neutrality as a fair and unbiased referee. Justice Knowles queried this attribute of arbitration in his judgement.
This is where national courts come in as part of the state apparatus with wider powers and status than arbitrators. They must remain available and accessible to arbitration disputants to ensure that there is adequate recourse for such patently obvious injustices as was the case here.
In such situations we see a unified justice delivery system at its best: a final resolution of the dispute in good time (in arbitration) and a review where necessary (in litigation) both serving the cause of justice.
Ideally the parties should conduct the arbitration in a fair duel devoid of deceit and falsehood, leading to a well-reasoned final award. This would save the parties time and costs and would reassure society that justice can be achieved using arbitration. However, where the parties fail to conduct a fair fight, the courts must step in to ensure that the higher ideals of justice are preserved.
Arbitration is structured to be a one-stop shop, and national courts are limited in how far they can reopen the issues examined by the tribunal. Justice Knowles carefully and expertly did this in the P&ID judgement by carefully focusing on the award and post-arbitration issues. However, national courts must also remain vigilant and be willing to support the arbitration process and its outcome, where the higher ideals of justice demand it.