A French court has ordered the seizure of three presidential jets owned by the Nigerian government in connection with a $70 million arbitration dispute involving Zhongshan Fucheng Industrial Investment, a Chinese company. This ruling is the latest development in a protracted legal battle stemming from a contract dispute with Nigeria’s Ogun State.
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Background of the dispute
The arbitration case dates back to a 2013 agreement between Zhongshan’s subsidiary, Zhongfu, and the Ogun State government, aimed at developing a free trade zone in the region. Zhongfu was to hold a 60% stake in the venture. However, in 2016, the relationship soured when Ogun State allegedly reneged on the agreement. Zhongfu accused the state of attempting to seize its “significant” investment and of orchestrating illegal activities to undermine the deal.
In 2018, Zhongshan initiated arbitration proceedings, resulting in a three-person panel ruling in its favor. The panel awarded Zhongfu approximately $70 million in damages, a sum that has since grown to around $81 million with interest.
Details of the jet seizures
The French court’s order affects three aircraft: a Dassault Falcon 7X, a Boeing 737-7N6/BBJ, and an Airbus A330-243, all of which are located at Paris-Le Bourget and Basel-Mulhouse airports. These jets were reportedly undergoing maintenance when the seizure was executed. The Airbus A330, which the Nigerian government had reportedly paid over $100 million for, has not yet been delivered. The jets have been seized as part of Zhongshan’s efforts to enforce the arbitration award.
Nigeria’s response
The Nigerian government has condemned the court’s decision, accusing Zhongshan of misleading the Paris court and withholding key information. Bayo Onanuga, Special Adviser to the President on Information and Strategy, argued that the jets should be protected by diplomatic immunity. He likened Zhongshan’s actions to those in the controversial P&ID case, accusing the company of deceptive practices aimed at defrauding African governments.
“The Presidency is aware of the various failed attempts by a Chinese company, Zhongshan Fucheng Industrial Investment Co. Limited, to take over offshore assets of the Federal Government of Nigeria through subterfuge,” Onanuga stated. He emphasized that the Nigerian federal government is not contractually obligated to Zhongshan, noting that the dispute is between the company and Ogun State.
Legal rulings in multiple jurisdictions
Nigeria’s legal troubles with Zhongshan are not limited to France. On August 9, a US appellate court upheld the enforcement of the $70 million arbitration award, confirming a lower court’s decision. This ruling allows Zhongshan to enforce charging orders on two residential properties owned by Nigeria in the United States.
The US appellate court ruled that the arbitration award is enforceable under the New York Convention, which governs international arbitration disputes, and that the Foreign Sovereign Immunities Act’s arbitration exception applies, thereby stripping Nigeria of its sovereign immunity.
Nigeria has also faced unfavorable rulings in similar cases against Zhongshan in the UK and France, reflecting the broad international scope of this dispute.
