The UK court upheld Nigeria's prayer on the ground that the ill-fated gas processing contract was obtained by fraud.
Nigeria has won its bid to overturn an $11 billion damages bill involving the controversial Process & Industrial Developments (P&ID) deal.
Nigeria claims that the collapsed gas processing project was procured by a campaign of bribery and fraud.
The West African country on succeeded in halting the enforcement of the $11 billion arbitration award in favour of P&ID.
In a judgment on Monday, a UK court upheld Nigeria's prayer on the ground that the ill-fated gas processing contract was obtained by fraud.
Process & Industrial Developments (P&ID) was awarded a 20-year contract in 2010 to construct and operate a gas processing plant.
Upon the failure of the deal, the little-known British Virgin Islands-based company took Nigeria to arbitration.
Background
The P&ID controversy dates back to January 2010 when the company signed a gas supply and processing agreement with the Ministry of Petroleum Resources on behalf of the Nigerian government.
Under the terms of the agreement, P&ID was to build and operate an Accelerated Gas Development project to be located at Adiabo in the Odukpani Local Government Area of Cross River State. The Nigerian government was to source natural gas from oil mining leases (OMLs) 123 and 67 operated by Addax Petroleum and supply to P&ID to refine into fuel suitable for power generation in the country.
However, P&ID alleged that after signing the agreement, the Nigerian government reneged on its obligation after negotiations were opened with the Cross River State government for the allocation of land for the project.
It added that attempts to settle out-of-court with the Nigerian government failed and thereafter instituted legal actions.
Legal Tussle
In March, the Nigerian government had asked a London High Court to deliver judgement in its favour in the controversial deal.
The government in closing arguments at a trial in March urged the court to overturn an arbitration award in favour of P&ID which has now accrued interest worth $11 billion.
The company claimed it entered into an agreement with Nigeria to build a gas processing plant but the deal collapsed because the Nigerian government did not fulfil its end of the bargain.
But Nigeria's lawyer, Mark Howard, told the court that P&ID obtained its contract "by telling repeated lies and paying bribes to officials."
Mr Howard alleged that the company financially induced top Nigerian government officials including those who chaired the government technical committee that reviewed the gas plant contract and several others.
He alleged also that lawyers in the Nigerian team during the arbitration proceedings were bribed.
Judgment
On Monday, in a judgment delivered by Justice Robert Knowles, it was held that the process through which P&ID secured the contract was fraudulent.
"In the circumstances and for the reasons I have sought to describe and explain, Nigeria succeeds on its challenge under section 68. I have not accepted all of Nigeria's allegations," a copy of the judgement, seen by PREMIUM TIMES, reads.
"But the Awards were obtained by fraud and the Awards were and the way in which they were procured was contrary to public policy.
"What happened in this case is very serious indeed, and it is important that section 68 has been available to maintain the rule of law. Section 68 (3) provides:"(3) If there is shown to be serious irregularity affecting the tribunal, the proceedings or the award, the court may (a) remit the award to the tribunal, in whole or in part, for reconsideration, (b) set the award aside in whole or in part, or (c) declare the award to be of no effect, in whole or in part."
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
The court also healed that it shall not exercise its power to set aside or to declare an award to be of no effect, in whole or in part, unless it is satisfied that it would be inappropriate to remit the matters in question to the tribunal for reconsideration.
"I was asked by Lord Wolfson KC in closing that should my judgment conclude in favour of Nigeria, as it does, to leave over the question of the order the Court should make so that the parties have the opportunity to present argument once they have considered the judgment. I respect that request and will hear that argument as soon as that can be arranged," the judge said.
