Enforceability of Awards Vitiated by Illegality and Fair Hearing: A Review from a Nigerian Law Perspective of PID v. FRN

Abstract

This article reviews, from a Nigerian law perspective, the judgment of the English court and the majority arbitral award in Process & Industrial Developments Ltd. (PID) v. The Federal Republic of Nigeria (FRN). The arbitral tribunal awarded record-breaking damages, totalling over USD 9 billion, inclusive of interest. The award relates to an alleged breach by the FRN of a Gas Supply and Processing Agreement (GSPA) to a facility that was never constructed by PID. The signatory of the GSPA, PID, was a British Virgin Island corporation. Although PID had incorporated a local PID Corporation in Nigeria (PIDNigeria), it never executed the GSPA. This article is divided into three sections. Section 1 features the introduction and a general commentary. Section 2 focuses on the second leg of the FRN’s objection: ‘Whether or not the Claimant failed to comply with the provisions of section 54 of the Company and Allied Matters Act (CAMA) 1990 as alleged, and if so whether the GSPA is void, and/or affected by illegality, as a result’. This article does not discuss the first leg of the FRN’s objection, namely, the capacity of theMinistry of Petroleum Resources to contract on behalf of the FRN. Section 3 examines the consequences of the order issued by the Federal High Court of Nigeria (FHC) on FRN’s application, restraining the parties from proceeding with the arbitral hearing, which the tribunal ignored. It considers whether the order can bind members of the tribunal who were not parties to the FHCaction; if it was proper for the tribunal to ignore the order; and the consequences of the order on the FRN. It analyses whether the principle of fair hearing was breached when the tribunal reached a determination on the issue of the seat of arbitration without taking further submissions from the parties. Fair Hearing, Arbitral Award, Tribunal, Arbitration, Expert Opinion, Foreign Companies, Illegality, Employment, Jurisdiction, Enforcement