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Nigerian Tribune | 16 August 2024
EXPLAINER: Why Nigerian presidential aircraft was seized
by Israel Arogbonlo
Three Nigerian presidential aircraft have been seized in France and Switzerland due to a long-standing legal dispute between Zhongshan, a Chinese company, and Ogun State Government over managing an export processing zone.
The seized jets, valued at over $100 million, include a Dassault Falcon 7X in Paris and a Boeing 737 and Airbus A330 undergoing maintenance in Switzerland.
Background
The dispute stems from a 2001 bilateral investment treaty between China and Nigeria, which led to Zhongshan’s involvement in the Ogun Guangdong Free Trade Zone (OGFTZ) project. However, Ogun terminated the contract in 2016, sparking a legal battle.
In 2021, an arbitration tribunal ruled in favour of Zhongshan, awarding $70 million in damages. The UK Court of Appeal upheld the decision in 2023.
Here’s a timeline of the events from the investment deal to the legal battles:
2001: China and Nigeria signed a bilateral investment treaty to encourage investment between the two countries.
2010: Zhongshan Fucheng Industrial Investment, through its parent company Zhuhai Zhongfu Industrial Group, acquired rights to develop the Ogun Guangdong Free Trade Zone (OGFTZ) in Ogun State, Nigeria.
2011: Zhongshan set up a local entity, Zhongfu International Investment (NIG) FZE, to manage the development of the free trade zone. The Chinese firm then carried out several works, including the development of infrastructure such as roads, sewerage and power networks, within the zone.
2012: Ogun State appointed Zhongfu as the interim manager of the OGFTZ.
2013: A joint venture agreement was signed, making Zhongfu the permanent manager of the OGFTZ and giving it a majority shareholding in the project.
2016: Ogun State abruptly terminated Zhongfu’s appointment and took actions to expel the company from Nigeria, including harassment of its executives and revocation of immigration papers.
2017: Zhongshan initiated arbitration proceedings against Nigeria, claiming breach of the bilateral investment treaty.
2021: On 26 March 2021, the tribunal, chaired by Lord Neuberger, the former president of the UK Supreme Court, ruled that Nigeria breached its obligations under the China-Nigeria BIT and issuing a final award of $55,675,000 in addition to an interest of $9.4 million and costs of £2,864,445 payable by Nigeria to Zhongshan. The total amount is about $70 million. All efforts by the federal government to amicably resolve the dispute between Ogun State and the Chinese firm were fruitless.
2023: Nigeria sought state immunity in a legal case but was denied by the High Court in the UK, which ruled that the country had exceeded the time limit for appealing arbitral awards.
Presidency reacts
The Nigerian Presidency has denounced Zhongshan’s actions as “arm-twisting” and “subterfuge,” claiming the company misled the French court and has no contractual obligation with the federal government.
The seizure has sparked a diplomatic row, with the Nigerian government vowing to protect its national assets and discharge the “frivolous” order in Paris.