The Federal Government has expressed its intention to challenge a recent court ruling by the British Virgin Islands (BVI) High Court, which granted Chinese investors Zhongshan Fucheng Industrial Investment Co. Ltd. the right to seize $25 million from Nigeria’s foreign assets.

This decision stems from a long-standing legal dispute related to a failed trade zone agreement in Ogun State, which was initially signed under the administration of former Governor Ibikunle Amosun.

On November 8, 2024, Judge Paul Webster of the British Virgin Islands High Court ruled in favour of Zhongshan, granting the Chinese company authority to enforce a $25 million judgment debt against Nigeria. The judgment follows an earlier arbitration ruling under the Bilateral Investment Treaty (BIT) between China and Nigeria, which Zhongshan invoked after Nigeria allegedly breached a contract for the development of a free trade zone in Ogun State.

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The court ruled that Nigeria’s sovereign immunity did not apply in this case, citing provisions in the BIT that require both parties to commit to the enforcement of any arbitral award.

Reacting to the ruling, Daniel Bwala, Special Adviser to the President on Policy Communications, said on Wednesday that the federal government would carefully examine the judgment and pursue all available legal options, including an appeal. Bwala, a trained lawyer, explained that the decision could not be enforced immediately, noting that the ruling served as a preliminary warning to Nigeria.

He emphasized that no judgment could be considered final or substantive without both parties being present in court.

“This is not a judgment that will be enforced immediately,” Bwala said. “The ruling serves as a warning, and until Nigeria has the opportunity to enter its defense, the judgment cannot be enforced. We still have the chance to appeal and vacate the ruling.”

Bwala reiterated that Nigeria remains committed to studying the ruling and responding appropriately, ensuring that all legal avenues are pursued to defend the country’s interests.

The case dates back to a 2010 agreement between Zhongshan Fucheng Industrial Investment Co. and the Ogun State government, in which Zhongshan, through its parent company Zhuhai Zhongfu Industrial Group Co. Ltd., secured rights to develop an export processing zone in Ogun State.

However, in 2016, the Ogun State government terminated the agreement, alleging disagreements over the terms of the partnership. This led Zhongshan to initiate arbitration proceedings under the China-Nigeria BIT, which culminated in the awarding of approximately $70 million in compensation by an arbitration tribunal in 2021.

In January 2022, Zhongshan moved to enforce the arbitral award in UK courts.

Despite Nigeria’s objections, arguing state immunity, the UK courts upheld the award, rejecting the sovereign immunity defense.

This led to further legal proceedings, culminating in the recent BVI court ruling, which allows Zhongshan to seize foreign assets belonging to Nigeria, including the $25 million now at stake.

The BVI ruling is part of a broader pattern of international legal setbacks for Nigeria in this case. Earlier in 2024, the Federal Government faced a similar legal blow in the UK, where a London commercial court granted Zhongshan a final charging order over two Nigerian government-owned properties.

The ruling involved an attempt by Zhongshan to enforce the $70 million arbitration award.

The case has also seen similar decisions in courts in France, Belgium, and Canada, where Nigerian sovereign immunity arguments have been dismissed.

A particularly notable development occurred in August 2024, when a French court ordered the seizure of three Nigerian presidential jets stationed at airports in Paris and Basel-Mulhouse.

These aircrafts were part of a legal strategy by Zhongshan to enforce the damages owed by Nigeria over the failed Ogun State trade zone project.

In response, the Presidency clarified that the federal government has no contractual obligation to Zhongshan, emphasizing that the dispute is between the Chinese company and the Ogun State government.

Bayo Onanuga, Special Adviser to the President on Information and Strategy, stated that the federal government was aware of the company’s continued efforts to seize Nigerian assets but was not bound by any contractual agreement with Zhongshan.

The government is also reportedly working with the Ogun State government to resolve the matter amicably.

“The Presidency remains committed to defending Nigeria’s interests.

“We will continue to examine all options and take the necessary steps to address these legal challenges, ensuring that Nigeria’s rights and assets are preserved,” he said.

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