In a judgment of the BVI Commercial Court dated 8 November 2024, Justice Webster held that the Federal Republic of Nigeria had consented to execution of an arbitral award against its property for the purposes of section 13(3) of the State Immunity Act 1978 (the 'SIA').
The decision is significant because the judge found that the State's consent had been given by way of the bilateral investment treaty pursuant to which the underlying arbitration had been brought.
Background
In March 2021, an arbitral tribunal chaired by Lord Neuberger awarded c. USD 70 million to Withers' client Zhongshan Fucheng Industrial Investment Co Ltd ('Zhongshan'). The award arose from a successful arbitration brought by Zhongshan against Nigeria for breaches of the China-Nigeria bilateral investment treaty (the 'China-Nigeria BIT') as a result of certain actions taken by actors and entities of the Nigerian state.
After Nigeria failed to pay the award, Zhongshan commenced enforcement proceedings in various jurisdictions, including the BVI.
In unrelated proceedings in England, Nigeria had successfully challenged a substantial award against it in favour of Process & Industrial Developments Limited ('P&ID). In a consequential order, Mr Justice Knowles had ordered P&ID to pay Nigeria £20 million as an interim payment on account of Nigeria's costs of the challenge proceedings. As P&ID is a BVI company, Zhongshan applied for an attachment of debts order in respect of P&ID's debt to Nigeria pursuant to the Knowles order.
Waiver in the China-Nigeria BIT
Nigeria disputed Zhongshan's entitlement to the relief sought, arguing that its property (including the debt owed to it by P&ID) was immune from execution pursuant to section 13(2)(b) of the SIA. The SIA applies to the BVI by virtue of the State Immunity (Overseas Territories) Order 1979.
Zhongshan argued, however, that Nigeria had consented to execution of the award against its property for the purposes of section 13(3) of the SIA by virtue of Article 9(6) of the China-Nigeria BIT, which provides that:
'The tribunal shall reach its decision by a majority of votes. Such decision shall be final and binding upon both parties to the dispute. Both Contracting Parties shall commit themselves to the enforcement of the award.'
Analogy with recent English authority
In support of its position, Zhongshan drew an analogy with the reasoning in HHJ Pelling KC's judgment in General Dynamics v the State of Libya [2024] EWHC 472 (Comm) (recently upheld in the Court of Appeal judgment in General Dynamics v the State of Libya [2025] EWCA Civ 134). In that case, Libya had entered into a contract which contained an arbitration clause providing that any decision of the arbitral tribunal would be 'wholly enforceable'. In his judgment, HHJ Pelling KC held that this provision was capable of amounting not just to a submission by Libya to the English courts but also to execution against its property.
General Dynamics was concerned with a written consent contained in a provision of a commercial contract. In the case before Justice Webster, the relevant written consent was said to be contained in a bilateral investment treaty between China and Nigeria. The authors are not aware of any previous instance in which consent to execution has been found in a bilateral investment treaty.
Principles of treaty construction
Whereas in General Dynamics, HHJ Pelling KC applied Swiss law (being the law of the contract) to construction of the relevant provision, Justice Webster applied the principle of treaty interpretation contained in Article 31 of the Vienna Convention on the Law of Treaties, that 'A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose'. In so doing, Justice Webster concluded that:
'The ordinary meaning of enforcement includes to give force or effect to something or to compel obedience to something. This is what was intended by the parties when they committed themselves to enforcement of a BIT award. Put another way, [Nigeria] and [China] agreed to waive immunity from enforcement against their property by whatever legal means was available to an investor and it was not necessary to include the word execution in article 9.6. Execution is by necessary implication included in the word enforcement.' 1
Contrast with ICSID Convention
Nigeria sought to rely on Articles 54 and 55 of the ICSID Convention, in which a distinction is drawn between recognition and enforcement on the one hand and execution on the other. However, Justice Webster found that this was of no assistance to Nigeria as the ICSID Convention is a different treaty dealing with a different subject matter. He also found that if the drafters of the China-Nigeria BIT had intended to limit the waiver of immunity to enforcement in the narrower sense proposed by Nigeria, they could have done so in the manner done in Articles 54 and 55 of the ICSID Convention.
In light of the judge's findings, his judgment provided that the provisional attachment of debts order obtained by Zhongshan in respect of the £20 million debt owed by P&ID to Nigeria be made final.
Footnote
1. Zhongshan Fucheng Industrial Investment Co Ltd v the Federal Republic of Nigeria, judgment of Justice Webster (Ag.) handed down on 8 November 2024 in claim number BVIHCOM2022/0017, paragraph 32.
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