In a striking development in the arbitration world, the English Court has upheld a challenge to an enormous arbitration award against Nigeria, estimated at US$11 billion, on the grounds of it being fraudulently procured. The judgment, which aimed to rectify what English judge referred to as “the most severe abuses of the arbitral process”, offers a fresh perspective on the limits of arbitration enforcement under the public policy provisions in English law, specifically section 68(2)(g) of the Arbitration Act 1996.
This is a noteworthy judgment due to its rarity; it is unusual for such challenges to succeed. The case, therefore, certainly highlights the critical importance of the seat of arbitration. Only courts maintaining neutrality, thoroughness, and robustness, shall be prepared to overturn awards when severe irregularities undermine the integrity of the process. Read the full details of the case here.
The arbitration involved Nigeria and a trio of companies, namely Natural Resources International Ltd, International Investment Ltd and Process and Industrial Developments Ltd (P&ID), two small British Virgin Islands entities that were awarded a 20-year contract to build a natural gas processing plant in Nigeria.
The English court’s decision underscores the critical role that courts play in the arbitration process. Despite the traditional deference paid by courts to arbitration awards, under certain circumstances, such as those evidenced in the Nigeria case, where there are severe irregularities or where public policy principles come into play, courts may rightly intervene.
This event should inspire a critical re-evaluation of the constraints imposed by the public policy exclusion in arbitral enforcement and ultimately encourage better arbitration practice globally. The English court’s verdict emphatically demonstrates that fraud will not be tolerated, even in the most lucrative of arbitration disputes.