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Addressing Corruption and Fraud in Investor-State Arbitration: Insights from the P & ID Case in Nigeria
The influence of fraud, bribery, and corruption in arbitration processes has been the subject of discussion following the P & ID case in Nigeria. The study suggests paying more attention to the enforcement of arbitral rulings, particularly in cases where claims of bribery, corruption, and fraud are made and where state and state actors are engaged and the money at stake is significant. Contract-based investor-state arbitration must be transparent to stop dishonest officials from profiting off public coffers. The P & ID case's arbitration tribunal's decision sparked additional legal action in other jurisdictions. Nigeria initially brought up corruption accusations in November 2019 to get English courts to overturn the verdict. The study will look at bribery and fraud in the upholding of arbitral rulings. Although final, interim, local, and international awards are included in Nigerian legislation, the term "arbitral award" is not defined there. Unless the parties agree differently, an arbitral award must be in writing, signed by the arbitrator(s), and include the date, location, and reasons for the award to be enforceable.
Nigeria has ratified several international agreements, such as the Energy Protocol of the Economic Community of West African States, the UNCITRAL Model Law on International Commercial Arbitration, the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States, the New York Convention, and bilateral investment treaties. The Arbitration and Conciliation Act, which is mostly in line with the UNCITRAL Model Arbitration Law, serves as the primary domestic framework in Nigeria for the execution of arbitral rulings. Nigeria attempted to reverse a $10 billion arbitration verdict in P&ID v. Nigeria based on a contract between Nigeria and a foreign investor. The court determined that there was a "strong prima facie case" that Nigeria's legal counsel had been compromised and that bribery was used to get the contract. Despite accepting Nigeria's arguments, the High Court of Justice of England and Wales determined that three anomalies were "the most severe abuses of the arbitral process on P&ID's part." The GSPA's arbitration language deviated from the model arbitration clause that Nigerian government agencies were instructed to incorporate into their contracts, the court further observed.
Bribery refers to an undisclosed payment or enticement made to an agent by a third party while keeping it a secret from their principal. It can give any advantage or profit and be offered or requested by the agent. Payments were made to Nigerian authorities in the P&ID Case to sway contract decisions. The court concluded that these payments were purposefully concealed from Nigeria, and Nigeria is right to claim that they were bribes made to Mrs. Grace Taiga on behalf of P&ID.
Under Nigerian law, arbitral decisions—including interim and partial awards—may be overturned if the arbitrators acted illegally, outside their authority, the judgment was obtained by fraud or other illegal means, or the award contains a legal error. If a party feels wronged by an award, they have three months from the date of the award or the request for an award's correction and interpretation to ask the court to set the award aside. A party may contest an award in the proceedings on the grounds of severe irregularity impacting the tribunal, the procedures, or the decision, according to Section 68 of the Arbitration Act of 1996. The court must establish the existence of some illegality, that the award's execution would manifestly harm the public interest, or even that it would be utterly insulting to the average, rational, and well-informed citizen, on whose behalf the state exercises its powers.
In international arbitration, public policy is a tenet that safeguards the public interest and forbids penalties for actions that compromise the public benefit or welfare. International agreements such as the UNCITRAL Model Law on International Commercial Arbitration and the New York Convention define it. Cases including elements of illegality or where enforcement would be detrimental to the public interest fall under the purview of public policy defense. The French legal system has strict guidelines for invalidating awards on the grounds of public policy, which includes transgressions of fundamental constitutional principles, consumer protection laws, national sovereignty, and foreign exchange regulations. The Nigeria v. P &ID Case brings to light broader policy issues around corruption and investor-state arbitration. Courts ought to keep rejecting applications for enforcement or nullifying verdicts because of corruption and fraud.
- Corruption and fraud in arbitration undermine public interest, justifying the rejection of enforcement of such awards.
- Nigerian and international laws allow for the annulment of arbitral awards obtained through illegal means.
- Nigeria successfully challenged a $10 billion arbitration award by proving corruption and bribery.
