Summary

In the Matter of an Arbitration Pursuant to the Agreement Between the Government of the People's Republic of China and the Government of the Federal Republic of Nigeria for the Reciprocal Promotion and Protection of Investments

Arbitral Tribunal:

Mr Rotimi Oguneso SAN, co-arbitrator
Mr Matthew Gearing QC, co-arbitrator
Lord Neuberger of Abbotsbury, presiding arbitrator

Place of arbitration: London, United Kingdom

Date of Hearing: 9th to 13th November 2020

Introduction

1. The Claimant, Zhongshan Fucheng Industrial Investment Co. Ltd ("Zhongshan"), contends that, in the summer of 2016, entities for whose actions the Respondent, the Federal Republic of Nigeria ("Nigeria"), is liable in international law, deprived it of a substantial investment contrary to the provisions of articles 2, 3 and/or 4 of a Bilateral Investment Treaty ("the Treaty") between (i) the People's Republic of China ("the PRC") and (ii) Nigeria, and that Zhongshan is entitled to compensation from Nigeria to be assessed by an arbitration tribunal pursuant to article 9 of the Treaty.

2. In the next section of this Award, Section B, we explain the basic relevant facts as advanced in this arbitration by Zhongshan on the basis of documents and oral evidence. Then, in Section C, we set out the relevant provisions of the Treaty. In Section D, we describe the relevant procedural history of this arbitration. Following that, in Section E, we address various jurisdictional and preliminary points raised by Nigeria. In Section F, we discuss misrepresentation and concealment arguments raised by Nigeria. Next, in Section G, we address the issue of Nigeria's liability. In Section H, we consider the appropriate level of compensation to be awarded. Section I deals with questions of interest and Section J with costs. Finally, in Section K, we make our award.

3. Before setting out the history as described by Zhongshan, it is convenient to record that Zhongshan's claim relates to rights in the Ogun Guangdong Free Trade Zone ("the Zone"), a substantial area of land in Ogun State in Nigeria, which is owned by the Ogun State Government ("Ogun State") and which is not far from Lagos, Agapa Port and Lagos Airport. The history involves three companies in the Chinese-owned Zhuhai Zhongfu Industrial Group Co Ltd group of companies, Zhuhai Zhongfu Industrial Group Co Ltd ("Zhuhai"), Zhongfu International Investment (NIG) FZE (Zhongfu") and Zhongshan.

The unchallenged evidence of Dr Jianxin Han, the managing director of, and majority shareholder in, Zhongshan, was that Zhuhai started in the early 1980s as a business manufacturing and repairing fishing nets, then developed a bottle manufacturing business, and finally expanded into operating in Special Economic Zones ("SEZ"s) also known as Free Trade Zones ("FTZ"s), initially in China, and then in other countries. He said that the Group had an excellent record in developing and managing FTZs. He also explained that the private equity firm, CVC Capital, had purchased a 29% stake in Zhonghsan in 2007 for USD225 million. Zhuhai and Zhongshan are and were Chinese registered companies, and Zhuhai is Zhongshan's parent company. Zhongfu was and is a Nigerian company and a wholly owned subsidiary of Zhongshan,.

...

K. Conclusion and Award

198. Accordingly, the Tribunal concludes, orders and awards as follows:

a. Zhongshan has locus to pursue a claim for compensation under the Treaty in respect of its rights under the 2010 Framework Agreement and the 2013 JVA;

b. Nigeria is in breach of its obligations under articles 2(3), 3(1) and 4(1) of the Treaty;

c. Nigeria is ordered to pay to Zhongshan;

i. Compensation for the expropriation in the sum of USD 55.6 million

ii. Moral damages in the sum of USD 75,000;

iii. interest on the aforesaid two sums from 22nd July 20I6 at the one month USD LIBOR rate plus 2 per cent for each year, or proportion thereof, such interest to be compounded monthly, until and including the date of the award, in the sum of USD 9.4 million.

iv. in respect of the Claimant's legal and related costs of the arbitration, the sum of £2,509,789.57

v. £354,655.17 in respect of the other costs of the arbitration.

vi. interest on the sums specified on all the amounts specified in sub-paragraphs (I) to (iii) above from the day after this award until payment at at the one month USD LIBOR rate plus 2 per cent for each year, or proportion thereof, such interest to be compounded monthly, until and including the date of payment (and should, for any reason, USD LIBOR cease to be operative while any amount remains outstanding, the interest due shall from that date onward be calculated on the basis of whatever rate is generally considered equivalent to USD LIBOR plus 2%, compounded monthly, until and including the date of payment).

vii. interest on the sums specified on all the amounts specified in sub-paragraphs (iv) and (v) above from the day after this award until payment at at the one month GBP LIBOR rate plus 2 per cent for each year, or proportion thereof, such interest to be compounded monthly, until and including the date of payment (and should, for any reason, GBP LIBOR cease to be operative while any amount remains outstanding, the interest due shall from that date onward be calculated on the basis of whatever rate is generally considered equivalent to GBP LIBOR plus 2%, compounded monthly, until and including the date of payment).

OCR errors may be present.