Award

Zhongshan Fucheng v Nigeria

UNCITRAL ad hoc tribunal · Investment (ICSID and treaty) · Nigeria · 26 March 2021

Why it matters

The most-watched China-Africa investment award and a masterclass in enforcement. After Nigeria did not pay, the investor pursued Nigerian assets across multiple countries, at one point obtaining attachment of Nigerian presidential aircraft in France. It shows the China-Africa BIT network being used in earnest, and why the enforcement stage, not the award, is where sovereign cases are really won or lost.

Summary

Zhongshan Fucheng, a Chinese company, helped develop the Ogun Guangdong Free Trade Zone in Nigeria through a local venture. After a falling out, Ogun State terminated the venture's rights, and the company said its representatives were harassed and the investment was effectively seized. It brought an ad hoc UNCITRAL arbitration against Nigeria under the China-Nigeria bilateral investment treaty, seated in London. The tribunal found Nigeria responsible, including for the conduct of Ogun State, a reminder that under international law a federal state answers for its regions, and held the treatment amounted to expropriation and unfair treatment, awarding compensation in the tens of millions of dollars plus interest, commonly reported at around US$70m once interest accrued. The award itself is only half the story. Nigeria did not pay, and Zhongshan launched one of the most aggressive enforcement campaigns ever run against an African sovereign, registering the award and pursuing Nigerian assets in the UK, the US, France and elsewhere, with French courts at one point allowing attachment of Nigerian presidential jets before diplomatic assets arguments unwound parts of it. For practitioners the case is now the standard study in sovereign immunity from execution: which assets are commercial and reachable, which are protected, and how a patient creditor turns paper into pressure.

The detail

Parties: Zhongshan Fucheng Industrial Investment Co Ltd (China) v Federal Republic of Nigeria

Case number: UNCITRAL ad hoc arbitration (China-Nigeria BIT)

Outcome: Nigeria liable for expropriating a Chinese investor's free trade zone interests; tens of millions of US dollars awarded, followed by a worldwide enforcement campaign.

Quantum: Around US$70m with interest

Applicable law: China-Nigeria bilateral investment treaty; UNCITRAL Arbitration Rules; seat in London.

Issues in play: Treaty protection for a Chinese investor in Africa against a state unwinding a politically connected project, and then the real fight: how do you actually collect from a sovereign that will not pay?

Read the full decision at italaw

Locus Standi links to the source decision and publishes its own plain-language summary. It does not reproduce the text of the award.

Back to the awards board