UK judge reviews $11 billion P&ID arbitration award, says Nigeria lawyers incompetent

Nigeria has secured a major legal victory after a United Kingdom judge, Robin Knowles, set aside the $11 billion arbitration award won by Process & Industrial Developments (P&ID), describing the entire process as fraudulent and deeply flawed.

Speaking in London during the Roebuck Lecture at the Chartered Institute of Arbitrators, Knowles said he “struggled to accept what happened” in the P&ID case and condemned both the arbitration tribunal and Nigeria’s legal team for their roles in the failed proceedings.

The case stemmed from a 2010 gas processing agreement between Nigeria and P&ID, which the company claimed the federal government breached, prompting a $6.6 billion arbitration award in 2017. With compounded interest, the award grew to over $11 billion.

However, Knowles ruled in October 2023 that the award was obtained through fraud, including bribes paid to Nigerian officials and illegal access to privileged legal documents. He upheld Nigeria’s claim under Section 68 of the English Arbitration Act, which permits courts to overturn arbitration decisions based on serious irregularity.

He said the tribunal failed to properly test P&ID’s evidence and awarded damages based on “unrealistic” projections of 20 years of uninterrupted gas profits without accounting for commercial risks or market changes. “The tribunal could have taken a more active role,” Knowles noted.

The judge also criticised Nigeria’s lawyers for failing to challenge the damages calculations and said their performance deserved “severe criticism.” He warned that such “vast awards” threaten economies and undermine trust in international arbitration.

Highlighting the consequences, Knowles pointed out that the original award was “a multiple of the size of Nigeria’s health and education budgets” and could have crippled the country’s finances. He suggested that international law should allow for exceptions when such awards pose serious national risks.

The UK Supreme Court has since dismissed P&ID’s appeal, upholding Knowles’ ruling that the company must pay £43 million in legal costs to Nigeria in pounds sterling.