Nigeria govt celebrates arbitration case victory against French entity over Ajaokuta complex project

The Nigerian government has won an arbitration case which saw a foreign entity’s N4 billion and €185.7 million claims against Nigeria dismissed, the office of Nigeria’s Attorney-General of the Federation announced on Friday.

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The case arose from an old contract case, dating back to 31 March 1981, for the construction of civil works in the Iron and Steel Complex at Ajaokuta, in the old Kwara State but now in Kogi State.

It was instituted against the Nigerian government by the contractor, a Joint Venture of Fougerolle Nigeria Ltd and Fougourolle SA, claiming the huge monetary awards against the country.

The Attorney-General of the Federation (AGF) and Minister of Justice, Lateef Fagbemi, a Senior Advocate of Nigeria (SAN), said Fougerolle’s claim was dismissed by the arbitration tribunal on 11 November.

The statement, which lauded the outcome of the arbitration proceedings, was signed by the Special Adviser to the President (Communication and Publicity), Office of the AGF and Minister of Justice, Kamarudeen Ogundele.

According to the statement, the arbitration tribunal was constituted under the auspices of the Alternative Dispute Resolution Centre of the Federal High Court.

The claimant, Fougerolle, a French company, brought the case dated 12 December 2022 before the tribunal about 18 years after the subject contract was terminated by the claimant itself on 30 January 2004.

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The claimant was said to have sought an additional payment of “unverified and uncertified sums of N3.8 billion (N3,846,098,403) and €185.7 million (€185,733,496), the AGF office said.

Before then, the AGF office said, the Nigerian government had engaged Price WaterCooperhouse to verify any indebtedness due to Fougerolle after terminating the contract.

It said the verification by WaterCooperhouse led to the payment of N3.9 billion (N3,894,600,000) to Fougerolle through Federal Government of Nigeria Bonds on 11 September 2006. Fougerolle was said to have signed an indemnity on 8 September 2006, accepting the sum as full and final settlement.

However, over 16 years after, Fougerolle initiated the case against the Nigerian government,

The company sought additional payment, arguing that the government owed it N3.8 billion and €185.7 million. It urged the tribunal to compel the government to pay the said sum to it.

Represented by the Federal Ministry of Justice, the Nigerian government argued that Fougerolle signed an indemnity on 8 September 2006 accepting the N3.9 billion and €185.7 million as the final settlement of the contract, waiving all future claims.

It also argued that the case was statute-barred because Fougerolle initiated the claim 16 years after.

However, the claimant maintained that it had signed the indemnity under duress.

Following their submissions, the tribunal rejected Fougerolle’s claim that it issued the indemnity under duress.

It dismissed the case for lack of competence and upheld the Nigerian government’s position.

The tribunal upheld the Nigerian government’s preliminary objection challenging the competence of Fougerolle’s claims..

It agreed with the Nigerian government that the case was statute barred and failed to disclose reasonable cause of action as the payment through bonds coupled with Fougerolle’s indemnity had extinguished the debt.

“Notwithstanding, the tribunal considered Fougerolle’s claim on the merit and held that Fougerolle failed to establish its case and had, indeed, waived all its rights to any other claim against the Federal Government because the payment made via FGN Bonds discharged the contractual obligation between the parties. The Tribunal rejected Fougerolle’s expropriation claim and the claim that it issued the indemnity under duress,” the AGF office said Friday.

The AGF lauded the victory and praised the officers of the Ministry of Justice who defended the case.

He noted the ministry’s commitment to boost the capacity of its officials and protect the government’s interest.

“The entire case was eventually dismissed, thereby saving FGN over N4 billion in liabilities.

“This decision also underscores the current administration’s determination to challenge all predatory and opportunistic claims against Nigeria, while also emphasizing the government’s policy to promote ADR as a dispute resolution mechanism,” the statement said.

Attempted efforts to revive the steel company

The steel company, located in Ajaokuta, Kogi State, was built between 1979 and the mid-1990s. It was never completed or operated optimally. For two decades, it has been moribund despite the efforts of previous administrations.

Over the years, the steel company has faced major hurdles, including delayed projects, funding constraints and managerial setbacks.

In September 2022, the Nigerian government paid $496 million to settle an Indian firm’s claim over the facility. The dispute followed the federal government’s revocation in 2008 of an agreement that handed control of the steelworks and the National Iron Ore Mining Company to the Indian firm.

In September, Aliko Dangote, founder and president/chief executive of the Dangote Group, said he believed the Ajaokuta steel company would never work.

He likened attempting to revive the steel company to comparing outdated technology with modern advancements.

However, in October, the Minister of Steel Development, Shuiabu Abubakar, announced that the ministry was exploring a partnership with the Republic of China for the revitalization of both Ajaokuta Steel Company Limited (ASCL) and National Iron Ore Mining Company (NIOMCO).