The legal battle between Nigeria and Zhongshan Fucheng Ltd, a Chinese investment firm, is set to take a decisive turn as the United States Supreme Court is scheduled to discuss Nigeria’s petition on January 10, 2025.
The Nigerian government is seeking to overturn a series of lower court rulings that have led to the firm being awarded $70 million in damages. These damages are part of a long-running dispute that has seen the country dragged into numerous international courts, with Zhongshan attempting to seize Nigerian assets to enforce the judgment.
The case is a complex one that dates back to 2001 when Nigeria and China signed a bilateral investment treaty designed to promote business relations between the two countries. Under this treaty, the Ogun State government entered into an agreement with Zhongshan Fucheng Ltd to develop a free trade zone in Ogun State. However, the situation quickly soured, and by 2016, the partnership had deteriorated, leading to a string of lawsuits.
Zhongshan Fucheng claimed it was unlawfully detained in Nigeria after Ogun State Governor Ibikunle Amosun cancelled the free trade zone deal. The investors filed multiple lawsuits in Nigeria’s federal and state courts, seeking to reinstate their contractual rights. Despite initial setbacks, the firm later sought arbitration, which resulted in an award of $74.5 million in compensation in 2018. This ruling has since been contested by the Nigerian government.
Governor Amosun, who played a pivotal role in the deal, has since admitted that he signed away the agreement without fully understanding its terms. In an August statement, he expressed regret, claiming that he had been misled by the Chinese investors. Since then, he has largely remained silent, as the dispute escalated into a global legal saga.
In August 2024, the tension further increased when news broke that a French court had authorised the seizure of three Nigerian government-owned aircraft. These jets, which include two Dassault Falcon 7X planes and a Boeing 737, were targeted by Zhongshan Fucheng as part of efforts to recover the damages owed by the Nigerian government. The third aircraft involved is an Airbus 330, which was purchased by Nigeria but had not yet been delivered.
Zhongshan’s actions have sparked outrage in Nigeria, with many questioning the fairness of the legal proceedings. Despite the Chinese firm’s persistent efforts, the Nigerian government has so far managed to avoid paying the damages. Nigerian officials argue that the attempts to seize assets are part of a broader strategy by Zhongshan to gain control over Nigerian resources abroad.
According to Ogun State Governor Dapo Abiodun, Zhongshan’s actions are a “new tactic” to lay claim to Nigerian assets in foreign jurisdictions. He has described the Chinese company’s move as yet another instance of unscrupulous foreign investors seeking to defraud Nigeria. Governor Abiodun also pointed out that these efforts were undertaken without proper legal notice to Nigeria, adding that the three aircraft were immune from seizure under international law due to their sovereign status.
“The latest attempts by Zhongshan to attach Nigeria’s assets overseas, including the aircraft, have failed in the past,” Abiodun said. “They are acting in bad faith, as evidenced by their failure to present complete information in court.”
The situation surrounding the seizure of the planes in France has only added to the drama. The aircraft are primarily used for government purposes, including transport for high-ranking officials. Thus, under international law, they are protected from seizure as part of Nigeria’s sovereign immunity. Despite this, Zhongshan has continued to pursue the damages through the legal systems of multiple countries, including the United States and the United Kingdom.
The Ogun State government has stressed that this issue was inherited from previous administrations and should not be attributed to the current leadership. The dispute began in 2007 when Ogun State entered into the agreement with Zhongshan to manage the Ogun Guangdong Free Trade Zone. The disagreement between the two parties, however, began in 2015, with arbitration proceedings starting in 2016.
By the time the current administration in Ogun State took office in 2019, the arbitration process had almost concluded. The panel’s decision, which awarded Zhongshan $60 million, was heavily criticised by Nigerian officials, who argued that the company had done little beyond building a perimeter fence around the free-trade zone.
The Nigerian government has refused to accept the arbitration panel’s decision, and legal experts have described it as an unfair and unreasonable ruling. Ogun State officials argue that the arbitration panel was biased and that the judgment would unfairly drain the state’s resources if enforced.
The US Supreme Court’s decision is eagerly awaited, as it will likely bring an end to this prolonged and costly dispute. If the court rules in favour of Zhongshan Fucheng, it could result in Nigeria being forced to pay the $70 million damages. This could also open the door for other foreign investors to pursue similar actions against Nigeria, potentially threatening the country’s international assets.
