British court stops sale of Nigerian government property in London over $5m debt

By Trumpet

EXCLUSIVE

The English Commercial Court has ruled against the forced sale of one of Nigeria's choice properties in London to recover a debt of $5million and a further N4.71million awarded as costs (excluding interest) arising from a dispute with an Israeli company.

The 1927-built three-storey property situated at 56-57 Fleet Street which previously housed a number of sections of the Nigeria High Commission London including its Consular services, is currently leased to Online Integrated Solutions Ltd (OIS) for the purpose of providing visa and passport services in exchange for an annual rent of £150,000.

Hitherto, the property was the London home of the Glasgow Herald Newspaper in the days when Fleet Street was the centre of Britain's newspaper industry.

The property had been the subject of a suit filed by a company registered in Israel - L R Avionics Technologies Ltd which had entered into a contract with the Federal Republic of Nigeria on 22 October 2002 to supply military equipment. The contract was governed by Nigerian law and was subject to arbitration in Nigeria in accordance with the Nigerian Arbitration and Conciliation Act 1998.

A subsequent dispute arose on 31 January 2012, and Mr Babajide Ogundipe, a Nigerian barrister, was appointed as Sole Arbitrator on the dispute by the Chief Judge of the Federal High Court of Nigeria. On 8 February 2013, the Arbitrator awarded $5million to L R Avionics Technologies Ltd as damages for breach of the contract, together with costs of N4.71million. The award did not carry interest.

An attempt to get this award set aside by way of an application filed at the Federal High Court Abuja on 17 March 2013, was unsuccessful.

On 30 June 2014, the Federal High Court granted leave to recognise and enforce the award in the same manner as a judgment and entered judgment ordering the Nigerian Government and the Attorney General, to pay the sums awarded together with interest at the prevailing bank rate from 11 March 2013.

The Nigerian Government did not comply with the order of the Federal High Court,  so L R Avionics Technologies sought to enforce the award in the United Kingdom. On 4 March 2015, it made a "without notice" application to register the award under the Arbitration Act 1996 and also to register the Nigerian judgment under the Administration of Justice Act 1920. Justice Phillips made both orders on 14 April 2015 and also gave permission for service of the claim form, the witness statement in support of the application and the order itself on the defendants out of UK jurisdiction through diplomatic channels under Section 12 of the State Immunity Act. These were duly served on 24 June 2015, but the Nigerian Government did not acknowledge service.

L R Avionics Technologies applied for a Charging Order on the Fleet Street property on 25 August 2015 and obtained an Interim Charging Order on 17 September 2015.

L R Avionics Technologies was granted a Final Charging Order on 6 November 2015 which provided that the Nigerian Government had 21 days from receipt, to apply to vary it or set it aside. This order provided for service by email as well as diplomatic channels. Service by email was effected on 10 November 2015 and by diplomatic channels on 19 January 2016.

L R Avionics Technologies applied for an order to sell the property in February 2016 and served the Nigerian government. It appears the advanced stage of the court processes which was fast gravitating towards the forced sale of the building, prompted the Nigerian government in May 2016, to eventually apply to have the Final Charging Order discharged or set aside and seek a time extension within which to make the application.

The court accepted the argument of Lincoln's Inn Barrister Hilda Ekpo Ephraim-Adejumo who represented the Nigerian government, that the premises owned by Nigeria were not “in use....for commercial purposes” within the meaning of section 13(4) of the State Immunity Act 1978 (“the SIA 1978”), and would therefore be immune from the enforcement of arbitral award or judgment against the State under that section.

In his judgement, Justice Males noted that: "The critical issue here is the use to which the property in question is put. The nature or origin of the obligation which it is sought to enforce is irrelevant."

"The nature of the case was that the Federal Republic of Nigeria is the registered proprietor of the freehold interest in office premises at 56-57 Fleet Street in London. It had granted a lease of the premises to a company called Online Integrated Solutions Ltd ("OIS") for the purpose of providing visa and passport services in exchange for an annual rent of £150,000.

"OIS, which describes itself as an official partner of the Nigeria High Commission, provides Nigerian visa and passport services on behalf of the High Commission.

"The Claimant - L R Avionics Technologies Ltd had obtained permission to enforce in England, an arbitration award made against the Federal Republic of Nigeria together with a judgment of the Nigerian Federal High Court which was entered by way of enforcement of the award in Nigeria (the award had been for a sum of just over $5 million US Dollars). It had also obtained a final charging order in respect of the Fleet Street property and had issued proceedings in the Chancery Division for an order for sale of the property."

The judgement handed down at the High Court of Justice, Queen’s Bench Division, Commercial Court, at The Royal Courts Of Justice; noted that the Defendants, the Federal Republic of Nigeria, contended that the property was immune from execution and applied to have the charging order set aside. That was the application set before Justice Males, although the arguments of Barrister Ephraim-Adejumo for the defendants also challenged the permission granted to enforce the award and the Nigerian judgment in England.

Justice Males concluded that L R Avionics Technologies Ltd had not discharged the burden upon it of proving that the property owned by the Federal Republic of Nigeria at Fleet Street was being used for commercial purposes.

The judge decided that the Fleet Street property was immune from execution and that the charging orders must therefore be set aside.

Although it was a victory for Nigeria, the Judge noted that "Ms Ephraim-Adejumo sought in the course of her submissions to invoke 'the justice of the case' as a reason for setting aside the charging orders.

"I would have thought that the interests of justice in this case would be best served if the defendant State (Nigeria) were to honour an arbitration award made against it which has been upheld by and converted into a judgment of its own Federal High Court. However, the law of State immunity exists in international law and has been given effect in the 1978 Act in order to promote wider interests of justice than those of the parties to any individual case."