• Main News
  • About Us
  • Contact
Premium Times Opinion
Friday, May 27, 2022
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight
No Result
View All Result
Premium Times Opinion
Home Columns

P&ID: Is Nigeria Truly Liable Under the Contract?, By Hannatu Musawa

by Premium Times
February 20, 2020
7 min read
1

From the nature of the contract, it can be conveniently argued that P&ID is the party that failed in its obligation of, first, providing a gas processing facility. Nigerian government can only supply natural gas (wet gas) to an existing production facility and as such there cannot be a breach of the agreement on the part of Nigeria.


So, by now most of us must have heard about the P&ID case that prompted the government to raise a legal team and go all the way to London to fight a case of juggernaut proportion. Here, I am going to look at the matter from the Nigerian legal perspective and chop it up in order to examine the legal standing of Nigeria as it pertains to the matter.

Global attention was recently drawn to the heat generated by the failed contract between P&ID (Projects and Industrial Developments Ltd.) and the Nigerian government, leading to an award of a whopping sum of about $9.6 billion. This award was granted by an Arbitration Tribunal in England against Nigeria, which the Queen’s Bench Division of the English Commercial Court adopted as its judgment and granted leave to P&ID to enforce against Nigeria in August 2018. The award arose from a contract, which P&ID posited that the Nigerian government repudiated. In order to ascertain whether the award against Nigeria was fair and just or not, one may want to first ascertain if there was a contract between P&ID and the Federal Government of Nigeria.

In law, it is said that, ‘to bring a contract into being for the parties to the contract to confer rights and impose liabilities on themselves, there must be mutual assent.’ It is also pertinent to state that the mutual assent of the parties must have the character of being broken down into ‘offer’ and ‘acceptance’. It is a basic tenant of Contract Law, that in addition to having an ‘offer’ and ‘acceptance,’ another essential element of a valid contract is ‘consideration.’ This is so unless we are talking about a contract under seal. In an old case of Rann V. Hughes (1778) 7 Term Rep. 350, the Court stated that:

“The law… supplies no means nor affords any remedy to compel the performance of an agreement made without sufficient consideration: such an agreement is ‘nudum pactum ex quo non oritur action.”

Furthermore, to buttress this rule, in Myddleton V. Lord Kenyon L2 VES Jun 391 at 408, Lord Loughborough made the point as clear as possible by stating that, “A bargain without a consideration is a contradiction in terms and cannot exist.” Thus, for any contract to qualify as a legal contract, there must be the element of ‘consideration.’

There must also exist in any ‘contract’ an intention to create a legal relationship. The duty of the court is to arrive at the intention of the parties by legal interpretation of the terms of the agreement.

The contract, in this particular case, was between P&ID and the Federal Government of Nigeria, which was entered into on January 11, 2010. The Contract was for a gas supply and processing agreement.

Under the contract, Nigeria agreed to supply natural gas (wet gas) to P&ID’s production facility over a 20-year period. P&ID, a company based in the British virgin Island, agreed to process the wet gas by removing natural gas liquids and return approximately 85 per cent of it to the Federal Government of Nigeria in the form of lean gas. Under the agreement, the lean gas was to be returned at no cost to the Nigerian government. This, essentially, was what the contract was for.

It has not been shown anywhere that P&ID acquired any piece of land in Cross River State as the site for the project. The question that will agitate any reasonable mind is how P&ID invested a colossal sum of $40 million in a project that never saw the light of day?


Consequently, upon the agreement, the Nigeria government had the obligation of arranging for the supply of wet gas to the gas processing facility of P&ID, which it intended to build in Cross River State of Nigeria. The arrangement further required the Nigerian government to construct the necessary pipeline and put in place facilities for transporting the wet gas to the gas processing facility of P&ID.

According to P&ID, the Nigerian government failed in its obligation under the contract and viewed the failure as a repudiation of the contract.

In March 2013, P&ID commenced an arbitration action against the government of Nigeria before a London Tribunal. One will want to find out why a contract entered into in Nigeria and to be executed in Nigeria will have London as the seat of the arbitration to resolve disputes arising from it as provided by clause 20 of the agreement. The alternative provision ‘or any other place agreed by the parties’ is certainly not helpful to Nigeria, as that requires consent of both parties and when one party disagrees, it will be in London. This is why Nigeria failed in its appeal to have the Tribunal sit in Nigeria. Those who signed the contract on behalf of the Federal Republic of Nigeria at the time should have weighed the disadvantages of having the seat of Tribunal in London when the contract has nothing to do with London or any part of Europe.

From the nature of the contract, the consideration is not clear to a discerning mind. The claim by P&ID before the Tribunal that it invested $40 million in the project is also difficult to be countenanced.

It has not been shown anywhere that P&ID acquired any piece of land in Cross River State as the site for the project. The question that will agitate any reasonable mind is how P&ID invested a colossal sum of $40 million in a project that never saw the light of day?

From the nature of the contract, it can be conveniently argued that P&ID is the party that failed in its obligation of, first, providing a gas processing facility. Nigerian government can only supply natural gas (wet gas) to an existing production facility and as such there cannot be a breach of the agreement on the part of Nigeria. This is so because Nigeria had no place to construct pipelines or transport the wet gas to.

P&ID was wrong in viewing the failure of the Nigerian government as a repudiation of the contract. In simple terms, repudiation means ‘a contracting party’s words or actions that indicate an intention not to perform the contract in the future or a threatened breach of contract.’ In this case it has not been sufficiently shown how Nigeria rejected or renounced its duty or obligation under the contract to evince an intention or indication not to perform the contract.

It appears in the circumstance, P&ID, which failed to perform its obligation by providing land for the gas processing facility in Cross River State, as agreed by the parties, is the one guilty of repudiation of the contract. P&ID’s refusal to perform the acts required by the contract releases Nigeria from its obligation under the contract.

From the facts available, the contract was not meant to succeed but to result in litigation for the benefit of P&ID and it is not farfetched to infer that there are some Nigerian collaborators to the detriment of the Nigerian State, which is what is presently playing out.


Taking all this into consideration, it is confusing on which grounds the Tribunal considered in awarding the $6.6 billion as damages to P&ID for the breach of contract, with interest at 7 per cent commencing from March 20, 2013 until payment is made. One is inclined to agree with the position of the Nigerian government that the damages claimed were not a fair and reasonable consequence of Nigeria’s breach of the agreement because P&ID never commenced building of the gas processing facility. Nigeria is also justified in faulting the measure of estimated expenses and income stream, which P&ID used to calculate the damages claimed.

It is also difficult to agree with the Queen’s Bench Division of the English Commercial Court when the court noted that the damages awarded were purely compensatory and not intended to punish the Nigerian government.

The simple poser is: What was P&ID being compensated for? It is also not convincing for the court to confirm that there were no public policy grounds on which the award should not be enforced.

From the facts available, the contract was not meant to succeed but to result in litigation for the benefit of P&ID and it is not farfetched to infer that there are some Nigerian collaborators to the detriment of the Nigerian State, which is what is presently playing out. Without mincing words, one will not hesitate to state that the contract is against public policy, which should be a vitiating factor.

It is agreed that the lean gas would have powered Nigeria’s national electric grid to deliver the much needed power generation to millions of Nigerians. However, because the contract was not meant to see the light of the day, it has become a serious burden on Nigeria and a judgment debt of $9.6 billion has been awarded against Nigeria and is currently hanging. It is safe to state that there is no detriment suffered by P&ID and no benefit enjoyed by Nigeria to justify the award of damages against Nigeria, especially to the extent that it has been.

Unless Brendan Cahill and Michael Quinn who founded Projects and Industrial Developments Ltd (P&ID) know of other hidden provisions in the agreement, it is not clear to the eyes how Nigeria became liable under the contract.

The good aspect of it is that Nigeria is a commonwealth country and our law of contract and the English Law of Contract are not radically distinct. Nigeria has lodged an appeal against the decision of the Court and one only hopes that the appellate court takes a deep look at the contractual terms before its verdict.

So, there we go. That is the P&ID case chopped up in two seconds, from my Nigerian legal perspective. As Nigeria fights tooth and nail to protect its legal standing and prove that it was not liable under the contract, let us hope that the Court of Appeal releases Nigeria from this huge and heavy burden of this P&ID (Projects And Industrial Develpments Ltd) against the Federal Republic of Nigeria debacle.

Hannatu Musawa; @hanneymusawa; www.hanneymusawa.com; www.facebook.com/hannatu.musawa; www.youtube.com/HannatuMusawa

Share this:

  • Tweet
  • Print
  • More
  • Pocket
  • Share on Tumblr

Related

Previous Post

Time To Speed Up the Ogoniland Clean-Up, By Cyril Abaku

Next Post

MIL and the Challenge of New Media Technologies, By Chido Onumah & Olunifesi Suraj

Related Posts

Trust and Confidence Building As Conditions of Good Governance, By Uddin Ifeanyi
Columns

The Policy Implications of 2021’s Low Growth Projections, By Uddin Ifeanyi

February 1, 2021
Akinwunmi Adesina: Africa’s Spotless Son, By Wole Olaoye
Columns

Iron Woman of Berlin, By Wole Olaoye

January 31, 2021
Rethinking Heroism and the Nigerian Civil Service, By Festus Adedayo
Columns

Aliko Dangote’s Costly Mess of the Libido, By Festus Adedayo

January 31, 2021
Why Lai Mohammed Must Be Fired Immediately, By Femi Aribisala
Article of Faith

Is God Invisible?, By Femi Aribisala

January 31, 2021
Religion As Africa’s Trojan Horse, By Osmund Agbo
Columns

South-East Governors: Preparing For a Post-oil and Restructured Nigeria, By Osmund Agbo

January 30, 2021
People Deserve The Coach They Hire, By Owei Lakemfa
Columns

Again, Entombed Humans Triumph Over Death, By Owei Lakemfa

January 30, 2021
Next Post
Biafrans and Onumah’s ‘Prophecies’, By Ibrahim Ramalan

MIL and the Challenge of New Media Technologies, By Chido Onumah & Olunifesi Suraj

Worthy Inheritors of the Looting Game, By Zainab Suleiman Okino

Time To Review the Vice President and Deputy Governor Positions, By Zainab Suleiman Okino

Editorial

  • EDITORIAL: The Urgency of Tackling Nigeria’s Second Wave of COVID-19

    EDITORIAL: The Urgency of Tackling Nigeria’s Second Wave of COVID-19

  • EDITORIAL: Unearthing the Cogent Lessons In the NESG-CBN Economic Policy Imbroglio

    EDITORIAL: Unearthing the Cogent Lessons In the NESG-CBN Economic Policy Imbroglio

  • EDITORIAL: COVID-19: Calling On Nigeria’s Billionaires and Religious Leaders To Step Up

    EDITORIAL: COVID-19: Calling On Nigeria’s Billionaires and Religious Leaders To Step Up

  • EDITORIAL: Bichi Must Go; Buhari Must Halt Slide Into Despotism

    EDITORIAL: Bichi Must Go; Buhari Must Halt Slide Into Despotism

  • EDITORIAL: The Flaws In Governor Emefiele’s Five-Year Plan For Central Bank of Nigeria

    EDITORIAL: The Flaws In Governor Emefiele’s Five-Year Plan For Central Bank of Nigeria

Subscribe to our Opinion articles via email

Enter your email address to get notifications of new opinion articles as they are published.

Join 526,539 other subscribers

Most Popular

  • The Bad Consequences and Dangers of Adultery and Fornication (Zina) In Islam, By Murtadha Gusau
    The Bad Consequences and Dangers of Adultery and Fornication (Zina) In Islam, By Murtadha Gusau
  • The Qualities of a Good Leader In Islam, By Murtadha Gusau
    The Qualities of a Good Leader In Islam, By Murtadha Gusau
  • World Teachers Day and The Position of Teachers In Islam, By Murtadha Gusau
    World Teachers Day and The Position of Teachers In Islam, By Murtadha Gusau
  • The Women Prohibited For Men To Marry In Islam, By Murtadha Gusau
    The Women Prohibited For Men To Marry In Islam, By Murtadha Gusau
  • Islam and the Conditions For Marrying More Than One Wife, By Murtadha Gusau
    Islam and the Conditions For Marrying More Than One Wife, By Murtadha Gusau
  • Slaughtering Animal for the New Born Baby (Al-Aqiqah) In Islam, By Murtadha Gusau
    Slaughtering Animal for the New Born Baby (Al-Aqiqah) In Islam, By Murtadha Gusau
  • You Will Be Held Responsible On What Happened To Your Children!, By Murtadha Gusau
    You Will Be Held Responsible On What Happened To Your Children!, By Murtadha Gusau

Like us on Facebook

Like us on Facebook

Podcasts

Advertisement

Advertisement

Advertisement

  • Main News
  • About Us
  • Contact

© 2022 JNews - Premium WordPress news & magazine theme by Jegtheme.

No Result
View All Result
  • Home
  • Democracy and Governance
    • Bámidélé Upfront
    • Jibrin Ibrahim
    • Okey Ndibe
  • Economy
    • Ifeanyi Uddin
  • Issues of the Day
    • Adeolu Ademoyo
    • Aribisala on Tuesday
    • Dele Agekameh
    • Pius Adesanmi
  • Politics
    • Ebeneezer Obadare
    • Femi Fani-Kayode
    • Garba Shehu
    • Hannatu Musawa
    • Zainab Suleiman Okino
  • Guest Columns
  • Faith
    • Article of Faith
    • Sunday Ogidigbo
    • Friday Sermon
    • Elevated Sight

© 2022 JNews - Premium WordPress news & magazine theme by Jegtheme.

This website uses cookies. By continuing to use this website you are giving consent to cookies being used. Visit our Privacy and Cookie Policy.