U.S. District Judge Paul A. Engelmayer signed off on the ex parte petition on Thursday, allowing Nigeria to seek discovery from VR Advisory Services Ltd., which acquired a 25% stake in Process and Industrial Developments Ltd. in 2018, and related entities and individuals.
Nigeria told the court in its May 12 petition that it was trying to obtain due diligence the asset manager had performed prior to VR’s acquisition of the shares. This could shed light on any bribes P&ID had paid to Nigerian officials to secure a lucrative gas supply and processing agreement, which later led to the massive arbitral award.
Nigeria claims P&ID never had the technical capability or financial resources to perform its obligations under the agreement. In fact, the firm was only able to secure the contract by paying hundreds of thousands of dollars in bribes to Nigerian government officials “who unlawfully commandeered the approval process for the [contract], and then abdicated their responsibility by declining to scrutinize P&ID or the [contract] despite the massive exposure to their country and government,” according to the petition.
The order from Judge Engelmayer was filed immediately after P&ID had urged the court to give it and the targets of the petition time to file a response in the litigation before deciding on the petition. The engineering firm also urged the judge to consider requiring Nigeria to notify the U.S. Department of Justice, saying it appeared as though the country was trying to sidestep a mutual legal assistance treaty it had signed with the U.S. that addresses discovery in support of criminal investigations.
The country filed its petition under Section 1782 of the U.S. Code, which allows courts to provide assistance with relation to disputes before a “foreign or international tribunal.”
The petition followed a similar bid that was granted earlier this month, in which the country was looking to subpoena 10 banks for information related to the transfer of the bribes.
P&ID has slammed both petitions. On Friday, the company argued that Nigeria “is barking up the wrong tree.”
“Their investigation, which is by all appearances a sham, relates to events that allegedly occurred years before VR had any involvement with [Process and Industrial Developments],” the company added. “The fact that they would seek discovery from VR is a pretty good sign that they have found no credible evidence to back up their claims from parties who did have contemporaneous knowledge of events.”
The underlying dispute relates to a gas supply and processing agreement between P&ID and Nigeria under which the company agreed to build a gas processing facility in the Niger Delta. In exchange, Nigeria would supply the facility with “wet” gas, which would then be converted at the facility into “lean” gas, which is used to generate electricity.
But the project never got off the ground. Instead, it was abandoned after Nigeria was unable to obtain the wet gas, and the facility was never built.
P&ID then initiated arbitration in London, and the tribunal found Nigeria had violated its agreement with the engineering firm. Nigeria applied to have the award set aside in London, at the same time seeking the court’s guidance on the actual seat of arbitration because there was confusion on this issue. Typically, only courts at the seat can set aside an arbitral award.
The English court denied the set-aside petition because it was filed too late. The judge refused to extend the time limit for the proceeding, saying that, in any event, the purported grounds for setting aside the award had “no merit.” The court did not address the seat issue. Nigeria subsequently took the matter to one of its own courts, which set aside the liability award.
But the arbitration continued, and the tribunal awarded P&ID approximately $6.6 billion in damages plus interest. The award is said to be worth nearly $10 billion now. An English court ruled the award was enforceable last year.
Nigeria and its attorney general, Abubakar Malami, are represented by Alexander D. Pencu, Christopher J. Major and Austin D. Kim of Meister Seelig & Fein LLP.
Process and Industrial Developments is represented by Michael S. Kim and Josef M. Klazen of Kobre & Kim.
Counsel information for VR Advisory Services was not immediately available Friday.
The case is The Federal Republic of Nigeria et al. v. VR Advisory Services Ltd. et al., case number 1:20-mc-00209, in the U.S. District Court for the Southern District of New York.
–Editing by Jay Jackson Jr.