The Second Circuit, a United States Court of Appeal has revived Nigeria’s bid for discovery aimed at propping up bribery allegations relating to a nearly $10 billion arbitral award, ruling that a lower court wrongly found that the country seemed to be trying to avoid US Department of Justice scrutiny in the Process and Industrial Developments Limited (P&ID) case.
The appeals court vacated US District Judge, Paul A. Engelmayer’s late 2020 decision denying Nigeria’s petition to subpoena VR Advisory Services Limited for information the country hopes would bolster criminal proceedings in Nigeria.
According to New York-based Law360.com, the panel then remanded the case, saying Judge Engelmayer had improperly analysed whether the country should have gone through its mutual legal assistance treaty with the US before turning to a US foreign discovery statute.
VR Advisory is a Manhattan asset manager that acquired a 25 per cent stake in P&ID in 2018.
Nigeria had accused P & ID of paying bribes to secure a lucrative government contract that led to the arbitral award, said to be worth more than $10 billion with interest.
Judge Engelmayer had concluded in his decision that Nigeria’s petition appeared to be an attempt to avoid US DOJ scrutiny of its request. He wrote that Nigeria hadn’t given a good reason why it had opted to use Section 1782 of the US Code, which authorises courts to order discovery for certain foreign proceedings, rather than a mutual legal assistance treaty for criminal matters, under which the DOJ would decide whether to approve the request.
But the Second Circuit agreed with Nigeria that the judge had, through his opinion, “effectively erected an impermissible ‘extra-statutory barrier’ to discovery,” according to the decision.
The mutual legal assistance treaty in question expands access for Nigeria and the US to criminal evidence within their borders, and it specifically states that the assistance it provides, “shall not prevent or restrict” either of the two countries from granting assistance under other agreements or laws, the panel wrote.
“To be sure, parts of the United States-Nigeria MLAT do impose limits on the assistance that the Department of Justice or Nigerian attorney general will provide in response to an MLAT request,” according to the decision, which provides as an example a section of the treaty authorizing the relevant authorities to deny certain requests, such as those relating to political offenses.
“But reading those limiting provisions together with Article ’s rule of construction, it is clear that they are intended only as internal limits applicable to MLAT requests, not as restrictions on proof-gathering means external to the treaty,” the panel added.
The judges later noted that it is, “hardly surprising” that there would be greater limits on information available under the treaty since it obligates the DOJ to assist the Nigerian authorities in their search for information.
The appeals court said neither the US Supreme Court nor any federal appellate court had previously
considered whether a foreign sovereign that has a mutual legal assistance treaty with the U.S. circumvents that treaty by filing a Section 1782 application in the district court.
Moving on to Judge Engelmayer’s conclusion that it would be “improper” for Nigeria to use the materials being sought in a related proceeding in England focusing on the corruption allegations, the panel agreed with Nigeria that this was an error since the English proceedings clearly qualify as a “proceeding in a foreign or international tribunal” within the meaning of Section 1782.
Counsel for VR Advisory declined to comment. Counsel for Nigeria did not immediately respond to a request for comment.
In its petition, Nigeria said it was seeking information that would aid its prosecution of former government officials who allegedly accepted the bribes from P & ID in exchange for the contract for a lucrative gas supply and processing agreement, which later led to the massive arbitral award.
The dispute between the parties has lasted for nearly a decade, arising out of a contract P & ID signed with Nigeria’s Ministry of Petroleum Resources in 2010. Under the pact, Nigeria had agreed to supply the company with natural gas for a gas processing facility that was to be built on Nigerian coastland with the goal of resolving the country’s growing electricity crisis.
But the project never materialised, falling apart after the government failed to uphold its end of the bargain.
Process and Industrial Developments took the dispute to arbitration in 2012, and the tribunal concluded that Nigeria was liable for breaching the agreement. It awarded the company $6.6 billion in early 2017, an amount that had ballooned to more than $10 billion with interest as of early 2021.
In recent years, however, Nigeria has been pushing courts in the United Kingdom to set aside the award on the basis of recently uncovered evidence of alleged fraud. The country argues the facility would not have been built anyway, since P&ID lacked the infrastructure or ability to perform under the deal, and that the contract had been obtained through bribery.
It has also accused the company of building its case before the arbitral tribunal on fabricated evidence and perjured testimony from its co-founder Michael Quinn, “a notorious music promoter and weapons dealer,” according to Nigeria.
A UK court is expected to hold a trial on these allegations in early 2023.
P&ID, for its part, has strenuously objected to any allegations of wrongdoing, calling criminal investigations and prosecutions in Nigeria “part of an illegitimate and abusive campaign designed to evade a politically damaging commercial debt.”
Senior Circuit Judge Gerard E. Lynch and Circuit Judges Susan L. Carney and Richard J. Sullivan sat on the panel for the Second Circuit.
VR Advisory was represented by Michael S. Kim, Zachary Rosenbaum, Josef M. Klazen and Darryl Stein of Kobre & Kim. On the other hand, Nigeria was represented by Alexander D. Pencu, Christopher J. Major and Austin D. Kim of Meister Seelig & Fein LLP.