Mishcon de Reya‘s hard-fought victory for Nigeria in Nigeria v P&ID saw the firm take home Commercial Team of the Year at the Legal Business Awards in September. The team assisted Nigeria in challenging a $6.6bn arbitral award made in favour of BVI-incorporated shell company Process & Industrial Developments Limited (P&ID) in 2017. With interest accruing at $1m a day, the team sought to overturn the award on the basis of fraud.
But, when the firm was instructed in 2019, Nigeria was almost three years past the deadline to bring the set-aside challenge. Before the team could even begin to present its fraud case (the result of a massive global investigation effort), it had to fight to extend the deadline – and achieved an unprecedented extension, granted in July 2020.
The team’s hard work paid off. On 23 October 2023, judgment was handed down in Nigeria’s favour by Mr Justice Knowles. It was found that P&ID had obtained the award, now worth over $11bn, by fraud.
But, when the firm was instructed in October 2019, Nigeria was almost three years past the deadline to bring the set-aside challenge. Before the team could even begin its global fraud investigation, it had to fight to extend the deadline – and achieved an unprecedented extension, granted in July 2020.
The team’s hard work paid off. On 23 October 2023 judgment was handed down in Nigeria’s favour by Mr Justice Knowles. It was found that P&ID had obtained the award, now worth over $11bn, by fraud.
Shaistah Akhtar, partner in Mishcons’ dispute resolution group, spoke to LB about getting the call from Nigeria, the biggest hurdles the team overcame, and the pressures of a case with national and international repercussions.
How did the instruction come about and what led to your involvement?
We were approached on behalf of the Nigerian government who had had a series of arbitral awards made against them and, in 2019, enforcement action had started in the English court. At that point, we were asked to step in and advise.
There was a general suspicion that there was something very wrong with the underlying contract and the arbitration. There was already a criminal investigation, which had started uncovering some evidence. We got to work pretty quickly. The die was almost cast at that point. It’s very difficult to challenge these awards. The statistics speak for themselves – the latest Commercial Court figures show only 4% of these cases succeed. And if you’re outside the statutory time limit for bringing a challenge, as we were, there’s an even bigger hurdle to overcome.
With implications on a national scale, did the pressure start to mount?
There was a two-pronged pressure: the award itself, but also a $200 million security payment which had to be paid into court in 60 days. The clock was ticking, so there needed to be some urgent action taken.
We dealt with this by offering a guarantee instead of a payment which was more practical.
The award itself was incurring interest at $1 million a day. At one point our opponents applied to double the security amount to $400 million. They had calculated that by the time it got to trial, they would require another $200 million. Within a year of taking on the case, we had the security requirement removed altogether.
The award itself was the equivalent of around a third of the country’s foreign reserves, multiple times its education, health and security budgets. If you can imagine, what amounted to an $11-billion liability affected everything on an economic level.
On the face of it, it looked like a tall order. The deadline for challenging the award itself was 28 days and, at this point, we were almost three years out of time.
But the client was determined to fight. The more evidence emerged, the more we saw the injustice of it. This award should never have been made.
It was a huge relief for the client – the end result – in terms of removing that liability and pressure from a country of 200 million people. People who, like the rest of the world, are dealing with the economic impact of COVID and other domestic pressures.
What was a particular challenge you faced during the case, and how did you overcome it?
We’ve had a lot of coverage on the final judgment and of course that’s important. But there were a number of hurdles that we overcame as we went along. The removal of the security was a big step forward. It was a reflection of the Court’s view of the strength of our case: once we got the extension of time, there was no need for the government to have this money tied up for the next two or three years. The biggest hurdle in my view was obtaining the extension of time to challenge the award. In terms of the length of time you can bring these challenges outside of the statutory deadline, historically the authorities have allowed a few weeks or couple of months – whereas in our case we were granted an unprecedented extension of almost three years.
This was a massive step forward because it had never been done before and according to commentary in the legal press at the time no one, based on the statistics, thought we would be successful.
The Cranston judgment opened the gate to the rest of the challenge, which then ensured that justice was delivered. If the judge had decided that, for policy reasons, awards are final, it was too late, and we hadn’t demonstrated that there was an exceptional case here, that would have been the end of it.
Was there a key moment in the case that stood out for you?
One of the key features of a fraud case is that people assume that there is one key piece of evidence that uncovers everything. It’s never that simple.
There was a long process of investigation. We had to go round the world getting disclosure orders, against banks, against third parties.
We had about 15 million documents, just from our side. We sifted through that to find evidence, but there was also evidence that we procured from other sources and evidence that was provided by our opponents. It was a long process of investigation, probing and then piecing it all together to present a picture that tells the judge the story.
Were there any surprises during the trial?
One of the shocking things about the case which emerged was that, during the historic arbitration process, our opponents had obtained our clients’ internal, privileged documents to see what advice was being given and the government’s internal strategy at the time. There was no proper explanation for this or any admission that any bribes had been paid to procure this confidential and privileged material.
So that meant that the arbitration was a fundamentally unfair process, and the award was corruptly obtained. At one point in the trial, it was said that the Court should not: ‘apply the
rules of Whitehall to what happens in Abuja’. The justifications, the defence, the arguments that were being put forward were pretty extraordinary.
One of the mantras that the other side adopted throughout this trial was: ‘that’s just what happens in Nigeria’. This quite rightly did not convince the Judge.
What did your team in particular bring to the case?
We were all aware that it was a big hill to climb. It was very much a team effort. We had an excellent counsel team and a great team at Mishcon working around the clock, including during lockdown.
Sir Ross Cranston was brought out of retirement to hear the extension application in July 2020. The hearing took place remotely, at the height of lockdown. The Judge found that there was good reason based on the strong prima facie evidence that this case should go forward and the deadline for challenging the award should be extended. In the final judgment, Mr. Justice Knowles acknowledged that Sir Ross Cranston had been courageous in making that decision.
I think it’s very easy to look at a difficult case and find all the reasons why you can’t do something. It’s very easy to tell a client all the reasons they might lose. But clients don’t go to lawyers to hear those things, they want to find a solution and a way through. I never saw this as impossible. In this case, there was clear evidence that bribes had been paid and that a massive fraud had been practised on the client.
How did it feel to win the award for commercial litigation team of the year for this case?
We are very honoured to receive this award, for Mishcon as a firm and as a legal team, but I also want to give credit to the counsel team. Mark Howard KC, in particular, did a stellar job. He led the advocacy at trial, supported by a very able team. I don’t think any other advocate could have done the job he did – it was a masterclass in cross examination, which contributed to the end result massively.
I think it’s a credit to the English justice system that the right result was arrived at. A lot of people deserve credit for this: the team of lawyers who fought very hard and found a way through; but also the English judges who made the right calls. There was a fair process throughout, everyone got a fair hearing, and at the end of it, the right result was arrived at.
What did you – and what can we – take away from this case?
The Nigerian government, through successive administrations, was determined to fight. They really put their support behind the legal process and stayed the course until the very end.
They were determined to set a precedent for other fraudsters. The case will benefit generations to come, not only for Africa’s largest economy, but a number of other developing countries who followed the case to see what would happen. It makes it worthwhile when our work has a real-world impact.