Court Grants Chinese Investor Order to Seize Nigerian Government Properties in the UK

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A significant legal development has unfolded as a Chinese investor, Zhongshan Fucheng Industrial Investment, has been granted permission to seize two Nigerian properties in the United Kingdom. This decision follows an order allowing the investor to enforce a $70 million investment treaty award against Nigeria.


The properties, located in Liverpool, are valued at approximately £1.7 million combined. They were targeted after the investor secured a final charging order from Master Sullivan in the Commercial Court in London on June 14, 2024. This order comes in light of the properties' conversion to commercial use, outside Nigeria’s diplomatic or consular activities.


The legal battle stems from a joint venture agreement made in 2013 between Zhongshan and Ogun State in Nigeria to develop a free trade zone near Lagos. Zhongshan's subsidiary held a 60% stake in the project until Ogun State terminated its involvement in 2016. Following this, a London-seated UNCITRAL tribunal ruled in 2021 that Nigeria had breached the China-Nigeria bilateral investment treaty, ordering Nigeria to pay $55.6 million plus interest and costs.


Nigeria initially challenged the arbitration award on jurisdictional grounds, claiming the arbitration clause in the bilateral investment treaty (BIT) was invalid. However, Nigeria withdrew this challenge before a hearing on Zhongshan’s application for security and security for costs was about to take place. In December 2021, Mrs. Justice Cockerill granted Zhongshan an ex parte enforcement order, which Nigeria did not contest within the 74-day legal deadline.


In July 2023, the Court of Appeal in London upheld Cockerill's provisional determination, confirming that state immunity did not apply, and thus, Nigeria could not bring a late challenge to the enforcement order. Subsequently, Zhongshan obtained interim charging orders in June and August over the two Liverpool properties, which are leased to residential tenants, affirming that no consular activities were occurring on the premises.


Timi Balogun of Squire Patton Boggs, representing Nigeria, has expressed disagreement with Master Sullivan’s decision, arguing that it oversimplifies complex international law issues regarding state immunity and the management of foreign state properties. Nigeria plans to appeal the decision to allow higher courts to consider these significant legal questions.


Zhongshan has also pursued enforcement actions in other jurisdictions, including the United States, Belgium, Quebec, and the British Virgin Islands. In Washington, DC, the district court dismissed Nigeria’s motion to dismiss on sovereign immunity grounds, a decision currently stayed pending Nigeria's appeal. In Belgium and Quebec, Zhongshan seeks the attachment of Nigerian assets, including a private jet. Additionally, Zhongshan has secured an interim attachment over a £20 million liability owed to Nigeria by Process & Industrial Development (P&ID) in the British Virgin Islands.


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