China loan: ‘Waiver of immunity clause standard in contracts’ ─Attorney

*Waiver of sovereign immunity a standard provision, not unusual in commercial transactions ─Mike Igbokwe, SAN

*$400million facility to fund Nigeria National Information and Communication Technology Infrastructure Backbone Phase II Project

Alexander Davis | ConsumerConnect

Following the heated arguments and criticisms generated by suspected controversial clauses contained in a loan facility that China, an Asian economic giant, has offered Nigeria, Mr. Mike Igbokwe, a Senior Advocate of Nigeria (SAN), has said that a contentious clause in a $400 million commercial loan agreement between the two economies is standard in contracts.

The Federal Ministry of Finance, Budget and National Planning had signed the loan agreement on behalf of Nigeria and the Export-Import Bank of China September 5, 2018.

The facility is expected to fund the Nigeria National Information and Communication Technology Infrastructure Backbone Phase II Project.

The National Assembly (NASS) recently stoked controversy when it suggested that Article 8(1) of the contract “surrendered Nigeria’s sovereignty to China”, report said.

However, Mr. Abubakar Malami (SAN), Honourable Minister for Justice, and his counterpart, Rt. Hon. Rotimi Amaechi, Minister for Transportation, who argued otherwise, explaining that the clause was only a form of assurance that Nigeria would not default in repaying the loan.

The Nation report indicated that Mr. Igbokwe agreed to the government’s position.

The Senior Advocate of Nigeria said: “The Clause 8(1) of the commercial loan agreement, stating that ‘The borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets,’ brings to light at least two principles in international law or international commercial transaction.

“In international law, a country like Nigeria has sovereign immunity against actions and enforcement of judgments on its assets, including military and diplomatic, but not in respect of certain areas, like trading or commerce.

“However, it has the right and power to waive such sovereign immunity by agreement or consent.”

According to him, “by that clause, Nigeria has waived its sovereign immunity in respect of the enforcement on itself and its assets, of any arbitral award that may be made against it in a dispute arising from the contract, but not in respect of its military and diplomatic assets.”

The attorney further explained that means should there be any arbitral award against Nigeria in any dispute between it and China arising from the agreement, “Nigeria will not raise sovereign immunity as a defence to the enforcement of the arbitral award against it and its assets other than military and diplomatic assets and will not revoke that waiver.

“The other principle of international law here is ‘pacta sunt servanda’, meaning that an agreement voluntarily entered into must be complied with.

“It implies that Nigeria is bound by the waiver of its sovereign immunity, if China decides to execute any arbitral award against Nigeria and on Nigerian assets other than military and diplomatic assets.

He stated that “the Attorney-General of the Federation was right in saying that the waiver of sovereign immunity by a country was standard provision because such waivers are not unusual in commercial transactions.

“The other state party usually insists on such a waiver to ensure that such sovereign immunity would not be used by the other state party as a defence to prevent it from either taking a legal action against it or levying execution of any judgment or arbitral award against it or the assets of the liable state party.”

Kindly Share This Story