by Seun Ogun

In recent news, reports have surfaced regarding the seizure of three presidential jets in France through a court order. This development follows a series of seizures of Nigerian assets abroad. This work seeks to establish whether Nigeria, which is not a party to a contract, can be sued.

Genesis of the Contract

In 2013, under the governance of his excellency Ibikunle Amosun, the Ogun State government entered into a contract known as the Joint Venture Agreement (“the JVA”) with a company known as Zhongfu International Investment (NIG) FZE (“Zhongfu”) in order to develop the Ogun Guangdong Free Trade Zone in Ogun State.

Recall that in 2001, a Bilateral Investment Treaty was established between China and Nigeria. Under this treaty, both countries committed to protecting each other’s investors and were granted the right to resolve any disputes through arbitration.

The series of events began in 2016 following significant payments in the millions of dollars for registration, renewal, and other fees stipulated in the NAPEZ Act (Free Zone Tariff and Charges Order).

However, a dispute between the two entities arose, leading the Ogun State government to terminate the contract, subsequently resulting in the breach of the joint venture agreement between Nigeria and China.

In fact, as reported by Templers law, this dispute resulted in threats by officials of OGSG and NEPZA to make Zhongfu leave the Zone. One of Zhongfu’s personnel, Mr. Wenxiao Zhao, was arrested, beaten, and detained for 10 days before being released on bail. Another Zhongfu personnel, Dr. Han, was also sought by the police but was never arrested. Both Mr. Zhao and Dr. Han fled Nigeria in October 2016 and never returned.

Since this act was done in contravention of human rights as contained in Sections 36 and 35 CFRN 1999 as amended, and also Article 9 of the International Covenant on Civil and Political Rights (ICCPR), as well as a breach of contract as provided by various acts, statutes, and treaties, Zhongfu brought an action against the Ogun State government (OGSG), the police, and NEPZA on August 30, 2018.

The grounds in their claim are contained in Articles 2, 3, and 4 of the China-Nigeria Bilateral Investment Treaty (BIT).

By virtue of Article 2 of the China-Nigeria Bilateral Investment Treaty (BIT), it provides to the effect that “Each Contracting Party shall promote economic cooperation and encourage investors of the other Contracting Party to make investments in its territory and admit such investments in accordance with its laws and regulations as well as provide protection and shall not take any unreasonable or discriminatory measures against the management, maintenance, use, enjoyment, and disposal of the investments by the investors of the other Contracting Party…”

In the same vein, Article 3(1)(2)(3) of the same treaty provides that “Investments of investors of each Contracting Party shall at all times be accorded fair and equitable treatment in the territory of the other Contracting Party. Without prejudice to its laws and regulations, each Contracting Party shall accord to investments and activities associated with such investments by the investors of the other Contracting Party treatment not less favorable than that accorded to the investments and associated activities by its own investors. Neither Contracting Party shall subject investments and activities associated with such investments by the investors of the other Contracting Party to treatment less favorable than that accorded to the investments and associated activities by the investors of any third State.”

In light of this, Article 3(4) provides that the provisions of Paragraph 1 to 3 of the Article shall not be construed so as to oblige one Contracting Party to extend to the investors of the other Contracting Party the benefit of any treatment, preference, or privilege by virtue of:

(a) any customs union, free trade zone, economic union, and any international agreement resulting in such customs union, free trade zone, or economic union; and

(b) any international agreement or arrangement relating wholly or mainly to taxations;

What the above provision means is that if one contracting state is part of regional trade agreements like the EU, NAFTA, etc., which provide preferential treatment to investors/goods from member states, it is not required to offer the same favorable treatment to investors from the other contracting state under this BIT. Keep in mind that tax treaties or agreements between the contracting states and third countries will supersede this BIT. The contracting states are not required to provide national/MFN treatment on tax matters to investors from the other state.”

Lastly, Article 4 of the China-Nigeria Bilateral Investment Treaty (BIT) provides that “Neither Contracting Party shall expropriate, nationalize, or take similar measures (hereinafter referred to as ‘expropriation’) against the investments of investors of the other Contracting Party in its territory unless the following conditions are met: (a) for the public interests; (b) under domestic legal procedure; (c) without discrimination; (d) against fair compensation.”

It is now clear, audible to the deaf, and visible to the blind that Ogun State breached all these express terms.

However, the bone of contention now is how can a country (Nigeria), who is not a party to the contract, be sued? Is Nigeria not immune as a sovereign state from being sued?

Legal Grounds Why Nigeria Can Be Sued by Zhongfu
Against this background, I shall establish various legal provisions which succinctly address the subject matter but before going a little further, there are some issues to be clarified

That the NEPZA engaged in the use of threats and other unlawful means alongside the police to make Zhongfu leave the Zone and in fact arrested and beat one of the personnel of Zhongfu.
That the said NEPZA is recognized as an agency of the federal government as established in Section 18(2) of the NEPZA Act.
That the tort is contrary to Section 35(1) of the Constitution of the Federal Republic of Nigeria, Article 3 of the UDHR, and in fact, Article 9 of the International Covenant on Civil and Political Rights (ICCPR), all of which provide to the effect that no one shall be subjected to arbitrary arrest, detention, or exile.
That the act of these agencies is contrary to Section 42 of the Constitution of the Federal Republic of Nigeria, which is further reinforced in Articles 2, 3, and 4 of the China-Nigeria Bilateral Investment Treaty (BIT) (Supra).
That there is a written agreement to resolve all issues via international arbitration under the NEPZA Act and Article 8 of the BIT (Supra).
As a general rule, a person who is not a party to a contract cannot sue or be sued, as established in Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847. This is known as the common law doctrine of privity of contract. Therefore, a contract cannot confer benefit or detriment on any person unless they are a party to it.

In Nigeria, this has been established in a plethora of cases, in U.B.A. Plc. v. BTL Ind. Ltd. (2004) 18 NWLR (Pt. 904) 180 where it was held that a contract affects the parties to it and cannot be enforced by or against a person who is not a party, even if the contract is made for their benefit and purports to give them the right to sue or to make them liable upon it. The fact that a person who is a stranger to the consideration of a contract stands in such a near relationship to the party from whom the consideration does not entitle them to sue upon the contract. See also N.N.P.C. v. Fung Tai Eng. Co. Ltd. (2023) 15 NWLR (Pt. 1906) 117.

However, there are several exceptions to this principle. In the current case, the exception pertaining to the agency is applicable. In Eyiboh v. Mujaddadi (2022) 7 NWLR (Pt. 1830) 381, the court gave a life meaning to what agency is as “a relationship that arises when a person (a principal) manifests consent to another (an agent) that he (the agent) would act on the principal’s behalf, subject to the principal’s control, and the agent equally manifests consent to do so.”

Similarly, the same court defined the agency of a state in Bakari v. Ogundipe (2021) 5 NWLR (Pt. 1768) 1 as an executive or regulatory body of a state, such as state offices, departments, divisions, bureaus, boards, and commissions.

Therefore, it’s well-settled that NEPZA and the police being sued in this case are agencies of the federal government, both established under statutory and judicial authorities.

Therefore, where there is a tortious act by an agent, the master will be vicariously liable for the action of agent as held in the case of “Essang v. Aureol Plast. Ltd. (2002) 17 NWLR (Pt. 795) 155.

Where it was held that an agent acting on behalf of a known and disclosed principal incurs no liability. This is because the act of the agent is the act of the principal. The common law rule is expressed in the Latin maxim thus: “Qui facit per alium facit per se ipsam facere vindetur” which means “he who does an act through another is deemed in law to do it himself’.

Therefore, where an action was brought by Zhongfu against the Police and NEPZA, Nigeria is vicariously liable for their wrongful acts.

In fact, under international law, organs, other bodies, and states like Ogun State are not recognized rather, the country is, and as such, that country can be sued.

This is covered by Articles 4, and 5 of the International Law Commission (ILC).

Pursuant to Article 4(1), “the conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial, or any other functions, whatever position it holds in the organisation of the State, and whatever its character as an organ of the central government or of a territorial unit of the State.”

In the same vein, Article 5 of the ILC Articles provides that “the conduct of a person or entity which is not an organ of the State under Article 4 but which is empowered by the law of that State to exercise elements of governmental authority shall be considered an act of the State under international law, provided the person or entity is acting in that capacity in the particular instance.”

It cannot be overemphasized that Article 8 of the China-Nigeria Bilateral Investment Treaty (BIT) makes provisions for the resolution of disputes through international arbitration. This is also contained in the NEPZA Act.

Therefore, we arrive at the conclusion that Nigeria can be sued since the Ogun state, the Police and NEPZA directly or indirectly exercise executive power, and other functions covered by Article 4 and 5 of International Law Commission (ILC).

Can Nigeria Claim Immunity as a sovereign state to any suit?
To this imperative question, my answer is negative.

It’s well-settled law that if a state has agreed in writing to arbitration as a resolution of disputes, it cannot invoke immunity as a means of reneging on such agreements, as provided in Article 17 of UNCJIS and Article 12 of ECSI, respectively. Other provisions that bar Nigeria from invoking immunity include Article 7, 10(3), 12, and 15(1) of the UNCJIS.

By virtue of Article 17 of UNCJIS (United Nations Convention on Jurisdictional Immunities of States and Their Property), if a State enters into an agreement in writing with a foreign natural or juridical person to submit to arbitration differences relating to a commercial transaction, that State cannot invoke immunity from jurisdiction before a court of another State which is otherwise competent in a proceeding which relates to:

(a) the validity, interpretation, or application of the arbitration agreement; (b) the arbitration procedure; or (c) the confirmation or the setting aside of the award, unless the arbitration agreement otherwise provides.

This was upheld in the case of “Buttet v. Embassy of France in the United Kingdom suit number: 2204921/2012 where the court held that France cannot claim Immunity.

Therefore, it has become clear that Nigeria cannot renege nor claim sovereign immunity from the above statutory authority. n the BIT agreement.

The continuous failure of Nigeria to comply with such provisions will make the case more fatal at the end.

In my humble opinion, I therefore advise Nigeria to comply by paying the required fee and, if possible, negotiate the period of payment in order to avoid the public disgrace.

Seun Ogun is a Law undergraduate at Olabisi Onabanjo University, Ago-Iwoye. He is keen to analyze the position of the law and give advice on contractual cases, contentious tech issues, and environmental issues.

He can be reached via email at [email protected], or on WhatsApp at +2349030730159.