The U.S. Court of Appeals for the District of Columbia ruled against Nigeria’s claim of sovereign immunity, allowing Chinese investors to proceed with efforts to seize Nigeria’s assets in the United States.
The case, which originated from a contractual dispute between Nigeria and the Chinese firm Zhongshan, has now escalated into an international legal battle with major financial stakes.
The conflict began in 2007 when the Ogun State government entered into an agreement with Chinese executives from Zhongshan to develop a free trade zone. However, after years of progress, the deal fell apart when former Ogun State Governor, Ibikunle Amosun, abruptly terminated the contract.
According to court filings, this termination was followed by harsh actions, including the wrongful detention and mistreatment of Chinese workers by Nigerian police. The Chinese expatriates were reportedly held without charges and subjected to torture.
In 2021, a court in the United Kingdom ruled in favor of the Chinese investors, awarding them $55.6 million in compensation and $75,000 in moral damages. Nigeria, however, failed to comply with the UK court’s judgment, prompting Zhongshan to seek enforcement of the ruling in U.S. courts.
As the case moved to the United States, Nigeria argued that it could not be held liable due to its sovereign immunity, a legal principle that shields nations from lawsuits in foreign courts.
However, the U.S. District Court for the District of Columbia rejected this argument. The court pointed out that Nigeria, being a signatory to the New York Convention—a treaty that governs international arbitration—was bound by the agreement to participate in arbitration, even if it involved a sovereign state.
Following Nigeria’s appeal, a panel of three judges in the U.S. Court of Appeals examined the case. Two of the three judges, Patricia Millett and Michelle Childs, upheld the earlier ruling, stating that Nigeria could not claim immunity in this instance.
The court reasoned that Nigeria had entered into a commercial relationship with Zhongshan under the Investment Treaty signed in 2001 between Nigeria and China. This treaty was designed to encourage investment and trade through the establishment of free trade zones.
“Whether the arbitration exception applies in this case therefore turns on whether a treaty—specifically, the New York Convention—governs the Final Award,” Judge Millett and Judge Childs explained. “We hold that it does because the Final Award arose from (1) a legal relationship, (2) that is considered as commercial, and (3) is between persons.”
The lone dissenting judge, Greg Katsas, expressed concerns over the decision, arguing that Nigeria should retain its sovereign immunity due to the nature of the targeted assets, which are under the protection of the country’s sovereignty.
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With the ruling in place, the case is now expected to return to the lower court, which has already indicated that it will allow the Chinese investors to proceed with actions to seize Nigerian assets within U.S. jurisdictions. Nigeria holds significant assets in the United States, including funds derived from its crude oil sales, deposited with institutions such as JP Morgan.
Meanwhile, the legal pressure on Nigeria has also spread to Europe. In recent days, Chinese investors successfully obtained court orders in France, allowing them to target Nigerian assets in European countries. Reports have surfaced that they are actively pursuing the seizure of Nigerian private jets across multiple jurisdictions in Europe.
In response, both the Nigerian federal government and Ogun State authorities issued statements condemning the actions of the Chinese investors, labeling them as fraudulent. Officials also compared the case to the infamous P&ID dispute, where Nigeria faced similar challenges over arbitration awards. Both governments affirmed that efforts were underway to overturn the rulings in France, though they did not directly address the U.S. court decision.
