The Nigerian Perspective
THE AUTHORS:
Joseph Siyaidon, Team Lead at Stren & Blan Partners
Stanley Umezuruike, Associate at Stren & Blan Partners
Michael Afuye, Associate at Stren & Blan Partners
Introduction
The pathway to a neutral and effective mechanism to resolve investment disputes and promote international investment and economic development was carved with the establishment of the International Centre for the Settlement of Investment Disputes (“ICSID”, “the Centre”) by the International Centre for Settlement of Investment Disputes Convention 1965 (“ICSID Convention”). Since its inception in 1965, ICSID has remained the premier global institution facilitating the resolution of investment disputes between states and foreign investors. As a de-localized system independent of domestic laws, the ICSID Convention establishes a comprehensive and self-contained legal framework for investor-state arbitration, with provisions addressing the institution of proceedings, jurisdiction, the arbitration procedure, post-award remedies, and the recognition and enforcement of the Award. With 166 member countries, including 50 African nations, the ICSID Convention has become a vital instrument for promoting foreign investment and economic growth on the African continent. Several investor-state arbitration proceedings involving African countries have been submitted to ICSID and its provisions on the recognition, enforcement, and execution of its Awards have ensured that parties do not just get an Award but one that is final, binding, and enforceable in any of its member states. This article explores the compliance with, recognition, and enforcement of ICSID awards including the requirements and procedure for enforcing an ICSID award in Nigeria a signatory Country (See, the United Nations Treaty Collection).
Compliance with ICSID Awards
One of the key features of the ICSID Convention is that Awards rendered in arbitrations conducted by ICSID are final and binding, meaning that the disputing parties must comply with them (Art. 53 of the ICSID Convention). The obligation to comply with an Award applies to both parties in an ICSID arbitration. This encompasses both pecuniary and non-pecuniary obligations. Generally, compliance is governed by the terms of the award. A term regarding the time, manner, or mode within which an Award is to be complied with is binding on the parties. However, the right of parties to engage in post-award settlement is not restricted by the ones originally specified in the Award.
Compliance is important under the ICSID Convention so much so that non-compliance does not just constitute a breach of the ICSID Convention (Art. 53), for a state party who is an award debtor, it may amount to a breach of its international obligations while for an investor, non-compliance may make it susceptible to a request for security for cost in subsequent arbitration proceedings. Though, ICSID does not monitor compliance with or post-award settlement of Awards, however, if an Award creditor informs ICSID of the debtor’s non-compliance, ICSID’s practice is to remind the non-complying party of the obligation to comply with the Award under Article 53(1) of the ICSID Convention and to request information on the steps that party has taken, or will take, to comply (Background Paper, Compliance with and Enforcement of ICSID Awards, Para. 100).
Recognition and Enforcement of ICSID Awards Across Africa
It is important to note that an Award rendered by ICSID is binding on the parties and not subject to an appeal or any other remedy except those provided for in the Convention which is limited to the interpretation, revision, and annulment of the Award (Art. 50, 51 & 52).
Under the Convention, a member state is under an obligation to recognize an Award as binding and enforce the pecuniary obligations within its territories as if it were a final judgment of a Court in that State (Art. 54(1)). Interestingly, the Convention does not distinguish awards against host states and investors. This is to say that where an award is against an investor, the investor’s country must recognize the award as binding. However, to facilitate the recognition and enforcement of an Award, member states are mandated to designate “the competent court” or “other authority” in the State for such purpose. In Senegal, the competent Court to seek the recognition and enforcement of an Award is the Cour d’appel de Dakar. In Liberia, it is the Supreme Court, the same as in Nigeria. The ICSID Convention embodies one of the simplest procedures for the recognition of an Award. All that is required for the Award Creditor seeking recognition and enforcement is simply to furnish a copy of the Award certified by the Secretary-General of ICSID to the competent Court or other authority which that State has designated for such purpose (Art. 54(2). Thereafter, the Court verifies the Award. Verification by the Court in this context is limited to the authenticity of the Award and not to subject it to any substantive review or condition additional to those included in the Convention. This procedure has been recognized globally by many designated competent Courts. In von Pezold and others v. Zimbabwel, the Decision of the High Court of Malaya at Kuala Lumpur, 17 February 2023 recognizing the award stated that:
“As long as the requirement of Article 54(2) of the ICSID Convention is satisfied, which the Plaintiffs have done by exhibiting a copy of the Award and the Decision on Annulment certified by the Secretary-General of the ICSID Centre, the Court is mandated to recognize the Award and Decision on Annulment pursuant to the provisions of the ICSID Act.”
Likewise, in verifying an Award, in Miminco v. Congo, Memorandum & Order of the United States District Court for the District of Colombia, 9 February 2015 the Courtheld that the Petitioners have complied with the requirements of Article 54(2) of the ICSID Conventionby filing a certified true copy of the Award. After recognition, the enforcement of the pecuniary obligation follows.
However, it is important to emphasize that the Convention specifically provides that it does not derogate from domestic laws regarding immunity from execution with respect to State assets (Article 55 of the ICSID Convention). Thus, after recognition of an ICSID Award, the enforcement of the pecuniary obligation which usually follows by way of execution against specific assets of a State to satisfy an Award against that State will depend on whether:
- Those assets are protected from execution by domestic laws on sovereign immunity, and
- There was a waiver of immunity from execution by that State.
This limitation does not apply to an investor’s pecuniary obligations.
The Nigerian Perspective
As a member state of the ICSID convention, Nigeria is bound by the obligation to recognize and enforce an Award rendered by ICSID. The ICSID Convention was ratified in Nigeria by the ICSID (Enforcement of Awards) Act 1967 (“the Act”). The Act oversees the recognition and enforcement of an ICSID award in Nigeria. In line with the ICSID Convention, the Act provides a simplified procedure for recognizing and enforcing an ICSID award. Under the Act, an award creditor seeking the recognition and enforcement of an ICSID award is expected to file in the Supreme Court, a copy of the award duly certified by the Secretary-General of the Centre (Section 1 of the ICSID (Enforcement of Awards) Act 1967). Once the award is filed, it takes effect as if it were an award contained in a final judgment of the Supreme Court and becomes binding. The implication of taking effect like a judgment of the Supreme Court is that the award cannot be subject to appeal as the Supreme Court is the apex Court in Nigeria. Nigeria has been involved in Six (6) ICSID arbitration till date, of which four (4) have been concluded. However, it is worth noting that notwithstanding Nigeria’s participation in these arbitration proceedings, the recognition and enforcement of an ICSID award has never been sought in Nigeria.
Enforcement of Pecuniary Obligations
The next step after the recognition of an award by the Supreme Court is the enforcement of pecuniary obligations stipulated by the award (Art. 54). A pecuniary award is a monetary award. Under the Nigerian legal landscape, enforcement of judgment is largely governed by various rules of court and statutes, and they include:
- Sheriffs and Civil Process Act.
- Enforcement of Judgments and Service Process Rules.
- Judgment Enforcement Rules of Court.
- Sheriffs and Civil Process Laws of the various states.
Some of the channels an Award creditor seeking to enforce a pecuniary obligation may employ are as follows:
- Writ of Fieri Facias (“Fi Fa”): This allows the Award creditor to seize and sell the Award debtor’s assets to satisfy the Award debt. The court appoints a bailiff to execute the writ.
- Writ of Possession: This grants the Award creditor possession of property owned by the Award debtor, which can then be sold to satisfy the Award debt.
- Garnishee Proceedings: In this procedure, the Court grants a garnishee order nisi which freezes the Award debtor’s funds in a bank account, preventing them from accessing or withdrawing the funds until the court makes the order absolute in which case the Award debt is transferred to the Award creditor.
Other channels include Writ of sequestration, Judgment Summons, Charging Orders, etc.
However, research conducted by the ICSID secretariat revealed that only a few Awards with pecuniary obligations go to enforcement proceedings, as in the majority of cases, parties voluntarily comply with Awards or reach post-award settlements (Background Paper, Compliance with and Enforcement of ICSID Awards, Para. 29).
Conclusion
One of the distinctive features of ICSID arbitration over other forms of investor-state arbitration platforms is its regime on compliance and enforcement of Awards. The fact that Awards are final and binding with no grounds for domestic courts to refuse the recognition of an Award, and the fact that Awards are not subject to appeal except post-award remedies provided under the Convention creates a level of trust that an Award Creditor is most likely to reap the fruit of its Award, especially in Nigeria where the designated court for the recognition and enforcement of ICSID Awards is the Supreme Court.
ABOUT THE AUTHORS
Joseph Siyaidon is a Team Lead in Stren & Blan Partners’ Arbitration, Maritime, Real Estate & Construction Disputes Practice Groups. He is a graduate of Law from the Niger Delta University and the Nigerian Law School. Joseph has extensive experience in arbitration and commercial litigation. He has acted as counsel in several international arbitrations and arbitral award enforcement proceedings under major arbitration rules, including ICC, DIAC, UNCITRAL, MAAN, and RCICAL. His focus is on providing cutting-edge strategies to resolve disputes in the areas of maritime, oil and gas, commercial contracts, construction, corporate, debt recovery, bankruptcy/insolvency, and civil fraud/white-collar crimes. He is also experienced in advising clients in relation to concession contracts, joint venture agreements, maritime asset acquisition, due diligence, and distressed situation deals. Joseph also has significant in-house experience, having led the legal and compliance team of Promax & Complant Holdings Limited, a Dubai International Financial Centre registered multinational investment consortium. Before his role at Promax & Complant Holdings Limited, Joseph had a visiting Counsel experience in the Arbitration Practice Group at Al Tamimi & Co in Dubai, UAE.
Stanley Umezuruike is an Associate at Stren & Blan Partners. He provides legal support in the Dispute Resolution Department of the Firm, with a specialty in arbitration, maritime and real estate-related matters. Stanley is a highly innovative and goal-driven lawyer, who applies a professional approach towards delivering top-notch legal solutions and support to clients. He was a former participant and team lead of the International Mediation Singapore Competition organized by the Singapore International Mediation Institute (SIMI), where he played the role of a mediator and a mediator advocate at different levels of the competition for his team.
Michael Afuye is an Associate in the Stren & Blan Partners’ Dispute Resolution department. He currently works within the Arbitration, Maritime, Real Estate, and Construction team of the firm where he advises a wide range of local and international clients on their legal needs within these practice offerings. He also expends his wealth of legal knowledge on proffering innovative solutions to local and cross-border legal problems within the transportation sector of the Firm. Michael holds a Bachelor of Laws degree from Ekiti State University and a B.L from the Nigerian Law School where he graduated top 19% of his class and bagged three awards for being the Best Graduating Student in Professional Ethics and Skills at the Nigerian Law School 2023 set. He is a member of the Nigerian Bar Association (NBA).
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
