Reasons Zhongshan Fucheng: Chinese Investor Seizes Nigerian Government Properties in UK
A Chinese investor, Zhongshan Fucheng Industrial Investment, is set to take over two Nigerian properties in the United Kingdom following a court order allowing enforcement of a $70 million investment treaty award against Nigeria
Zhongshan Fucheng secured final charging orders on two UK residential properties owned by the Nigerian government. These properties are tied to a £20 million debt related to the high-profile P&ID case. The order, granted by Master Sullivan in the London Commercial Court on June 14, pertains to two properties in Liverpool valued at a combined £1.7 million.
The judge noted that the properties had been converted to commercial use, thus falling outside the scope of Nigeria’s diplomatic or consular activities in the UK, making the enforcement order applicable.
The legal battle saw Zhongshan represented by Withers and barristers from 3VB, while Nigeria was represented by Squire Patton Boggs and a barrister from Atkin Chambers.
The dispute stems from a 2013 joint venture with Ogun State to establish a free trade zone near Lagos, in which a Zhongshan subsidiary held a 60% stake. Ogun State terminated its participation three years later. In 2021, a UNCITRAL tribunal in London, chaired by Lord Neuberger, with Matthew Gearing KC and Rotimi Oguneso SAN, found Nigeria guilty of expropriation and other breaches of the China-Nigeria bilateral investment treaty, ordering Nigeria to pay $55.6 million plus interest and costs.
Nigeria challenged the award on jurisdictional grounds in 2021, arguing that the arbitration clause in the BIT was invalid. However, Nigeria withdrew the challenge before a hearing on Zhongshan’s application for security and costs could take place. Consequently, Mrs. Justice Cockerill granted Zhongshan an ex parte enforcement order in December 2021. Nigeria failed to file against this order within the 74-day legal deadline.
In July 2023, the Court of Appeal in London prevented Nigeria from bringing a late challenge to the enforcement order, affirming that state immunity did not apply.
Zhongshan obtained interim charging orders on the Liverpool properties in June and August of the previous year. Nigeria’s efforts to dismiss these orders were unsuccessful. Master Sullivan ruled that the properties, leased to residential tenants, were not being used for consular activities. She also rejected Nigeria’s claims of improper service and lack of full disclosure under the State Immunity Act.
Timi Balogun of Squire Patton Boggs, representing Nigeria, expressed disagreement with the decision, citing concerns over state immunity and the rights of foreign states to manage assets in England and Wales. Nigeria intends to appeal the decision for further consideration by higher courts.
Zhongshan has also sought to enforce the award in Washington, DC. Last year, the DC district court rejected Nigeria’s motion to dismiss the action on sovereign immunity grounds, arguing that the China-Nigeria BIT involved a commercial relationship. The case is currently stayed pending Nigeria’s appeal of the sovereign immunity decision.
Additionally, Zhongshan has pursued enforcement in other jurisdictions, including Quebec, where it seeks to seize a private jet, and Belgium, where Nigeria is challenging property attachments. In the British Virgin Islands, Zhongshan has secured an interim attachment over a £20 million liability owed to Nigeria by Process & Industrial Development (P&ID) under an English court ruling.
As of the time of reporting, Nigeria’s Ministry of Foreign Affairs had not responded to inquiries regarding this development.
