Some lawyers yesterday faulted the venue of arbitration in the controversial Chinese loan agreement, wherein Hong Kong was chosen as the place of adjudication, in case of default in loan repayment, while canvassing a reappraisal of the clauses.
While some lawyers who spoke with Saturday Telegraph called on the Nigerian Government to avoid Hong Kong as the place of arbitration, others opined that the place of the arbitration does not matter if a default is not envisaged. Speaking on the issue, an Abuja based lawyer and arbitrator, John Isaac Darlington, said countries with commercial transactions are increasingly avoiding Hong Kong as a jurisdiction for settling disputes through arbitration. He said: “Businesses are instead choosing rival hubs like Singapore, Paris and London, a shift that has accelerated since the Chinese government bypassed Hong Kong’s legislature to impose a sweeping national security law.
“The new legislation has raised doubts about the independence of Hong Kong arbitrators, who are now subject to a vaguely worded statute carrying potential life sentences for crimes including subversion of state power and collusion with foreign forces. “Parties to contracts are questioning whether Hong Kong remains a neutral and effective seat of arbitration. Hong Kong’s Common Law system and highly regarded stable of legal professionals have long underpinned its appeal as a financial hub. “Before this year, Hong Kong was one of the world’s top arbitration centres.
It handled at least 308 disputes involving US$4.7 billion (S$6.5 billion) last year, figures from the Hong Kong International Arbitration Centre show”. Another lawyer, a Lagos based, Femi Adenowo, agreed with Darlington, while noting that fears are rising that the city is becoming a less safe place to do business as China plays a more assertive role in Hong Kong affairs. Adenowo said: “Hong Kong, as a top arbitration centre, handled over 300 disputes in2019 alone. But the independence is now in question considering the role of China. Our government officials should have consulted widely before putting pen to paper on the place of arbitration. “They should have opted for a more independent venue, such as Netherlands or the US. But we learnt that the agreement was written in Chinese language, so they may not understand the document.
What were the interpreters of government doing?” He queried. Another lawyer and arbitration expert, Dr. Pius Omololu, while reacting noted that companies use arbitration as an alternative to litigation in courts, agreeing to designate an independent third party to resolve their disagreements in private. He equally opined that Nigeria should have engaged in a wide range of consultation before signing the clause on the place of arbitration. According to him, China’s national security law for Hong Kong will fundamentally change the territory’s legal system.
“It introduces new crimes with severe penalties -up to life in prison- and allows mainland security personnel to legally operate in Hong Kong with impunity. The legislation gives Beijing extensive powers it has never had before to shape life in the territory far beyond the legal system.
“A team of legal experts from the United States and Hong Kong had also identified what they consider a number of worrying aspects”, Omololu said. However, making a different submission, another lawyer, Segun Ipadeola, submitted that the arbitration clause is not that important considering other clauses that is contained in the loan agreement, though he agreed that Hong Kong gives concern. “Arbitration clause, put aside other clauses in the loan agreement should really not be a thing of concern to Nigeria government.
Arbitration comes up when the country defaults in the repayment of the loan as at the time agreed on. “In my own opinion, this should not give the government sleepless night whatsoever. It is a general practice in a contract that place of arbitration should be decided. Of course, the Nigeria pursues cases to ICC and ECOWAS Court. So, making Hong Kong a place of arbitration should be a reason to raise concern”.
Reps to summon Malami, Amaechi, others
Upon its return from recess, the House of Representatives will summon some government officials, including the Minister of Justice and Attorney General of the Federation (AGF), Mallam Abubakar Malami, and his Transportation Ministry counterpart, Rotimi Amaechi, over their defence of the loan agreement, Saturday Telegraph has learnt. Both Malami and Amaechi had recently assured Nigerians that the agreement on the controversial $400 million loan from the Chinese Export- Import Bank did not trade off the nation’s sovereignty.
They also tried to distinguish between sovereign and commercial immunity saying the National Assembly had a misconception about the terms in international diplomatic circles. A member of the House of Representatives committee on treaties, agreements and protocols who spoke with our correspondent in confidence disclosed that with Malami’s tacit support for the “offensive clause” in the contract, he would be invited to appear before the committee, tentatively on August 17. “I watched with amazement, both the Minister of Transportation and the Attorney- General of the Federation, defending what cannot be defended. Malami was very unconvincing trying to distinguish between sovereign and commercial immunity.
“We are saying that agreement is injurious to the nation’s sovereignty because if we default in repayment, what is happening in Zambia would happen to Nigeria. It is a slavish agreement aimed at recolonising Nigeria.” He added: “Malami was saying there is a difference between international diplomatic immunity, which has to do with a nation’s sovereignty, independent existence’ and commercial immunity, which has to do with a commitment to ensure repayment of loans. “But as a committee and as a parliament, we are saying take a look again at Article 8(1) and 8(5) of the agreement. Article 8 (1) states that: ‘The borrower hereby irrevocably waives any immunity on the grounds of sovereign 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.
“Therefore, we shall be inviting him to come along with the transportation minister. We are not witch hunting anybody, but this matter revolves around the nation’s sovereignty and we have all seen what the Chinese are doing in Zambia. We cannot afford to fold our arms and people carelessly signed off the future of this nation,” he stated. Responding to Amaechi’s position that the National Assembly approved the loan, knowing it was signing off the country’s sovereignty, the lawmakers agreed that “he is only blackmailing the legislature”, because he is very conversant with how loans are approved.
‘We had no details’
“We never had the details of the loan agreement before the approval. What the executive sent to us was just a synopsis of the proposed deal and it never stated clause by clause what is contained in the agreement. Another lawmaker who also prefers anonymity agreed that the AGF must be invited to explain what those contentious articles in the agreement meant, while noting that Malami made an attempt to explain away the concerns, but he could not. “The National Assembly is not made up of morons; we are experienced and knowledgeable people. There is no way the National Assembly would have approved the loan if that agreement was sent to us with all the details.” Continuing, the lawmaker said: “We are constrained to speak elaborately on this issue for now because we are still investigating and we do not want to pre-empt the outcome of our assignment. But all I can say is that, we must look at this agreement dispassionately and ensure that the future of our children is not mortgaged. “We do not want to engage the ministers or the executive in a war of attrition. We are representatives of the people and anything that is not in the interest of the generality of the people also affects us. I can understand the passion Amaechi has for this job; he wants to make a mark but things must be done appropriately. We have a duty to vet executive actions and that’s exactly what we are doing”, he said.
‘Nigerians must scrutinise agreement’
On his part, Senator Jibrin Barau, representing Kano North Senatorial District, called on Nigerians to scrutinise the loan agreement to ensure that no clause is injurious to the country. He however, said that he had not seen the details of the agreement and therefore, would not make categorical statement on the matter, saying that he could only speak in detail when he had studied the content and had full understanding of the document. Barau, who is the Chairman, Senate Committee on Appropriations, also advised members of the nation’s legal team to always critically understudy any agreement they were signing on behalf of the country, in order to protect the people’s interest. He said: “To me, I believe that the issue of governance is a collective responsibility. Nobody can claim the monopoly of knowledge or intelligence. It is something that is open to all of us. Anybody should contribute to any issue about the country to the betterment of the people.”