Exclusive! Another Breach of Contract:English Court Orders Federal Airports Authority of Nigeria (FAAN) to Pay US$24 Million to Adjourn the Enforcement of a US$120 Million Award

By Micho Hayes

With the P&ID still unresolved, Nigeria may soon be forced to pay a heavy fine again due to flagrant breach of contract. This time around, it is on one of the Federal parastatals, Federal Airports Authority of Nigeria, FAAN,which has been asked to deposit $24million in an enforcement of $120million award.

According to a document sited by Newsnow, the High Court of Justice in England on August 13, 2019 adjourned AIC Limited’s application to enforce an Award in the sum of US$48,124,000 (Forty-Eight Million, One Hundred and Twenty-Four United States Dollars with interest totalling US$74,590,881(Seventy-Four Million, Five Hundred and Ninety Thousand, Eight Hundred and Eighty-One United States Dollars) as at 10 January 2019 against the Federal Airports Authority of Nigeria (“FAAN”).

The Award was issued on 1st June 2010 in favour of AIC Limited by the Sole Arbitrator, the late Hon. Justice Kayode Eso, following FAAN’s breach of a contract between the parties. By a Deed of Lease dated 17 February 1998, FAAN leased parcels of land at Murtala Mohammed Airport in Ikeja for a term of 50 years for the sole purpose of developing a flightpath hotel and resort complex. However, by a letter dated 16 May 2000, FAAN directed AIC to refrain from work on the hotel development and prevented AIC Limited from proceeding with the construction of the hotel and resort as planned. The resulting dispute was referred to arbitration pursuant to the arbitration agreement in the Deed of Lease.

Following the publication of the Award, FAAN filed an application at the Federal High Court in Lagos to set aside the Award. AIC filed three applications, one to enforce the monetary element of the Award and another to remit the Award on a point of law (namely that the Arbitrator ought to have ordered specific performance of the Deed of Lease thus enabling the project to be completed) and the third was a preliminary objection challenging the application filed by FAAN on procedural grounds. Justice Buba of the Federal High Court delivered judgment on the applications on 19 June 2013. He dismissed AIC’s applications and set aside the Award. AIC filed an appeal at the Court of Appeal challenging the judgment. The Court of Appeal allowed AIC’s Appeal and remitted FAAN’s application to set aside the Award to a different judge of the Court. FAAN has filed an appeal against the judgment of the Court of Appeal and the same is pending at the Supreme Court.

In January 2019, AIC filed an application before the High Court of Justice in England to enforce the Award. FAAN challenged this application on the grounds that there is an application to set aside the Award currently pending before the Nigerian Supreme Court. Following FAAN’s application, AIC applied for an order that FAAN give suitable security in the sum of US$161,978,132 (One Hundred and Sixty-One Million, Nine Hundred and Seventy-Eight Thousand, One Hundred and Thirty-Two United States’ Dollars), in the event that AIC’s application to enforce the Award is adjourned.

The Court noted the considerable delay in relation to the enforcement of the Award in Nigeria and FAAN’s lack of diligence in prosecuting the pending appeal. The Court thus held that there should be security as a condition of the grant of the adjournment and that it would be reasonable for this to be in the sum of US$24,062,000 (Twenty-Four Million, Sixty-Two Thousand United States’ Dollars) representing 50% of the Award or just under three years’ worth of interest on the Award. As at the time of writing this post, FAAN is yet to file an appeal against the decision of the Court. 

Attempt by Newsnow to get the reaction of the minister of Justice and Attorney -General, Mallam Abubakar Malami, to know what he is doing to forestall another heavy fine against Nigeria due to lack of diligence prosecution by his ministry was unsuccessful as at the time of filling this report.

One thought on “Exclusive! Another Breach of Contract:English Court Orders Federal Airports Authority of Nigeria (FAAN) to Pay US$24 Million to Adjourn the Enforcement of a US$120 Million Award

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