Zhongshan Fucheng Industrial Investment Co. Ltd. v. The Federal Republic of Nigeria – High Court – [2024] EWHC 1503 (Comm) – Case Summary

Relevant for:

Arbitration practitioners, international law specialists, enforcement lawyers

This case concerned an application by Zhongshan Fucheng Industrial Investment Co. Ltd. ('Zhongshan') for final charging orders over two properties owned by the Federal Republic of Nigeria ('Nigeria') to enforce an arbitration award.

TLDR:

• Zhongshan sought to enforce a $55,675,000 arbitration award against Nigeria.
• Interim charging orders were previously granted on two properties owned by Nigeria.
• Nigeria objected to the final charging orders on grounds of state immunity and improper service.
• The court ruled that the properties were in use for commercial purposes, allowing enforcement.
• The final charging orders were granted.

The factual background to the case involved Zhongshan seeking final charging orders over two properties in Liverpool owned by Nigeria. These properties were 15 Aigburth Hall Road and Beech Lodge, 49 Calderstones Road. Interim charging orders had been made in June and August 2023. The dispute arose from Nigeria's failure to comply with an arbitration award made in March 2021, which ordered Nigeria to pay Zhongshan $55,675,000 plus interest and costs.

On 21 December 2021, Mrs Justice Cockerill granted Zhongshan permission to enforce the arbitration award in the same manner as a High Court judgment. Nigeria's appeal against this decision was unsuccessful, and additional costs were awarded to Zhongshan. By the time of the interim charging order applications, Nigeria had not made any payments towards the award or costs, leaving an outstanding amount of approximately £59.6 million.

Nigeria objected to the final charging orders on several grounds, including improper service under the State Immunity Act 1978 (SIA) and state immunity claims. Nigeria argued that the properties were not in use for commercial purposes and that the interim orders were not properly served. Additionally, Nigeria claimed that Zhongshan failed to provide full and frank disclosure during the interim stage and that multiple enforcement actions by Zhongshan made it unclear what sums might be recovered.

The court considered the legal framework under the Civil Procedure Rules (CPR) 73 and the SIA. The court noted that an interim charging order is a further step in enforcement proceedings, not a new proceeding, and thus did not require service under s12(1) of the SIA. The court also examined whether the properties were in use for commercial purposes, as defined under s3(3) of the SIA, which would negate state immunity.

The court found that the properties were indeed rented out as residential tenancies at market rates, which constituted commercial use. The evidence provided by Zhongshan, including witness statements and rental comparisons, was sufficient to rebut Nigeria's certificate claiming non-commercial use. The court determined that the properties had not been used for consular purposes for over 34 years and were in a dilapidated state, inconsistent with Nigeria's claims of maintaining them for consular use.

Ultimately, the court ruled that the properties were in use for commercial purposes and that state immunity did not apply. The court exercised its discretion to grant the final charging orders, allowing Zhongshan to enforce the arbitration award against the properties.

Legal representatives: Christopher Harris KC and Mark Wassouf (instructed by Withers LLP) for the Claimant. Riaz Hussain KC (instructed by Squire Patton Boggs) LLP) for the Defendant.

Judicial Panel: Master Sullivan

Case Citation Reference: [2024] EWHC 1503 (Comm)