By Mary Izuaka

 

Nigeria has won the $2.35 billion arbitration case instituted against it by Sunrise Power and Transmission Company Limited over the controversial 3,050-megawatt Mambilla hydropower project in Taraba State.

The International Chamber of Commerce (ICC) tribunal, sitting in Paris, France, ruled in favour of Nigeria and ordered Sunrise Power and its promoter, Leno Adesanya, to reimburse the country $11.8 million in legal fees.

The award was issued on Thursday.

In the decision signed by the three-man panel, the tribunal dismissed Sunrise’s claims against Nigeria for breach of contract and rejected its demand for payment.

The tribunal dismissed Sunrise’s claim for a declaration that Nigeria breached its contractual obligations under the settlement agreement and its addendum.

It also rejected the company’s claim for an order compelling Nigeria to pay $400 million as a settlement sum of $200 million and a default sum of $200 million.

The panel held that Mr Adesanya, the promoter of Sunrise Power, is bound by the arbitration agreement with Nigeria pursuant to the settlement agreement and the addendum, and that it has jurisdiction over Nigeria’s counterclaim against him and his firm.

The tribunal ordered Sunrise and Mr Adesanya to reimburse Nigeria 75 per cent of the legal fees and expenses incurred in the arbitration.

The legal fees were put at $11,819,506.51, out of which $2.5 million will be covered directly from the amount held in escrow by the ICC that will be released upon notification of the final award.

Sunrise and Mr Adesanya were ordered to pay Nigeria the balance of $9,319,506.51 with interest at an annual rate of 10 per cent, “compounded annually, from the date of the notification of this Final Award until such amount is paid in full.”

The tribunal also fixed arbitration costs at $1,656,500, to be shared by Sunrise and Mr Adesanya (75 per cent) and Nigeria (25 per cent).

The panel was presided over by Melaine van Leeuwen, with Stavros Brekoulakis and Simon Nesbitt as co-arbitrators.

Nigeria was represented by a team of lawyers led by Elizabeth Oger-Gross and Tolu Obamuroh, now of Paul Hastings LLP.

Background

The dispute between Sunrise Power and the federal government revolves around the contract for the construction of the Mambilla hydropower project.

On 10 October 2017, Sunrise filed an arbitration case against Nigeria at the ICC, seeking $2.354 billion in damages for alleged breach of a 2003 agreement. The original deal granted the company exclusive rights to execute the project under a Build, Operate and Transfer (BOT) arrangement.

Sunrise argued that the government violated the agreement by engaging Sinohydro Corporation Limited, a Chinese firm, to take over the project, and joined Sinohydro in the arbitration.

To resolve the dispute, the federal government entered into a settlement agreement with Sunrise on 21 January 2020. Under the agreement, the government committed to paying the company $200 million within 14 days, with a 10 per cent penalty in case of default.

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The deal also reinstated Sunrise as the local content partner for the $5.8 billion project.

The agreement was signed on behalf of the federal government by the then Attorney-General of the Federation, Abubakar Malami, and the former Minister of Power, Sale Mamman, while Mr Adesanya signed for Sunrise.

The settlement was intended to facilitate the withdrawal of the arbitration case.

However, the government failed to meet the payment obligation. The China Exim Bank, which was expected to provide 85 per cent of the joint funding for the project, had insisted on compliance with due process and terms of the November 2017 Engineering, Procurement and Construction (EPC) contract before releasing funds.

Following the failure to pay the $200 million, the company’s lawyer, Femi Falana, filed a fresh suit at the arbitration tribunal on 11 May 2021, demanding $400 million.