It’s getting warmer outside. People are starting to talk about their summer plans. I have been enjoying drafting argumentation plans for numerous trials and hearings in the Québec courts in the last few months. I am also getting some precious opportunities to draft Notice of Application, Statement of Claim and Notice of Motion for some litigation files in Ontario, a common law jurisdiction.
Last weekend, when I was sipping on my coffee beside the windows, I happened to read the judgment rendered by the Honorable Chantal Corriveau, J.S.C. on Zhongshan Fucheng Industrial Investment Co. Ltd. c. Federal Republic of Nigeria, 2024 QCCS 988 and the judgment rendered by the Honorable David R. Collier, J.S.C. Zhongshan Fucheng Industrial Investment Co. Ltd. c. Federal Republic of Nigeria, 2023 QCCS 791. These two judgments show us how the Québec judiciary facilitates the execution of a foreign investment arbitral award, Zhongshan Fucheng v. Nigeria, rendered by a three-arbitrators tribunal in London, United Kingdom on March 26, 2021. These judgments also bring us to revisit the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the “New York Arbitration Convention” and State Immunity Act, RSC 1985, c S-18.
Background
In or around October 2020, through numerous agreements signed by Zhongshan Fucheng’s parent company, Zhuhai Zhongfu, Zhongshan Fucheng became a Chinese investor in Ogun State in Nigeria. Zhongshan Fucheng has invested in developing the Ogun Guangdong Free Trade Zone situated in a substantial area of land in Ogun State in Nigeria, which is owned by the Ogun State Government.
From 2010, Zhuhai Zhongfu and Zhongshan Fucheng have carried out significant works according to the agreements.
In or around June 2010, Zhuhai Zhongfu and Ogun Guangdong Free Trade Zone Company (“OGFTZ”) entered into a “Framework Agreement on Establishment of Fucheng Industrial Park in the Zone” (“the 2010 Framework Agreement”).
In October 2020, Zhuhai Zhongfu, OGFTZ and Zhongshan Fucheng entered into another agreement to transfer Zhuhai Zhongfu’s rights and obligations under the 2010 Framework Agreement to Zhongshan Fucheng.
In July 2011, the OGFTZ has acknowledged the receipt of “the first instalment of the land use rights fees” in the approximate amount of RMB 5,445,129.50 from Zhongshan Fucheng through a written document.
Since November 2011, the relationship among the parties starts getting complicated.
In or around July 2016, a representative of the Ogun State of Nigeria informed the manager of Zhongshan Fucheng, Dr. Han, who has been responsible for developing the free trade zone that his mandate is terminated by texting him the following, “leave peacefully when there is opportunity to do so, and avoid forceful removal, complications and possible prosecution”.
In or around August 2016, warrants issued “criminal breach of trust” were issued by the police for the arrest of Dr. Han and his colleague Mr. Zhao. Mr. Zhao was arrested by the police at gunpoint; but managed to leave Nigeria in October 2016. Dr. Han also left Nigeria in October 2016.
In August 2016, Zhuhai Zhongfu started legal proceedings in Nigerian courts to seek declaratory and injunctive relief according to their joint venture agreements and framework agreements signed by the parties. Mr. Zhao started legal proceedings in Nigerian courts against the police for damages in connection with his mistreatment. However, those legal proceedings in Nigerian courts were discontinued.
In September 2017, Zhongshan Fucheng sent to Nigeria a notice of dispute and request for negotiations pursuant to the Sections 1, 2, 3, 4, 9 of the China-Nigeria bilateral investment treaty. No response was received.
On August 30, 2018, Zhongshan served a Request for Arbitration pursuant to Section 9 of the China-Nigeria bilateral investment treaty to seek monetary compensation for the expropriation, moral damages and costs for the arbitration proceedings in addition to the interests and indemnities. The arbitral tribunal is formerly constituted by the international Center for Settlement of Investment Disputes (“ICSID”) in January 2018.
On March 26, 2021, the final investment award was rendered to condemn Nigeria to pay Zhongshan Fucheng 55.5 million $US in compensation for the expropriation and 75 thousand $US for the moral damages, as well as the costs for arbitration proceedings and other indemnities.
Photo by Mr. Ou
Since then, Zhongshan Fucheng has instituted legal proceedings in England, in the USA and in Canada to execute this investment arbitral award.
In January 2023, Zhongshan Fucheng filed an ex parte Request for the Issuance of an Order to Seize Property in the Hands of a Third Person before Judgment in front of the Superior Court of Québec as a luxury private jet owned by Nigeria, touched down at Montréal-Trudeau International Airport.
On January 25, 2023, the Honorable David R. Collier, J.S.C. grants Zhongshan Fucheng’s request for seizure before judgment.
On April 19, 2023, Zhongshan Fucheng notified the originating application for the recognition of the foreign investment arbitral award to Nigeria through diplomatic channel with success. No response was received until June 18, 2023.
On July 12, 2023, Zhongshan Fucheng has inscribed the file for default judgment in front of the Superior Court of Québec. The date of the trial is scheduled on February 16, 2024.
On January 11, 2024, Nigeria filed a response to the Court.
On February 15, 2024, Nigeria filed a request to relieve it from the consequences of its default to respond within the delay stipulated in the Code of Civil Procedure of Québec.
On February 16, 2024, the Honorable Chantal Corriveau, J.S.C. heard the case.
Court’s Analysis
The Court dismisses Nigeria’s request to relieve it from the consequences of its default to respond within the delay for the following reasons:
- The political elections in Ogun State do not constitute a valid reason for Nigeria’s delay in response because the Defendant in the present case is the Federal Republic of Nigeria, not the Ogun State;
- The mediation session, took place in September 2023 in London, does not constitute a valid reason for Nigeria’s ignorance to the Originating Application instituted by the Zhongshan Fucheng in Québec, which was served to Nigeria with success in April 2023;
- Nigeria instituted a legal proceeding in front of the Superior Court of Québec in May 2020 to seize a luxury private jet, touched down in Montreal. In this legal proceeding, Nigeria was represented by a well-established law firm. In January 2023, Zhongshan Fucheng’s attorney informed Nigeria’s attorney in the other file about the seizure before judgment rendered by Mr. Justice Collier in the present file.
Considering the above-mentioned circumstances, the Court is not convinced that Nigeria was unable to act on the present file between April 2023 and February 2024. Therefore, the Nigeria’s motion is dismissed.
The Court also emphasizes that according to Article 5 of State Immunity Act, RSC 1985, c S-18, a foreign state is not immune from the jurisdiction of a court in any proceedings that relate to any commercial activity of the foreign state. In the present file, the commercial nature of the investment dispute between Zhongshan Fucheng and Nigeria is without doubt. Furthermore, the Court also reminds us that as both Nigeria and Canada are contracting states of the New York Convention, Nigeria has renounced its rights to invoke state immunity to oppose the recognition and enforcement of an arbitral award; Canada would be required to respect its commitment on recognition and enforcement of an arbitral award according to the New York Convention. Therefore, Nigeria’s argumentations based on the state immunity won’t be considered as serious defense in the present file.
Reflection
首先， 加拿大魁北克省高等法院通过其判决书明确指出，尼日利亚国无权以国家豁免为由反驳中国投资人在加拿大魁北克省执行由国际争端解决中心组织的仲裁庭英国伦敦作出的仲裁裁决。
其次，加拿大魁北克省高等法院明确表示，在本案中，尼日利亚在得知其被诉的情况下，无视中国投资人的起诉书，并在长达9个月的时间里，不对魁省法院表明其对中国投资人起诉的法律立场；法院无法理解尼日利亚国在本案中的诉讼行为的合理性。
最后，本案告诉我们，加拿大魁北克法院是一个能严格遵守纽约公约，为国际仲裁裁决的认可和执行保驾护航的机构；在启动执行国际仲裁裁决程序前，我们要对被告的财产在全球各地的分布进行彻底搜查并作出“稳准狠”的诉讼行为。本案中，中国投资人就成功地对尼日利亚国的一架降落在加拿大魁北克省蒙特利尔市的飞机进行了诉讼保全；此举为完全执行仲裁裁决提供了有效保障。
(Reminder: The purpose of this article is to provide general legal information. It does not contain a full analysis of the law nor does it constitute a legal advice on the points of law discussed. To minimize the legal risk for your business, you must take specific legal advice from a lawyer on any particular matter which concerns you. Thanks for your attention.)