Attorney General of the Federation and Minister of Justice, Abubakar Malami, SAN, said the Federal Government has settled the long-standing contractual dispute with a foreign investor group in the steel space of $5.258 billion for $496m.

He said the settlement agreement came into fruition on 19 August 2022.

He explained that the mediation proceedings was under the International Chamber of Commerce’s 1(ICC) Alternative Dispute Resolution (ADR) framework led by Mr Phillip Howell-Richardson.

According to him, the settlement has succeeded in reducing the claim in mediation brought by the international firm of King and Spalding, legal representatives of the Global group by 91%.

He added that a claim for over $10 billion was threatened in arbitration before the International Chamber of Commerce, International Court of Arbitration, Paris, in respect of five major contracts of 2004 to 2007, covering steel, iron ore, and rail.

He said that the seeds of the disputes were traceable to five contracts entered into by the 1999 – 2007 administration that gave complete dominance over the Nigerian steel space to one company group, the Global Steel group.

He disclosed that in 2008,a new administration proceeded to terminate these contracts contrary to legal advice supplied by the Federal Ministry of Justice, which cited the termination cost in the form of damages.

He said that had the government of that day not terminated the Ajaokuta Share Purchase Agreement on 1st April 2008, and waited for just 55 days to terminate, it would have terminated lawfully and the Government would have collected more than $26 million USD from Global Steel.

“This was because the firm appeared unable to pay the first tranche for the Ajaokuta shares before the first anniversary of the agreement (25th May 2008). This failure would have given Nigeria a right to over $26m as liquidated damages under cl.12 of the Ajaokuta Share Purchase Agreement. Global Steel, in consequence, took the FGN to the International Chamber of Commerce, International Court of Arbitration, Paris, commencing arbitration in 2008″ Malami said in a statement.

He said:”Although the Federal Government negotiated a settlement in May 2013, the previous administration failed to implement its settlement agreement. In May 2020, Global Steel threatened a resumption of the arbitration and announced an anticipated claim in damages of over $10 to 14 billion against the Nigerian State in respect of the affected 5 contracts”

According to him, the administration of President Muhammadu Buhari, took decisive steps to resist the claim, rather than pass it on to a future administration with ballooning interest.

He said President Buhari has now rescued the steel industry from interminable and complex disputes as well as saving the taxpayer from humongous damages.

He added that one of the lessons to be learnt included that the future arrangements – sale or concessions – must be carried out in the national interest and in compliance with the law.

Malami said his office grappled with the inherited problem by adopting a blueprint of seven principles for the cost-effective resolution of contractual disputes wherever they occur.

“They are the use of institutional mediation, choice of FGN counsel, the use of financial advisers with reputational capital, the importance of not discouraging foreign investment, fiscal responsibility, transparency, and the recognition that joined-up government produces superior outcomes” he said.

He hinted that the Federal Government has engaged PwCNigeria to do a comprehensive review to ensure taxpayers are protected.

He said, one Dr Tunde Ogowewo, a barrister (and senior academic at King’s College London), represented the Federal Government and advised the government throughout the process.

Malami stated that Dr Ogowewo’s report:
“FGN Counsel’s Report on Case Reference 15539/VRO/AGF/ZF/TO/AZR/SPN)_ – of over 1,000 pages provided a guide on how to avoid such contractual disputes and, where they occur, how to reach cost-effective savings for the benefit of the Nigerian taxpayer.”

He reiterated the commitment of the Federal Government of standing firm to continue to make assiduous efforts in protecting the public interest and ensuring that Nigeria is not denuded of its resources through whatever means.