Concerns Mount over Loan Agreement Clause Waiving Nigeria’s Sovereignty Immunity to China

Concerns Mount over Loan Agreement Clause Waiving Nigeria’s Sovereignty Immunity to China


•Experts fear repeat of fate of Zambia, say waiver of immunity, unconstitutiona

By Yemi Ajayi, Davidson Iriekpen, Martins Ifijeh in Lagos and Chuks Okocha in Abuja

Concerns mounted at the weekend over the rising trend of government officials signing loan agreements with a clause that waives the sovereign immunity of the country if it defaults in its repayment plan.

Last week, the House of Representatives summoned the Minister of Transportation, Hon. Rotimi Amaechi; Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed; and Minister of Communications and Digital Economy, Alhaji Isa Pantami; over a loan agreement with China, which contained the waiver clause.

According to the House, Article 8(1) of the commercial loan agreement signed between Nigeria and Export-Import Bank of China concedes Nigeria’s sovereignty to China.

The lawmakers had picked holes in the $400 million loan agreement for Nigeria National Information and Communication Technology (ICT) Infrastructure Backbone Phase II Project, signed in 2018.

The controversial clause in the agreement, signed by Federal Ministry of Finance (borrower) on behalf of Nigeria and the Export-Import Bank of China (lender) on September 5, 2018, provides that “the borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.”

While the ministers are to have their day with the House on August 17, 2020, to explain their action, some critics, including former vice president, Alhaji Atiku Abubakar, agreed with the federal legislators at the weekend that the clause was capable of mortgaging the sovereignty of Nigeria, saying it exposes Nigeria to the fate of Zambia, which signed a loan agreement with a similar clause with China and has now lost some of its national assets to the Asian country on default of repayment.

THISDAY checks showed that China in 2018 had taken over Zambia National Broadcasting Corporation (ZNBC) over loan default and had commenced talks with the Zambian government to take control of Zambia’s national electricity company, ZESCO, and the Kenneth Kaunda International Airport, Lusaka, owing to the inability of Zambia to meet its loan repayment promises to the Asian Country.

According to data from the China Africa Research Initiative (CARI) at Johns Hopkins University, Zambia had accumulated loans from China totalling almost $6.4 billion as at December 2017.

Senior lawyers, including Mr. Ebunoluwa Adegboruwa (SAN) have called on the National Assembly to compel President Muhammadu Buhari to submit to both chambers all agreements signed with China to enable experts to vet them, saying the contract might not have been signed with the input of experts.

Many other lawyers that spoke with THISDAY said the waiver clause might have been accepted by the Nigerian officials out of ignorance of the concept of the sovereign immunity of states, which protects sovereign states from the jurisdiction of courts, particularly in a foreign country without the consent of the state.

They pointed out that it is this concept that Nigeria is hanging on to in its $9.6bn arbitral award case with Process and Industrial Development (P&ID) in the United States, where the nation is challenging the enforcement of the award on the ground of sovereign immunity.

Besides, some legal experts told THISDAY that the agreement having not been approved by the National Assembly would be unconstitutional and illegal, adding that although Amaechi claimed in a statement on Saturday that the loan was approved by the federal legislature, the contract might not bound the country if its details were not approved by the legislature.

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