The Federal Government has, through mediation, settled a long-standing contractual dispute with a foreign investor group in the steel industry, by securing a reduction of the total money in contention from $5.258 billion to $496 million, the Attorney-General of the Federation and Minister of Justice, Mr. Abubakar Malami, SAN, has revealed.
Malami in a statement by his media aide, Dr. Umar Gwandu, yesterday, maintained that the reduction Federal Government secured from the group represented 91 per cent of the total mediation claim.
He disclosed that the mediation proceedings were under the International Chamber of Commerce’s, ICC, Alternative Dispute Resolution, ADR, framework, led by Mr Phillip Howell-Richardson.
According to the AGF, the settlement agreement came into effect on August 19, 2022.
He said: “Nigeria succeeded in reducing the claim in mediation brought by the international firm of King and Spalding, legal representatives of the Global group, by 91 per cent.
“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 2004-2007 – covering steel, iron ore, and rail.
“It might be recalled that the seeds of the disputes can be traced 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.
“However, 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.”
The statement noted that had the then administration not terminated the Ajaokuta Share Purchase Agreement on April 1, 2008 and waited for just 55 days to terminate, it would have terminated lawfully and the government would have collected more than $26 million 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 (25 May 2008).
“This failure would have given Nigeria a right to over $26 million 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.
“Although the Federal Government negotiated a settlement in May 2013, the previous administration failed to implement its settlement agreement.”