Shell and Eni had challenged the jurisdiction of the English court in light of continuing legal proceedings before Italian courts in the same matter. During an online hearing in April, the defendants submitted that the English court should decline jurisdiction under Article 29 of the Brussels Regulation or that the case should be stayed pending the outcome of the Italian proceeding. The Brussels Regulation sets the rules for courts in EU member states to determine which court has jurisdiction in cases with links to more than one EU member state.
The Nigerian government had argued that the Italian criminal case has a completely separate legal basis from the UK civil case and that the Milanese prosecutor could chose to end the case at any stage. Eni’s representatives claimed this was irrelevant.
Milan case
In Milan, the two oil companies face corruption charges linked to the Malabu scandal, a 2011 deal involving a Nigerian oil block known as OPL 245. Shell and Eni allegedly paid out about $1.1 billion to Nigerian government accounts in the UK which then transferred most of the money to Malabu Oil & Gas, a company at that stage controlled by Dan Etete, Nigeria’s former petroleum minister.
Some $195 million relating to the deal has already been frozen in the U.K. and Switzerland by Italian authorities. In 2018, Nigeria succeeded in the return of over $70 million of these frozen funds. Royal Dutch Shell is also facing prosecution in The Netherlands over the deal, and US authorities had investigated the matter, but dropped the case in October of 2019. Subsidiaries of Shell and Eni have been charged in Nigeria with conspiracy to commit corruption.
Same facts
In his written decision Justice Butcher wrote that for the purposes of the Brussels Regulation the English case and the Italian proceedings are brought by the same parties, involve the same essential facts and have the same object in mind - redress for alleged bribery by Shell, Eni and others.
While recognising differences in the elements of what has to be established in the Italian and in the English proceedings for Nigeria to succeed, the judge deemed the cause to be the same. The judge rejected claims that there would be injustice due to a higher criminal standard of proof in the Italian case than the balance of probabilities which would have been applied in U.K. proceedings.
Anchor defendant
Given the court’s conclusions it ruled that there were no grounds for staying the proceedings. Unlike the other defendant, Royal Dutch Shell is domiciled in England. As Shell was sued as the 'anchor defendant' and the court concluded it had no jurisdiction over Shell, it followed that the English court had no jurisdiction over any of the defendants.
The court denied Nigeria permission to appeal against the judgment. Friday’s UK ruling does not, however, affect the ongoing Italian criminal proceedings.
Previous challenge
It is not the first time an English court has dealt with the matter. There was a previous court challenge to the Crown Prosecution Service (CPS) for failing to freeze some $215 million in alleged proceeds of crime from the corrupt Nigerian oil deal.
A group of NGOs and anti-corruption campaigners wrote to the High Court raising concerns that the frozen funds were proceeds of crime. The London Metropolitan Police’s Proceeds of Corruption Unit (POCU) sought action under the Proceeds of Crime Act, but the Crown Prosecution Service (CPS) declined to initiate proceedings. The NGOs therefore sought a judicial review of the CPS’s decision.
In March 2014, the High Court refused permission to bring a judicial review after the CPS had assured the court that it was still considering taking action. In July 2014, however, more than $110 million of the suspect funds left the UK for Switzerland. The CPS did nothing to prevent the movement of this money, but at the request of the Italian authorities the funds were frozen in Switzerland. Only after a mutual legal assistance request from Italy did UK authorities freeze some $80 million that remained in the UK.
Navigating the courts
This is not the Nigerian government’s only litigation in the English courts.
Nigeria is suing JP Morgan Chase for more than $875 million in connection with the same disputed 2011 oilfield deal, accusing it of negligence in transferring the $1.3 billion payment from Shell and Eni to Malabu, the company controlled by the country’s former oil minister Dan Etete. The lawsuit says that the funds were transferred into a Nigerian government escrow account managed by JP Morgan. It is claimed that the bank transferred the funds to two accounts controlled by Etete, without exercising sufficient due diligence.
Not all of the Nigerian government’s litigation in the UK courts relates to the alleged misbehaviour of multinationals, however. In a more controversial case, the Nigerian government is in the process of seeking to overturn an asset freeze made by the UK’s National Crime Agency on funds forfeited by the US Department of Justice with regard to 141 million euros ($155 million), held in trust for Abubakar Bagudu, the governor of Nigeria’s northern state of Kebbi, and his family. Bagudu was a key associate of former dictator Sani Abacha.
In October 2018 Nigeria’s current administration under president Muhammadu Buhari, reached a new agreement with Bagudu, stipulating a transfer of ownership to the Nigerian state which would then pay 98.5 million Euros to Bagudu and his affiliates. The commitment by Nigeria to transfer the funds to Bagudu is said to undermine Buhari’s pledge to quell rampant graft in the country. Last September Buharis’s administration submitted the 2018 deal to the UK court in support of its application to unfreeze the assets so that they can be sent to Nigeria. The case will be heard in June.