A coalition of international anti-corruption groups has urged a World Bank affiliated group against scuttling Nigeria’s bid to successfully prosecute illicit funds associated with the controversial OPL 245.
In a petition to the Chairman, International Centre for Settlement of Investment Disputes, David Malpass, the groups raised critical issues concerning ICSID lack of diligence in dealing with serious corruption cases in Nigeria, warning that the posture of the ICSID may have far reaching consequences across the global anti-corruption campaign especially as it affects oil giants.
The petition was signed by Olanrewaju Suraju for Human and Environmental Development Agenda (HEDA Resource Centre); Bart-Jaap Verbeek for SOMO; Simon Taylor, Global Witness; Luca Manes, Re-Common; and Nicholas Hildyard, for The Corner House.
The anti-corruption groups had helped opened up a can of worms involving several criminal deals associated with the OPL245 while raising the alarm that some of the affected companies were seeking refuge under the ICSID frontiers for an arbitration that raise fears of a plot to undermine on-going court proceedings in Nigeria and Italy.
The groups warned of a real danger that a parallel adjudication of the OPL 245 corruption charges by an ICSID arbitration tribunal, lacking the clear rules and evidential powers that assist a criminal court, may reach conclusions that undermine or conflict with the findings of the courts in Italy and Nigeria.
The coalition said ICSID as an institution should not let cases even start when they involved corruption that is being prosecuted or under official investigation.
The groups said they were concerned about the ICSID’s long-standing failure to promulgate clear rules for addressing cases where corruption had been alleged, resulting in a well-founded perception that arbitration is now “a venue where agreements vitiated by corruption find legitimisation and enforcement”.
They argued that it cannot be right that investors were able to use letterbox companies established for tax benefits to “forum shop” BITs by taking claims in the name of companies, which have had no role in negotiating or fulfilling the contracts under dispute.
It said ICSID needs to take urgent steps to ban this practice.
The coalition said, “ICSID should not allow itself to be put into a position where its registration or tribunal rulings undermine the rule of law or development policy on the fight against corruption.
“Screening out such is essential if ICSID’s reputation (already undermined by its lack of transparency and the conflicts between its arbitration judgments and ICSID’s foundational development objectives) is not to be further damaged.
“Likewise, with cases where a lack of legality clauses might mean illegal contracts are considered fit for adjudication.
“More generally, there is an urgent need for ICSID to clarify its rules relating to cases where corruption is pleaded by a party or suspected by the arbitrators.
“A clear duty should be imposed on the arbitrators to report such suspicions to the appropriate investigatory authorities and to suspend hearings until those investigations have been concluded.”
The coalition stated that ICSID should, according to the international coalition, acknowledge the primacy of national courts in trying corruption cases. We would therefore urge that rules are introduced to deny registration of cases where corruption has been proved or suspend registration and/or jurisdiction to cases that are either being prosecuted or under investigation by national prosecutorial authorities, pending conclusion of such investigation or prosecution.
It posited that the Eni case was a test of ICSID’s resolve in this regard.
The coalition said it was concerned that the ICSID is willing to accept cases for arbitration based on outdated (and arguably illegitimate) Bilateral Investment Treaties that do not require investments to comply with host country law.
“Since ICSID is part of the World Bank Group, the onus is on the World Bank to ensure that ICSID supports rather than hinders the fight against corruption. Indeed, it would be an affront for the World Bank Group to continue to give secretarial and other assistance to ICSID whilst it remains an avenue through which corruption is rewarded” the groups added.
The groups condemned the recent registration of a request by Eni International B.V. (The Netherlands), Eni Oil Holdings B.V. (The Netherlands), Nigerian Agip Exploration Limited (Nigeria) “the Eni companies” for the institution of arbitration proceedings against the Federal Republic of Nigeria where Eni accused Nigeria of refusing to abide by what are said to be its obligations under agreements signed in 2011 to convert an oil production licence for an offshore field (known as OPL 245) into an oil mining license.
The groups said the request violates Nigeria’s 1992 Bilateral Investment Treaty with The Netherlands.
They called on the President of the World Bank Group and Chair of the ICSID Administrative Council to take urgent action under Article 6.3(5) of the ICSID Convention to empower the Secretary-General to declare cases to be manifestly outside the jurisdiction of ICSID where corruption is proven in a separate legal process or a contract has been proven to be illegal under host country law (irrespective of whether the underlying BIT or BITs has a clause requiring compliance with host state law).