China, Nigeria, And Hostage Aircraft

By Dakuku Peterside, PhD.

Every story has two sides, but when a country’s rep­utation as a sovereign and an investment destination comes under threat, it calls for im­mediate concern and action from its citizens and leaders. The recent unfolding of a concerning develop­ment has significant implications for Nigeria’s global standing as an investment hub. A Chinese com­pany, Zhongshan Fucheng Indus­trial Investment Co. Ltd, secured a court order in France following an arbitration award initiated in 2017, with the Ogun State Govern­ment over a contractual relation­ship that dates to 2010. The arbi­tration panel ruled in favour of Zhongshan, stating that “It is clear that Zhongshan is the effective win­ner in these arbitral proceedings, in that it has proved its version of events is accurate, successfully re­sisted Nigeria’s jurisdictional and preliminary objections, established a valid claim against Nigeria under the Treaty, and obtained an award for substantial damages.” This is not just a legal victory for the Chi­nese firm, but a red flag for Nige­ria’s global investment reputation that demands immediate attention and action.

This ruling is a significant blow to Nigeria’s absolute sovereign sta­tus and the doctrine of sovereign immunity. The order has since been upheld by a US court, which dismissed Nigeria’s sovereign im­munity defence in enforcing the $70 million investment treaty award. The US court was scathing in its judgment, asserting that Nigeria had “gruesomely” violated the Chinese firm’s fundamental and commercial rights. This ruling has led to the dramatic seizure of three Nigerian aircraft in France—air­craft that belong to the federal gov­ernment. The seized jets include a Dassault Falcon 7X, a Boeing 737- 7N6/BBJ, and an Airbus A330-243, all stationed at Paris-Le Bourget and Basel-Mulhouse airports.

While initially a dispute be­tween a subnational government and a private firm, this situation has spiralled into a crisis with broader and more severe implica­tions for Nigeria. It raises critical questions about Nigerian subna­tional entities’ conduct and the federal government oversight of international contracts. Can sub­national entities enter into agree­ments guaranteed by sovereign that do not include national assets or support? What level of due dili­gence should subnational govern­ments observe before they engage in contractual relationship with foreign firms? More importantly, does this case reflect a more pro­found, systemic issue within Ni­geria—a culture that lacks respect for contracts and international agreements?

The case also casts a spotlight on the perceived weaknesses of Nigeria’s institutions, which need more authority or respect on the global stage.

This perception is troubling and raises the question: do for­eign investors lack confidence in Nigerian institutions ? These are not rhetorical questions but rather pressing concerns that de­mand a thorough investigation and straightforward answers. The implications are dire, as evi­denced by this case, which has re­sulted in public embarrassment for the country and the potential loss of much-needed funds due to poorly negotiated and managed contractual relationship . A thor­ough investigation is crucial to restore trust and confidence in Nigeria›s international business dealings.

This situation is not an isolated incident but part of a worrying trend. It calls to mind earlier cases, such as the P&ID arbitration ruling in 2010, where Nigeria was found tardy in a failed gas supply and pro­cessing contract. Though this was reversed but it left a scar . Similar­ly, in 2019, a UK court awarded an Irish engineering firm $9.6 billion in damages against Nigeria over a failed gas project. In that case, the firm went so far as to instruct its lawyers to identify Nigerian assets worldwide that could be seized to enforce the arbitration award. These incidents paint a troubling picture of Nigeria’s handling of in­ternational contracts and the coun­try’s reputation on the global stage.

The ongoing dispute with Zhongshan Fucheng Industri­al Investment Co. Ltd is likely to negatively impact Nigeria’s glob­al standing, especially when the country is desperately trying to attract foreign direct investment. This case highlights the often poor­ly structured nature of Nigeria’s international contracts, where subnational governments and even private companies have found ways to entangle the federal gov­ernment in their questionable and often poorly thought-out deals. The result is a further tarnishing of Ni­geria’s already fragile reputation. Following the Dangote saga where there is perception that Nigeria could not treat its own businesses fairly ,this is another blow to Ni­geria’s global image . The country already suffers from a prevalent negative perception regarding the sanctity of contracts, largely due to inconsistent adherence to contrac­tual obligations. The federal gov­ernment’s failures to uphold these commitments, particularly at the subnational level, only exacerbate the problem. This disregard for the sanctity of contracts contributes to a growing cynicism about Nigeria as a reliable destination for invest­ment and business. It is crucial to uphold agreements and respect contracts to restore Nigeria’s rep­utation.

The symbolism of this saga is still visible to us. Beyond the immediate damage to Nigeria’s national reputation, this incident brings broader issues related to leadership, business ethics, and the sacrosanct nature of contracts. It underscores the importance of continuity in government—where all governments inherit their pre­decessors’ assets and liabilities and should not cancel contracts arbitrarily. More­over, this situa­tion highlights the critical need to build solid, responsive, and trustworthy in­stitutions that command re­spect locally and internationally and can handle the complexi­ties of interna­tional business contracts. It is an anomaly that contracts involv­ing Nigerian subnationals or firms and foreign businesses al­ways situate arbitration in foreign lands when local institutions are available and ostensibly capable of fulfilling this role.

The recurring cases of Chinese companies taking advantage of Ni­geria’s open business doors are in­creasingly worrisome. It is imper­ative that the federal government, particularly the Office of the At­torney General, take a closer look at international contracts entered by state governments to insulate sovereign assets from exposure. This situation raises significant constitutional questions: does the federal government have the con­stitutional authority to regulate or even approve contracts entered by subnational entities?

The ongoing dispute between Zhongshan Fucheng Industrial Investment Co. Ltd and the Ogun State Government, which has now implicated Nigeria’s sover­eign assets, is a stark reminder of the importance of upholding the sanctity of contracts and ensur­ing due diligence in international agreements. The federal govern­ment must take decisive action to safeguard Nigeria’s reputation as a reliable investment destination. This includes strengthening in­stitutions, enforcing contractual commitments, and resolving dis­putes through diplomatic channels. Please government must address these issues to ensure good dip­lomatic relations and not deter much-needed foreign investment, compromising Nigeria’s economic future.

The time has come for Nigeria to reassess its approach to inter­national business dealings. This reassessment must focus on re­storing confidence among global investors, ensuring that all levels of government adhere to interna­tional best practices, and building institutions that are strong, re­spected, and trusted by domestic and international stakeholders. Nigeria can repair its reputation and safeguard its national interests in an increasingly interconnected global economy by doing so.

This incident is more than just a legal or diplomatic issue; it is a wake-up call for Nigeria to re­align its policies, practices, and institutions with global business demands. The country cannot af­ford to continue this path of negli­gence, laxity and mismanagement. As this case has shown, the cost is far too high—not just in monetary terms, but in terms of Nigeria’s global standing, credibility, and future prosperity. It is imperative that Nigeria learn from this epi­sode, take corrective action, and ensure that such incidents are not repeated in the future. The nation’s economic future and place in the global community depend on it. As for the foreign business sharks that aim to reap off Nigeria’s through dubious business deals that can­not hold waters, it is time we iso­late and deal with them and their Nigerian companions. Convicting some of these criminals will serve as a deterrent to others and help reduce such incidents in Nigeria.