FG secures legal victory in Washington over disputed Paris Club legal fees

The United States District Court for the District of Columbia has handed a significant legal victory to the Federal Republic of Nigeria by dismissing a $159 million enforcement suit brought by businessman Ted Iseghohi Edwards. In a ruling delivered on March 12, Presiding Judge Colleen Kollar-Kotelly determined that the court lacks subject matter jurisdiction over the claims, marking the third time a U.S. district court has reached this conclusion regarding the matter. The decision favors the federal government and its various entities, which had moved to dismiss the suit on the grounds of sovereign immunity.

The long-standing dispute centers on an agreement for a 10 percent legal fee purportedly owed to Edwards for representing hundreds of Nigerian local government councils in a lawsuit against the federation. This fee was tied to the recovery of the Paris Club refund. After struggling to collect these fees within Nigeria, Edwards first sought enforcement in the District of Massachusetts in 2018, but that action was dismissed because the Nigerian defendants were deemed immune from suit under the Foreign Sovereign Immunities Act.

Following subsequent negotiations, Nigerian Debt Management Office issued ten promissory notes to Edwards in 2021, totaling $159 million and scheduled to mature annually over a decade. Although these notes were backed by the full faith and credit of the federal government, they were governed by Nigerian law and required presentation to the Central Bank of Nigeria for payment. When the first note matured in October 2022 without payment, Edwards and his assignees, Boston Legal Partners, turned back to the American judicial system to compel the government to honor the debt.

Federal government has maintained that these promissory notes were invalid and issued in breach of relevant laws. Federal authorities argued before an Abuja court that the notes were unlawfully charged against national assets instead of the local governments that actually incurred the debts. They further contended that because the federal government never engaged these consultants directly, there was no valid consideration for the millions of dollars in promissory notes issued to them.

In the latest Washington ruling, Judge Kollar-Kotelly emphasized that foreign states enjoy presumptive immunity in the United States unless a specific exception applies. The plaintiffs failed to prove that Nigeria’s refusal to pay the debt had a direct effect within the United States. The judge specifically noted that the mere fact that the debt was denominated in U.S. dollars does not prove the contract contemplated performance in America, as the dollar is a global currency. Consequently, the court found no legal grounds to bypass Nigeria’s sovereign immunity, effectively ending this chapter of the businessman’s attempt to enforce the payment abroad.

SOURCE: NEWS SCROLL