Nigeria wins $2.35bn Sunrise Power arbitration as tribunal orders refund of legal fees

Nigeria has secured a major victory in its long-running legal dispute with Sunrise Power over the Mambilla Hydropower Project, after an International Chamber of Commerce tribunal in Paris dismissed the company’s $2.35 billion claim against the Federal Government.

The tribunal also ordered Sunrise Power and its promoter, Leno Adesanya, to reimburse Nigeria for 75 per cent of the legal fees and expenses incurred during the arbitration.

The award, issued on Thursday, directed Sunrise and Adesanya to pay Nigeria $11.819 million in legal costs, with $2.5 million to be deducted from funds held in escrow by the ICC and released upon notification of the final award.

The remaining $9.319 million is to be paid by the claimants with interest at an annual rate of 10 per cent, “compounded annually, from the date of the notification of this Final Award until such amount is paid in full”.

In its decision, the three-member tribunal rejected Sunrise Power’s request for a declaration that Nigeria had violated its contractual obligations under a settlement agreement and its addendum.

The tribunal also dismissed the company’s demand for $400 million, comprising a $200 million settlement sum and another $200 million default sum.

It further ruled that Adesanya, the promoter of Sunrise Power, is bound by the arbitration agreement with Nigeria under the settlement agreement and addendum.

The tribunal also affirmed its jurisdiction to hear Nigeria’s counterclaim against Adesanya and his firm.

The arbitration costs, fixed at $1.656 million, will be shared, with Sunrise Power and Adesanya bearing 75 per cent while Nigeria will pay the remaining 25 per cent.

The panel was chaired by Melaine van Leeuwen, with Stavros Brekoulakis and Simon Nesbitt serving as co-arbitrators.

Nigeria was represented by a legal team led by Elizabeth Oger-Gross and Tolu Obamuroh of Paul Hastings LLP.

The dispute dates back to October 10, 2017, when Sunrise Power commenced arbitration proceedings against Nigeria before the ICC International Court of Arbitration.

The company sought $2.354 billion over an alleged breach of contract relating to a 2003 agreement for the construction of the 3,050-megawatt Mambilla power plant in Taraba State.

The proposed project was valued at $6 billion and was to be executed under a build, operate and transfer arrangement.

A second arbitration subsequently arose from a 2020 settlement agreement between Sunrise Power and the Nigerian government.

Under that claim, the company sought $400 million, alleging that the Federal Government failed to honour the terms of the settlement agreement intended to resolve the original dispute.

Former President Olusegun Obasanjo, in an interview in 2023, questioned the authority of his then Minister of Power, Olu Agunloye, to award the 2003 contract to Sunrise Power.

“When I was president, no minister had the power to approve more than N25 million without express presidential consent. It was impossible for Agunloye to commit my government to a $6 billion project without my permission and I did not give him any permission,” Obasanjo told TheCable.

“If a commission of inquiry is set up today to investigate the matter, I am ready to testify. I do not even need to testify because all the records are there. I never approved it.

“When he presented his memo to the federal executive council (on May 21, 2003), I was surprised because he had previously discussed it with me and I had told him to jettison the idea, that I had other ideas on how the power sector would be restructured and funded.

“I told him as much at the council meeting and directed him to step down the memo. I find it surprising that Agunloye is now claiming he acted on behalf of Nigeria. If I knew he issued such a letter to Sunrise, I would have sacked him as minister during my second term. He would not have spent a day longer in office.”

Former President Muhammadu Buhari also denied authorising the 2020 settlement agreement with Sunrise Power.

In a letter to Lateef Fagbemi, attorney-general of the federation and minister of justice, Buhari said he was aware that some ministers had engaged Sunrise over the project but did not authorise them to conclude a settlement.

“While I understood that my ministers of justice, power and water resources were approached by Sunrise and were engaging with various stakeholders that were involved in the project to resolve the issues blocking the project’s implementation, at no time did I specifically instruct them to enter into and conclude any settlement agreement with Sunrise Power and Transmission Company Limited,” he wrote to Fagbemi.

“Indeed, when the proposed settlement agreement and addendum were presented to me for my consideration and approval on 20th April 2020, I refused to approve the settlement deal because I was convinced that there was no basis for Sunrise’s claim.

“I hope the above clarifications will assist you in your defence of our country from these ‘invisible contractors who all too often quietly take Nigeria for many millions in out-of-court settlements’, as I stated in my recent statement regarding Nigeria’s victory in the P&ID saga.”

(THE CABLE)