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Nigeria’s sovereignty and Chinese loans


By Ikenna Emewu

We are in the season of distraction from the issues that face us to chase the shadows they throw on the ground. Nigeria is borrowing recklessly as if the only thing it can do to survive is borrowing. We read it very early in life that ‘he who goes a borrowing goes a sorrowing’. The truth of this saying can never fade, but Nigeria doesn’t care.

In the past five weeks, we have seen some of the worst drama of the present government in unbridled sleaze when we were promised no tolerance for corruption. The matters were getting adequate national attention and all of a sudden, someone threw a huge distraction into the mix. We have left those compelling issues to bicker over the shadow.

The substances are the EFCC probe and the ousted acting chairman’s alleged soiled hands running into hundreds of billions of naira.

Today, instead of discussing what is going on, they brought us a potent distraction that a loan giver, the China EXIM bank signed or compelled Nigeria to sign loan deal to cede Nigeria’s sovereignty.

I saw the bait when the Transportation Minister, Hon. Chibuike Amaechi asked Nigerians if anything is wrong with China giving a condition on Nigeria’s sovereign immunity waiver as clause.

If for instance, Amaechi doesn’t understand the legal interpretation of the clause that contains the sovereign immunity issue, the lawyers that signed for Nigeria do. So why are the Attorney General of the Federation and the Finance Ministry and in fact, the foreign ministry silent on telling Nigerians the true meaning of that clause that has nothing to do with Nigeria ceding her sovereignty to any country?

Even a lay man would ask of the possibility of a country being stripped of its sovereign immunity endowment. Simply put, waiver of a state’s sovereign immunity means losing its statehood.

It became better understood when Amaechi started by asking the National Assembly to stop probing the loans conditions signed with the Chinese capital exporting institution, the EXIM Bank.

Why a minister of a country made such request, and asserting in a very confusing manner that China would be cold towards honouring the loan facility if the National Assembly probes it is surprising. Which country or loan giver in the world would be annoyed that a probe is conducted by a state to ensure due process and proper utilization of a facility it gave? Reason Nigeria is sinking in debt is the culture of loans obtained in the past being diverted to private coffers and the state left to pay.

Did the minister forget that China punishes fraud in public office with death to show its total intolerance for fraud? So why would such country that knows the recovery of its loan or loan of its agency is assured when only the loan is judiciously used be against public probe?

For the records, loans China extends to any country in Africa are not from the government. For Africa, China operates the China Africa Development Fund (CADFund) created in 2015 after the Johannesburg summit of the Forum on China Africa Cooperation (FOCAC) and endowed with US$5 billion which was later raised to US$10 billion in 2016.

So, when I read Article 8(1) of the loan conditionalities that has been latched on to as the offending ingredient, I would not find any reasonable meaning in the obfuscated interpretation. The clause described the loan as COMMERCIAL. That is a loud qualification in public international law.

It reads “The borrower hereby irrevocably waives any immunity on the grounds of sovereignty or otherwise for itself and its property in connection with any arbitration proceedings pursuant to Article 8(5) thereof with the enforcement of any arbitral awards pursuant thereto, except for the military assets and diplomatic assets.”

There is no stretch of interpretation of this clause that connotes Nigeria losing her sovereignty to China.

What it simply means is that if the borrower defaults in repaying, and the lender takes the borrower to arbitration to decide how the loan would be recovered, the borrower can’t plead it is a sovereign state and won’t subject to the jurisdiction of the arbitral panel.

Sovereign immunity is a rule in public international law that precludes sovereign states from subjecting to the jurisdiction and decisions of the court of another state. This rule applies in two arms – absolute sovereign immunity or restrictive sovereign immunity.

The absolute sovereign immunity applies in issues related to pure state activities termed acta jure imperii. The restrictive immunity applies in matters that are commercial in nature and called acta jure gestionis. So, this issue of loan is COMMERCIAL and the rule of absolute sovereign immunity can never apply. That is why the clause exempted military and diplomatic assets. I don’t think, with due respect, that whoever entered into that treaty ceded Nigeria’s sovereignty as we hear.

This rule didn’t start with China and Nigeria loans. It is an old one and consolidated even with Nigeria in the case of Trendtex Trading Company v. Central Bank of Nigeria in 1977 in a judgment of a London court. ([1977] 2 WLR 356)

In this case, the Swiss company sued our own CBN for reneging on its obligation to honour the payment for cement supplied Nigeria government and the demurrage that accrued to it after delay in berthing and offloading in the Lagos ports. CBN entered appearance at the London court and pleaded sovereign immunity to opt out of the litigation. But the court disagreed and interpreted the deal on RESTRICTIVE SOVEREIGN IMMUNITY because the CBN, though an agency of a sovereign state was involved in commercial activity (acta jure gestionis) and held it liable for the default.

Before our CBN was a celebrated case in 1961, Harris & Co. Advertising v. Republic of Cuba, 127So.2d 687 (Fla. App. 1961) between the company and state of Cuba. Cuba lost its plea of sovereign immunity in Florida, USA court because what was at stake was a commercial matter, also applying the rule of restrictive sovereign immunity.

It might also interest us to know that the IMF and World Bank vet all international loan conditions, and if that Article 8(1) was at variance with the rules, it would not have been allowed to stand in the first place.

Recently, one of the most favourite past times of the world has been China bashing in factual and fictitious shades and US has been the champion and creator of the rave. Last week, even Reuters, a prominent US news agency reported from its Lusaka base a refutal of the government of Zambia of a statement credited to the White House that a Chinese company has taken the Zambian electricity agency, ZESCO over loan default.

What should worry us so much is why Nigeria keeps borrowing endlessly and nothing is done in the public interest with the loans. Our debt stands at N33 trillion as at May 2020. We keep borrowing when the drain pile is not yet plugged and keep losing the same loans we got to individuals that run the state.

  • Emewu, journalist is of Afri-China Media Centre. He wrote from Lagos.

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