FG Wins Arbitration Case Over 1981 Ajaokuta Steel Contract, Saves Over N4bn

FG has won arbitration case over 1981 Ajaokuta Steel Contract and saved over N4bn.

NewsOnline Nigeria reports that the Federal Government has secured a major legal victory in a decades-old dispute linked to a 1981 civil works contract for the Ajaokuta Iron and Steel Complex.

Attorney General of the Federation and Minister of Justice, Lateef Fagbemi, announced on Friday that Nigeria obtained a favourable final award on November 11 from a tribunal convened under the Alternative Dispute Resolution Centre of the Federal High Court.

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The contract, awarded to a joint venture between Fougerolle Nigeria Ltd and French firm Fougerolle SA, was executed long before Kogi State was created, when the project site fell under old Kwara State.

According to Fagbemi, the contractor initiated arbitration on December 12, 2022; 18 years after terminating the contract in January 2004. Fougerolle sought to compel Nigeria to pay N4 billion and €185 million in what it claimed were outstanding obligations.

The minister noted that the sums demanded comprised unverified and uncertified claims totalling N3.85 billion and €185.7 million, contrary to the contract terms and the company’s earlier commitments.

Following the contract’s termination, the Federal Government had commissioned PricewaterhouseCoopers to verify any outstanding liabilities. Based on the verification, the government paid Fougerolle N3.89 billion through FGN Bonds on September 11, 2006. The company also signed an indemnity confirming the payment as a full and final settlement.

Despite this, Fougerolle resurfaced with a new claim 16 years later.

The tribunal upheld the government’s preliminary objection, ruling that the claim was statute-barred, lacked a valid cause of action, and had already been extinguished by the indemnity and the 2006 bond payment. It also found that the claimant lacked the legal standing to reopen the matter.

Even after reviewing the case on its merits, the tribunal held that the company failed to prove its allegations and had already waived further claims. Assertions of expropriation and duress in signing the indemnity were also dismissed.

The award effectively saves Nigeria more than N4 billion.

Fagbemi said the successful defence which was handled internally by the Federal Ministry of Justice underscores the administration’s commitment to resisting frivolous claims and strengthening Nigeria’s capacity to manage complex litigation and arbitration.

He added that the ruling reaffirms the government’s support for alternative dispute resolution as a credible mechanism for resolving commercial disputes.