Case of the Day: Chiejina v. Nigeria

The case of the day is Chiejina v. Nigeria (D.D.C. 2022). I’m counsel to the petitioners, Peter Chiejina and PICCOL Nigeria Ltd. PICCOL, a Nigerian engineering firm, had a contract with the Nigerian government for the construction of gully erosion control structures in Imo State. The contract contained the following agreement to arbitrate:

Any dispute, controversy or claim arising out of or relating to this contract or the breach, termination or invalidity thereof, shall be settled by arbitration at the Regional Centre for International Commercial Arbitration, Lagos, under the applicable Arbitration Rules in the schedule to the Arbitration and Conciliation Act Cap. 19 Laws of the Federation of Nigeria 1990.

A dispute about payments under the contract arose–the details aren’t important here–and in 2016, PICCOL and its managing director and CEO, Chiejina, demanded arbitration. The case was arbitrated at the Regional Centre for International Commercial Arbitration in Lagos before a single Nigerian arbitrator. After rejecting Nigeria’s challenges to jurisdiction, and after an evidentiary hearing at which all parties had counsel and participated, in 2019, the arbitrator issued an award in favor of PICCOL and Chiejina, ordering payment within 21 days. But Nigeria never paid the award.

In August 2021, Chiejina and PICCOL filed a petition for confirmation of the award in the US District Court in Washington, DC. They served process on Nigeria by sending the necessary documents by Fedex to the Minister of Justice. Nigeria moved to dismiss the case, asserting that the service of process was invalid and that the court lacked jurisdiction because no exception to foreign sovereign immunity applied.

Service of Process

Under the FSIA, there is a hierarchy of methods of service Here is the list:

  1. delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the foreign state or political subdivision.
  2. if no special arrangement exists, by delivery of a copy of the summons and complaint in accordance with an applicable international convention on service of judicial documents
  3. if service cannot be made under paragraphs (1) or (2), by sending a copy of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the head of the ministry of foreign affairs of the foreign state concerned.
  4. if service cannot be made within 30 days under paragraph (3), by sending two copies of the summons and complaint and a notice of suit, together with a translation of each into the official language of the foreign state, by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the Secretary of State in Washington, District of Columbia, to the attention of the Director of Special Consular Services—and the Secretary shall transmit one copy of the papers through diplomatic channels to the foreign state and shall send to the clerk of the court a certified copy of the diplomatic note indicating when the papers were transmitted.

Special arrangements for service are unusual. Usually, they pop up in the cases when a plaintiff unhappy about having to use one of the less familiar methods of service in the statute tries to make the case that language in the parties’ contract that doesn’t mention service of process is a special arrangement for service. There’s a well-developed body of precedent in DC on this. The upshot is that notice provisions in contracts that say things like, “all notices under this contract” must be sent in a particular way, or “all notices required or permitted to be served under this contract,” etc., are not special arrangements for service, but all-encompassing notice clauses (maybe something like “all notices,” or “all notices for any purpose,” etc.) can be special arrangements for service. Because the cases generally operate to protect foreign sovereigns from overeager plaintiffs who try to serve process the easy way, the courts say that the special arrangement prong of the statute should be read narrowly.

This case was unusual because it was not the plaintiff but the foreign state arguing for a simplified contractual notice process rather than the formal methods spelled out in the FSIA. The contract provided that “any notice, authorization, information, instruction and correspondence required or authorized by this Agreement to be given by either party to the other shall be sent by registered post to the other party” at a specified address. That’s clearly the kind of clause that the cases say isn’t a special arrangement for service, and the court rejected the argument.

Jurisdiction

Nigeria also argued that the court lacked jurisdiction. On its face, this is a challenging argument to make, because the FSIA contains an arbitration exception to the ordinary rule of foreign sovereign immunity:

A foreign state shall not be immune from the jurisdiction of courts of the United Statesor of the States in any case … in which the action is brought, either to enforce an agreement made by the foreign state with or for the benefit of a private party to submit to arbitration all or any differences which have arisen or which may arise between the parties with respect to a defined legal relationship, whether contractual or not, concerning a subject matter capable of settlement by arbitration under the laws of the United States, or to confirm an award made pursuant to such an agreement to arbitrate, if (A) the arbitration takes place or is intended to take place in the United States, (B) the agreement or award is or may be governed by a treaty or other international agreement in force for the United States calling for the recognition and enforcement of arbitral awards, (C) the underlying claim, save for the agreement to arbitrate, could have been brought in a United States court under this section or section 1607, or (D) paragraph (1) of this subsection is otherwise applicable.

Here, PICCOL had a valid agreement to arbitrate with Nigeria, the award was made pursuant to that agreement, and the award is subject to the New York Convention. That should be the end of the analysis. But Nigeria argued that the court lacked jurisdiction because Chiejina, who it says was not a party to the contract, was a party to the action.

The basic problem with this argument is that it confuses a merits question (is there a defense to confirmation under the New York Convention, because Chiejina did not sign the agreement to arbitrate in his individual capacity?) with a jurisdiction question. The judge cited several similar cases in which the court had held that a question about arbitrability (e.g., did the claimant have an “investment” in a foreign state sufficient to bring a bilateral investment treaty into play?) were merits questions that did not affect the court’s jurisdiction. And anyway, even if there were some issue about Chiejina’s presence in the case, Nigeria could hardly argue that the court lacked jurisdiction with respect to PICCOL. Because the court ruled in Chiejina and PICCOL’s favor on the arbitration exception, it did not need to reach the most interesting jurisdictional point the parties briefed, namely, whether Nigeria had, by signing the New York Convention, implicitly waived its foreign sovereign immunity on claims for confirmation of arbitral awards. The DC Circuit, in dicta and in non-precedential decisions, has said that that’s the law, but it has never reached a formal holding on the question. Nigeria suggested that even if that is the general rule, the rule should be different where, as here, the arbitration’s seat was in the state’s own territory. I argued that there was no basis for that distinction in the New York Convention. An answer will, it seems, have to wait for another case.

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