30 Jul Impact of Nigeria’s Sovereign Immunity Clause Waiver
Impact of Waiver of Sovereign Immunity Clause: Has Nigeria signed away its Sovereignty?
It has been reported in the Nigerian media that the $400 million loan for the Nigeria National Information and Communication Technology (ICT) Infrastructure Backbone Phase II Project, signed in 2018 between Nigeria and the Export-Import Bank of China, Nigeria allegedly ‘conceded sovereignty of Nigeria to China’. The clause apparently reads:
“The Borrower hereby irrevocably waives any immunity on the grounds of sovereign or otherwise for itself or its property in connection with any arbitration proceeding pursuant to Article 8(5), thereof with the enforcement of any arbitral award pursuant thereto, except for the military assets and diplomatic assets.”
If this clause is the sole reason for the assertion that Nigeria has conceded its sovereignty to China, then this assertion is false, and in this article, we will provide some clarity about how a sovereign immunity clause works.
Sovereignty v Sovereign Immunity
It is important to understand that these are two different legal concepts. Sovereignty is the power of a state to do everything necessary to govern itself, such as making, executing, and applying laws; imposing and collecting taxes; making war and peace; and forming treaties or engaging in commerce with foreign nations. It is the full right and power of a country over itself, without any interference from outside countries.
On the other hand, sovereign immunity is a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil proceedings or criminal prosecution. The doctrine stems from the ancient English principle that the King/Queen can do no wrong.
Why waive ‘sovereign immunity’?
In commercial loan agreements where the borrower (the sovereign country) maintains its immunity, it means that if the country were to default on any of its obligations or breach a term of a contract, the lender would have no recourse in law to enforce the contract, because the country has sovereign immunity from civil courts.
Therefore, it is a standard and common term in most commercial loan agreements involving countries, that the country agrees to waive its sovereign immunity as a condition of the loan, that is the only way the lender will be able to enforce its rights under the loan agreement.
Has Nigeria waived its sovereignty to China?
No, a country cannot sign away its sovereignty to another country via a commercial loan agreement. What Nigeria has done in that clause is that if they were to breach the loan agreement and the lender won the case in an arbitration, the lender will be able to enforce whatever arbitral award they win against any property of Nigeria except military or diplomatic assets.
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