Mambilla: How Contract Flaws Sank Sunrise’s $2.35bn Claim Against Nigeria.
Fresh details surrounding Nigeria’s victory in the long-running Mambilla Hydroelectric Power Project dispute have revealed how questions over contract approval, corporate capacity and subsequent settlement arrangements weakened the multibillion-dollar claims brought by Sunrise Power and Transmission Company Limited.
The International Chamber of Commerce arbitration tribunal in Paris rejected Sunrise’s claims arising from the controversial power project, handing Nigeria a major victory in a dispute that had lingered for years.
At the centre of the controversy was Sunrise’s claim to contractual rights over the proposed 3,960-megawatt Mambilla Hydroelectric Power Project in Taraba State.
The dispute dates back to 2003, when the Federal Executive Council considered a proposal concerning the project.
According to accounts presented in connection with the arbitration, FEC did not approve the proposed award to Sunrise and instead directed that the project should pass through a competitive procurement process.
However, a day after the FEC meeting, then Minister of Power and Steel, Dr Olu Agunloye, issued a letter to Sunrise indicating preliminary approval for the company to participate in the development of the project.
That document subsequently became central to the disagreement over whether Sunrise possessed a valid and enforceable contract with the Federal Government.
Nigeria maintained that the ministerial letter could not override the decision of the Federal Executive Council and therefore did not amount to a valid government contract.
The government’s position was reinforced by evidence concerning Sunrise’s financial and operational capacity.
Documents referenced in accounts of the arbitration indicated that Sunrise’s corporate filings showed total declared assets of only N1 million in some later years and no turnover between 2017 and 2019.
Questions were consequently raised about the company’s capacity to undertake a multibillion-dollar hydroelectric project.
The dispute became more complicated after the government subsequently moved ahead with other contractors for the Mambilla project.
Sunrise initiated legal proceedings, claiming rights over the project and seeking substantial compensation for alleged expenditure and anticipated profits.
Efforts by successive administrations to resolve the dispute eventually produced negotiations aimed at clearing the legal obstacles surrounding the project.
During the Muhammadu Buhari administration, discussions between Sunrise and senior government officials resulted in proposed settlement arrangements.
A $200 million settlement was eventually proposed, while an addendum reportedly created circumstances under which Nigeria’s potential financial exposure could rise significantly if payment was delayed.
But the settlement faced a crucial obstacle: presidential approval.
When the proposed terms were presented to Buhari in 2020, the former president declined to approve the payment.
That decision subsequently became an important part of Nigeria’s defence when Sunrise returned to international arbitration.
The tribunal ultimately found that the settlement agreement and its addendum were not binding on Nigeria because the required presidential approval had not been obtained.
The tribunal also made serious findings concerning the circumstances surrounding aspects of the settlement negotiations, including the conduct of some officials involved in the process.
Those findings further weakened Sunrise’s attempt to enforce the arrangements against the Nigerian government.
The case consequently shifted from whether Nigeria should compensate Sunrise to whether the documents and agreements relied upon by the company created legally enforceable obligations against the country.
After examining the history of the project, contractual documents, settlement negotiations and evidence presented by both sides, the tribunal rejected Sunrise’s claims.
It also rejected a separate $400 million settlement-related claim.
In another significant development, Sunrise and its promoter, Leno Adesanya, were ordered to reimburse Nigeria 75 per cent of the legal fees and expenses incurred in defending the arbitration, amounting to approximately $11.82 million.
Of that amount, $2.5 million is expected to be released from funds held in escrow by the ICC, while the balance of approximately $9.32 million is payable by Sunrise and Adesanya, with applicable interest.
The tribunal’s decision represents a major turning point in a controversy that has complicated efforts to develop the Mambilla project for more than two decades.
President Bola Tinubu welcomed the ruling, describing it as removing one of the biggest legal obstacles standing in the way of the hydroelectric project.
Attention may now shift from the international legal battle to whether the Federal Government can finally mobilise financing and contractors required to move the long-delayed Mambilla project from litigation to actual construction.
For Nigeria, therefore, the significance of the Paris decision goes beyond avoiding a potentially enormous financial liability.
It could also provide an opportunity to revive one of the country’s most ambitious electricity projects after years in which contractual disputes, litigation and arbitration overshadowed its development.
