FG clears air on controversial sovereign clause in Chinese loan agreement.

Abiola Seun    |   

Minister of Justice and Attorney General of the Federation, Abubakar Malami has assured that Nigeria’s sovereignty was not at risk in the country’s loan agreement with China.

The clarification is coming on the heels of the raging controversy over the varied and diverse loan interpretations agreement between China and Nigeria in many quarters for some of the on-going standard gauge rail projects across the country.

Malami, while answering questions alongside Rotimi Amaechi, Minister of Transportation, on ‘Good Morning Nigeria’ aired on NTA, explained the difference between international diplomatic immunity which relates to a nation’s sovereignty, independent existence, and commercial immunity which has to do with a commitment to ensure repayment of loans.

The AGF said the misconception is that the National Assembly is looking at the diplomatic immunity as against the commercial immunity of a country when it has to do with loans, adding that there is no concession whatsoever made as it concerns Nigeria’s diplomatic immunity.

“If you talk of immunity within the context of diplomatic immunity which has the implication of the independence of a state and its institutions in its own right, there is no concession whatsoever made by Nigeria as it relates to diplomatic immunity that has to do with its independent existence as a nation, neither was any concession made as related to institutional diplomatic immunity of the Nigerian institutions.

“But when you talk of immunity within the context of commercial sense, that is where I think we need to clarify issues with particular reference to the loans and commercial transactions among nations”.

According to Malami, concessions relating to immunity for the purpose of provision of commercial guarantee are a normal traditional ritual.

“Nations enter into respective interstate agreements and in the course of so doing, surrendering their jurisdictional immunity.

“It is on account of that for example that you see Nigeria signing an agreement with other institutions or nations and agreeing to a choice of territorial jurisdiction for the purpose of determining disputes when they arise.

“So that is how eventually you see Nigeria submitting to jurisdiction for determination of a trade dispute in UK, in Paris and in other international fora even when the country as a nation has diplomatic immunity.

“And that brings you to commercial immunity; the context and the implication of a commercial immunity or sobriety. 

“It’s indeed embedded in an appreciation that country A requests for a loan facility from country B and then country B is entitled as a matter of right to extract a commitment; an understanding that at the end of the day, the loan advance will eventually be paid. 

“So it is indeed a concession and sobriety, giving an undertaking, providing a guarantee for repayment of the facility when the need arises.

“So commercial immunity is in essence a mere guarantee that allows an advancing state an opportunity, right and power to claim back the financial advances made to a party and that in its own right is to an asset for the purpose of repayment of the loan.

” It is in no way extended to perhaps concession to diplomatic immunity by which you now surrender the rights, privileges and independence of a nation state.

” But it is a commercial term that is restrictive, exclusive to an asset, a commercial asset for that matter in the event of default,” Malami explained.

The AGF noted that the clause is a mere guarantee, a commitment that allows an advancing state (the lender) the powers to claim back an asset for the purpose of repayment of a loan and is in no way connected to the sovereignty of a country.