On 14 June 2022 Mrs Justice Cockerill handed down judgment in Federal Republic of Nigeria v JPMorgan Chase Bank NA [2022] EWHC 1447 (Comm), following a seven-week trial in the Commercial Court earlier in the year.  Rosalind Phelps QC, David Murray and Aaron Taylor, instructed by Freshfields Bruckhaus Deringer, acted for JPMC.

The claim arose out of the settlement of long-running disputes concerning an Oil Prospecting Licence for an oilfield off the Nigerian coast (OPL 245). The licence had initially been granted to a company (Malabu) owned by the then-Petroleum Minister (Chief Etete) in the military government of General Abacha. The licence was subsequently revoked and granted to a company in the Shell group, before being re-granted to Malabu. Those events gave rise to a series of claims between the Federal Government of Nigeria (FGN), Malabu and Shell in several fora, each of which was eventually settled by a suite of Resolution Agreements in 2011.

Those agreements provided for Shell, and the Italian oil company Eni, to pay $1.3 billion to the FGN, of which the FGN was to pass c.$1.1 billion to Malabu for the surrender of its rights to the licence. The FGN was to retain c.$200 million as a signature bonus for a new licence to be granted to Shell and Eni. The FGN account into which Shell and Eni transferred these sums was held with JPMC. JPMC paid out the c.$1.1 billion to Malabu in 2011 and 2013, pursuant to the instructions of the FGN’s authorised officers.

Following a change of government in Nigeria, the FRN brought proceedings against JPMC alleging that the 2011 Resolution Agreements had been procured by the corruption of the then-Attorney General, Mr Adoke, for his own benefit and the benefit of other corrupt officials. It argued that in making the payments to Malabu which fell due under the agreements, JPMC was in breach of the duty formulated in Barclays Bank v Quincecare [1992] 4 All ER 363, by which (as Steyn J put it in that case) “a bank must refrain from executing a payment order if and for so long as the banker is ‘put on inquiry’ in the sense that he has reasonable grounds (although not necessarily proof) for believing that the order is an attempt to misappropriate the funds of the [customer].” In light of the contractual threshold for a claim, the FGN alleged that JPMC had been grossly negligent in making the payments to Malabu.

Cockerill J rejected the FRN’s claim. She held that the existence of a fraud by Mr Adoke in 2011 had not been proven. Even if such a fraud had been proven, JPMC did not act with gross negligence in making the payments in 2011 or 2013. The Resolution Agreements were the considered policy of the FGN, with the aim of resolving more than a decade of litigation which had prevented the oil field from becoming productive. The agreements had been approved by a significant number of ministers and officials – including then-President Jonathan – against whom no allegations of wrongdoing had been pursued.

The judgment, available here, contains a valuable discussion of the nature of the Quincecare duty, the meaning of gross negligence in private law, and the scope of the Foreign Act of State doctrine.