Nigeria’s $1.7 billion suit: Why London court ruled in favour of JP Morgan

A London high court on Tuesday ruled in favour of JPMorgan Chase & Co. in a $1.7billion suit over its role in the disputed 2011 Malabo oil deal.

Nigeria alleges that JP Morgan was “grossly negligent” in its decision to transfer funds paid by oil giants Shell and Eni into an escrow account controlled by a former Nigerian oil minister, Dan Etete.

The court held that there was not sufficient evidence to prove that the Nigerian government was defrauded in the oil deal.

In 2017, Nigeria had instituted a legal action against American banking and financial service group, JP Morgan Chase, claiming over $1.7 billion in damages over its role in the disputed 2011 Malabo oil deal.

The suit was in relation to the $1.3 billion acquisition of an oil block prospecting licence OPL 245 by oil majors, Shell and Eni, which has also been at the centre of ongoing legal battle in Milan and the UK.

The Federal Government accused JP Morgan of gross negligence in its decision to transfer funds paid by Shell and Eni into an escrow account to a company controlled by Nigeria’s former Minister for Petroleum, Dan Etete, instead of paying into government account and without conducting sufficient due diligence.

Delivering judgement, the presiding judge, Sara Cockerill held that the Nigerian government couldn’t show that it had been defrauded.

She said that “it may be that with the benefit of hindsight, JP Morgan would have done things differently”

The court declared that “none of these things individually or collectively amount to triggering and then breaching” the bank’s duty of care to its client.

She noted that by the time of the 2013 payments, the bank was “on notice of a risk” of fraud. There was a risk but it was, on the evidence, no more than a possibility based on a slim foundation.”

She held that there was no proof that Nigeria was defrauded in the said deal and consequently, ruled in favour of JP Morgan.