The Royal Court of Justice on Tuesday unanimously dismissed JP Morgan’s appeal against the Nigerian government over its role in the controversial Malabu scandal.
According to civic campaigner Barnaby Pace of Global Witness, who was at the court yesterday, the court took no view on the underlying cause but ruled that the contractual terms did not rule out Nigeria bringing the claim.
This implies that the banking giant lost its appeal to stop the Nigerian government from proceeding with its suit.
Tuesday’s verdict was devoid of speeches and arguments as it was just a hand down of the judgement.
Last July, JP Morgan told an appeal court that it acted in line with its legal mandate when it allowed the transfer of $875million from an account held by Nigeria to a shell company run by a former Nigerian oil minister, Dan Etete.
Rosalind Phelps of Fountain Court Chambers, representing the bank, told the Court of Appeal that a lower court judge was wrong to reject JPMorgan Chase & Co.’s bid to toss the Federal Republic of Nigeria’s suit.
The bank moved to appeal a judgement that dismissed its motion to halt its prosecution by the Nigerian government last February. A skeletal argument presented by the Nigerian government through its lawyers during a case management hearing at a London High Court showed details of the appeal.
Last February, a High Court in London had dismissed a motion filed by the U.S. firm to halt its prosecution by the Nigerian government over the Malabu oil scandal.
In a ruling, the judge, Andrew Burrows, held that the American investment/finance firm “owed Nigeria a duty of care; as indicated by an implied term in the written agreement.”
“The duty of care was neither inconsistent with nor excluded by the terms of that agreement,” the court ruled.
He argued that several clauses in the agreement underpinning the bank account with JPMorgan were incompatible with the claim that the bank is bound by a “so-called Quincecare duty”.
The duty established in Quincecare provides that a bank will be liable to its customer in negligence if it makes a payment in circumstances where it had reasonable grounds for believing that the payment instruction is an attempt to misappropriate the funds of its customer.
“The judge approached the task of reviewing those clauses in an overly restrictive way,” the lawyer said.