Dangote Farms Faces Liquidation For ‘Defaulting’ On Arbitral Award

A prolonged legal dispute between Dangote Farms and a global cotton company, Plexus Cotton Limited, regarding non-payment of an arbitral sum may result in the closure of Dangote Farms, a subsidiary of the Dangote Group.

Plexus, headquartered in England, entered into a cotton supply contract with Dangote Farms in 1996.However, Dangote Farms reportedly breached the agreement by delivering only 1,450 metric tonnes of raw cotton instead of the agreed 3,700 metric tonnes.

Consequently, Plexus initiated arbitration proceedings against Dangote in Liverpool, resulting in an arbitral award issued against Dangote in 1998.

The tribunal, led by the President of the Liverpool Cotton Association, found Dangote in breach of the contract and awarded $431,000 in favour of Plexus, equivalent to the unfulfilled supply plus an 8% interest rate.

Despite Dangote’s attempts to overturn the arbitral award in England and Nigeria, Court documents made available to POLITICS NIGERIA revealed their efforts proved futile. For instance, Dangote’s initial appeal before the Federal High Court in Lagos, claiming lack of awareness of the arbitration, was dismissed as incompetent.

"The fact and evidence of the Defendant outweigh the mere assertion made by the Claimant that it had no knowledge of the arbitrator or that it was denied the right to appoint its own arbitrator,” the presiding judge, Justice DT Okuwobi ruled in 2015."

"A court has no jurisdiction to award interest on an arbitral award or to otherwise interfere with the award. The counterclaim now found incompetent is hereby struck out.”

Similarly, a three-man panel at the Court of Appeal in Lagos affirmed Justice Okuwobi’s ruling in 2018.

According to the presiding judge, Justice Biobele Georgewill, Dangote cannot contest the outcome of the “arbitration it had neglected, boycotted and or failed to participate in”.

Award Value rises to $2.4 Million

With the arbitral sum unpaid for over 25 years, it has accrued to $2.45 million, according to a recent filing by Plexus at the Federal High Court in Lagos. The British company is now seeking a winding-up order against Dangote Farms to enable liquidation of the company’s assets.

“Your Petitioner therefore humbly prays that: Dangote Farms Limited be wound up by the Court under the provisions of the Companies and Allied Matters Act, 2020 for its inability to pay and satisfy its liquidated money sum owed by the Respondent to Your Petitioner and established by copies of the attached notices and orders of court.

"The Respondent's refusal to liquidate its aforesaid indebtedness to Your Petitioner has occasioned serious financial hardship and unnecessary expenses to Your Petitioner and ought to be wound up to prevent its future indebtedness to other commercial entities."

"The Respondent is, by its own admission, unable to pay its established debt to the Petitioner and the sum owed by the Respondent is increasing daily owing to the interest element, and in the circumstances it is just and equitable that the Respondent be wound-up. As of November 30, 2023, the sum had become $2,452,695.44,” the court documents filed in December read in parts.

The Case is up for hearing on March 19th