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Tribunal Awards N54 Billion Damages Against FG Over DLA Deal

An arbitration tribunal has ordered the federal government of Nigeria the sum of N54 million to Resort International limited, a company owned by Dr. Wale Babalakin.

Resort international had reached a Development Lease Agreement with the federal government in 2006 to convert the Federal Secretariat Complex, Ikoyi into blocks of luxurious apartments.

The agreement which was to be valid for a period of 99 years was for Resort limited to build 480 flats. However, the Lagos state government stopped the development of the complex in 2007 and essentially put paid to Resort International’s efforts.

The company contended that the failure of the federal government to assert its title deed over the property put the company in dire financial straits and claimed loss of profit and damages against the government to the tune of N88 billion.

The federal government on its part claimed that the Lagos State Model City Development Authority Law 2009 frustrated its efforts to honor the contract.

In its ruling, the tribunal stated, “The claimant proceeded on the strength of these covenants to commence work on the demised premises, only to be stopped by the Lagos State Government on the ground that the land belonged to it and not the respondent,”

“The inability of the respondent to resolve the dispute between itself and the Lagos State Government over the demised premises revealed a defect in title, which is a clear breach of the covenant as to good title.”
The panel however concluded that, “The Respondent in this case has clearly failed to carry out the obligations it undertook under the DLA.”

The tribunal went ahead to conclude that the federal governemnt “has not shown any extenuating circumstances for its flagrant violation of its covenant under the DLA. The respondent did not even try to address these points of the claimant as to its general loss of business, reputation, goodwill and credibility.”

The Tribunal awarded damages of N12 billion as Direct Expenditure with interest at 17.26 per cent from September 2008; N9 billion as loss of expected income with interest at 17.26 per cent from September 2008; and N5 billion as Special Damages.

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