Between a Court’s Perverse Decision and Investment

The Advocate

By Onikepo Braithwaite

Onikepo.braithwaite@thisdaylive.com

Perverse Decision

In Nigeria, from time to time, the attitude of some courts and their judgements, not only discourages FDI (Foreign Direct Investment), but also chases away Local Investors to neighbouring countries, or even distant places where they can invest in peace, and not in pieces. With all due respect, the judgement delivered on 29/1/2026 in Suit No. FHC/L/CS/628/2021 Eurafric Energy Limited v Ministry of Petroleum Resources, Minister of Petroleum Resources & Petralon 54 Limited (Eurafric Case) per A.O. Awogboro J. appears to be one of those that qualifies as not just being perverse/erroneous, but anti-investment. In Lawal v State (2025) LPELR-81673(SC) per Obande Festus Ogbuinya, JSC, the Supreme Court held thus: “A verdict of Court is perverse when: it runs counter to the pleadings and evidence before it, a Court takes into account matters it ought not to take into consideration, a Court shuts its eyes to the evidence, a Court takes irrelevant matters into account, or it has occasioned a miscarriage of justice”. In CBN v Ochife & Ors (2025) LPELR-80220(SC) per Adamu Jauro, JSC, the Supreme Court held that a perverse decision, being unsustainable, must be set aside.

A judgement that contrary to the evidence placed before the court, declares that an asset, which within the shortest possible time, has been properly brought to production by a Party P who has expended millions of Dollars to do so, and is finally reaping financial benefits for Nigeria with the exportation of crude oil and payment of royalties therefrom to the Government, should be taken away from Party P who has fulfilled the purpose of the asset, the agreement, and National objectives to bring indigenous companies into the oil sector to participate and thrive, be returned to Party E who was unable to do anything with the asset for about 17 years, and to come and reap where Party P sowed! 

I had watched some back and forth on television a few weeks ago on the Eurafric case, and I decided to read the judgement, since the case appeared to have generated a considerable amount of public interest.

Dawes Island Marginal Oil Field: Background 

The subject-matter of the Eurafric Case involved one Dawes Island Marginal Oil Field (Dawes), formerly operated by Eurafric whose licence was awarded in 2004 and finally expired in April 2019. DPR had recommended to the Minister of Petroleum Resources, that the licences of Eurafric and some other Marginal Field Awardees (aka Farmees), not be renewed and/or revoked after sympathetic extensions of their licences for an additional period of at least 8 years extra, because the oil fields hadn’t been developed to production after several years. Eurafric instituted the above-mentioned action, to reverse the non-renewal/revocation of Dawes which was subsequently awarded to Petralon 54, in March 2021. 

In 2016, Petralon 54, on behalf of the erstwhile Joint Venture as technical and financial partners, executed a drilling contract with Tasaniola Nigeria Limited for the sidetrack of Dawes well DI-1, Petralon 54 solely expending $16 million for that outing. Petralon 54, following their Award of Dawes, have subsequently, drilled DI-3 of Dawes and made new discoveries. Royalties have been remitted to the Nigerian Government on crude oil production of over 180,000 barrels of crude oil, and it is still producing.

Eurafric’s Case

1) Competence of the Action

The first thing that struck me, is whether the Eurafric case  is even competent in the first place, considering the fact that the  jurisdiction of the court to entertain this matter may be in question, as the Farm-out Agreement governing the transaction with Eurafric provides for arbitration as the means of dispute resolution between the parties. Though the arbitration clause cannot oust the jurisdiction of the court – see Section 6(6)(b) of the 1999 Constitution of the Federal Republic of Nigeria (as amended)(the Constitution), it acts as a condition precedent to litigation. See Madukolu & Ors v Nkemdilim (1962) LPELR-24023(SC) per Vahe Robert Bairamian, JSC, on the court’s jurisdiction not being ignited if a condition precedent to bringing an action to court, isn’t fulfilled, making any such defect in competence, fatal, rendering the proceedings a nullity. The issue of jurisdiction being the ‘life blood’ of the case, the court could have raised it suo motu, and the proper thing for the court to have done, would have been to stay the proceedings of the matter and refer it to arbitration   

The second issue is that the Department of Petroleum Resources (DPR), the main oil and gas industry regulator responsible for licensing and supervision of operations related thereto (amongst other things)now known as Nigerian Upstream Petroleum Regulatory Commission (NUPRC), a very necessary party to the action, was not joined in the matter. The exclusion of DPR from the matter appeared to be intentional on the part of Eurafric, the Plaintiff, as DPR is the Agency that all Awardees engage with directly, as the industry regulator, and could therefore, not just be overlooked or forgotten. 

Awogboro J. then went ahead to make declarations purporting to bind DPR, when DPR had not been given an opportunity to be heard, contrary to the right to fair hearing enshrined in Section 36(1) of the 1999 Constitution of the Federal Republic of Nigeria (as amended)(the Constitution). As we say in Nigerian parlance, shaving a person’s hair in their absence! Without DPR,the judgement appears to have no value. 

In Iwunze v FHA & Ors (2025) LPELR-82001 (SC) per Chidiebere Nwaoma Uwa, JSC  the Supreme Court held that:  “A necessary party is one whose presence is indispensable to the constitution of the suit, against whom the relief is sought, and without whom no effective order that would be obeyed or implemented can be passed”. Similarly, in Okwu & Anor v Umahi & Ors (2015) LPELR-26042(SC) per John Inyang Okoro, JSC,the Apex Court held thus: “….a necessary party is that person whose presence is essential for the effectual and complete determination of the issues before the Court. It is a party, in the absence of whom, the whole claim cannot be effectually and completely determined”. How could the Eurafric matter be determined without the Regulator? In fact, in the 2004 Farm-out Agreement between NNPC & Chevron Nigeria Ltd as Farmor and Eurafric as Farmee, by virtue of Article 3.3.2.2. to obtain a renewal of the agreement, Eurafric required DPR’s approval. How then were they excluded from the suit? Because, DPR would have come to give evidence which may have been unfavourable to Eurafric? Perhaps, delving deeper into Eurafric’s poor performance which is discussed below. 

In AMCON v Suru Worldwide Ventures (Nig) Ltd & Ors (2024) LPELR-62162(SC) per Adamu Jauro, JSC, the Supreme Court held thus: “Where a necessary party whose presence is necessary for the determination of all the questions in a suit is not added as a party, the failure will have fatal consequences, and the judgement will be unsustainable. Similarly, where the Plaintiff claims a relief or reliefs, which when granted will have a binding effect on a person who is not a party to the action, the action becomes incompetent, as the necessary party has not been joined”. In Akinremi & Anor v Suleiman & Ors (2022) LPELR-56903 (SC) per Biobele Abraham Georgewill, JCA, the Court of Appeal held thus: “….it is truism that competence is the soul of adjudication. It is in this sense, the issue of competence can no longer in law truly be regarded as ‘mere technicality’, but rather be seen as a substantial issue of law….In law, once a suit is found to be incompetent, the proper order to make is one striking it out”. Eurafric’s action at the FHC is incompetent for the  non-joinder of DPR, and as such, the proper step for the court to have taken, should have been to strike out the matter as the omission of DPR was fatal to the case. 

2) Weight of Evidence, Exhibits  and Problematic Findings 

As for the declarations made by Awogboro J. in favour of Eurafric, they went against the evidence adduced. See Lawal v State (Supra). In Atolagbe v Shorun (1985) LPELR-592(SC) per Chukwudifu Akunne Oputa, JSC, the Supreme Court held that “Perverse simply means persistent in error, different from what is reasonable or required, against weight of evidence”. It is trite law that “where the findings of fact are erroneous or perverse, and/or not based on evidence led”, the proper step to take is to upset (set aside) such findings – see Ruwa v Manja (2025) LPELR-81356(SC) per Jamilu Yammama Tukur, JSC. The findings in the Eurafric case appear to fall into this erroneous mould, and appear to be eligible to be upset.

Awogboro J. declared that Eurafric was entitled to the renewal of their Farm-out Agreement on Dawes because it had allegedly brought Dawes to production of 62,039 barrels of oil, and ordered that Eurafric’s licence for Dawes be renewed. No evidence was adduced to prove that there was indeed a discovery which involves an evaluation of the quality of the crude oil alleged to have been found, that the well has commercial quantities that could be classified as producing, and wasn’t just a ‘dry hole’. It is trite that, he who alleges must prove.

So this aforementioned declaration by Awogboro J. appears to be problematic on several levels. 

Firstly, DPR not being a party to the action, isn’t bound by this order; and the above-mentioned Article 3.3.2.2. requires DPR’s approval for renewal. Secondly, no evidence was adduced to prove that Eurafric discovered and produced crude oil from Dawes, in accordance to industry standards. 

Thirdly, the court finding appears to be contrary to the exhibits that were tendered during the trial:-

1) Exhibit EE1 – Performance Valuation Report dated 28/4/2015 issued by DPR concerning 17 Marginal Field Awardees including Eurafric. Scoring was in 4 categories – A 71% and above; B 51%- 70%; B1 31%-50%; C less than 30%. Eurafric failed, placed in the 14th position out of 17, with a C category score of 8%, and a remark that it had “shown little or no commitment towards developing the assets”.

2) Exhibit FF1 – Letter from DPR to the Minister of Petroleum Resources dated 30/12/2015 stating clearly that an extension had been given to all Marginal Field Awardees, including those who didn’t attain production in the first 5 years, for another 5 years that expired in 2015. The letter stated that a workshop had been held on 11/12/2014, in which Awardees were informed of the Government’s intention not to extend the duration of non-performing fields. The withdrawal was then changed to a renewal for 36 months upon payment of a fee, with a caveat that this would be the final extension for those unable to bring their fields to production within the 36 month grace period. And, if they failed to bring their fields to production within this 36 month period, they should consider the fields withdrawn at the expiration of the 36 months and returned to the basket. 

3) Exhibit GG1 – Letter from DPR to Eurafric dated 12/4/2016 reciting the history of the award of Dawes to Eurafric, stating that Eurafric’s inability to bring the field to production in over 10 years since the award is the basis for the revocation of the licence, with a caveat that the renewal was the final chance for Eurafric to bring the field to production, failing which Dawes would be withdrawn without further recourse to Eurafric. Exhibit GG1 on its face, clearly shows that 1) Exhibit GG1 was received by Eurafric on 21/4/2016, 2) Eurafric was well aware that the extension to 2019 was its last chance 3) Eurafric accepted the terms stated by DPR, as it paid a portion of the renewal fee demanded therein. So, how could they say they were unaware of the reasons for the revocation?

Fourthly, a declaratory judgement is simply a statement of the legal state of affairs; it doesn’t order that anything should be done, nor does it award damages. See Olabomi & Anor v Oyewinle & Ors (2013) LPELR-20969(SC) per Olabode Rhodes-Vivour, JSC. In fact, in Government of Gongola State v Tukur 1989 4 N.W.L.R. Part 117 Page 592 per Chukwudifu Akunne Oputa, JSC, his Lordship likened a declaratory judgement to “a toothless bulldog which can only bark…but cannot bite to vindicate its overt anger and aggression”. The proper step to take after a declaratory order or judgement has been handed down, is to file a subsequent action based on the declaration, praying the court for executory orders. That is, the right declared in the initial judgement can only become enforceable in a subsequent judgement which confers the power of execution. In Okoya & Ors v Santilli & Ors (1990) LPELR-2504(SC) per Abdul Ganiyu Olatunji Agbaje, JSC, the Supreme Court held that “A declaratory judgment is complete in itself, since the relief is the declaration”. 

The moral of the story on this fourth point is that, Awogboro J. appears to have acted ultra vires, by purporting to make executory orders along with the declaratory judgement. See Olabomi & Anor v Oyewinle & Ors (Supra); Government of Gongola State v Tukur (Supra). Naturally, any Defendant in such circumstances, upon executory orders being made by the court, would be constrained to automatically apply for a stay of execution for several reasons including: 1) a court’s decision remains valid until it is set aside; 2) to maintain the status quo and continue to generate revenue, until the matter is finally determined.

Conclusion 

This will probably not be the last we hear of this case. There appear to be many fertile grounds of appeal. Decisions that do not appear to contain the elements of a good judgement, nor meet the threshold of soundness, give the public the impetus to question the competence of judicial officers, amongst other things, and raise doubts about their selection process. In Nwokedi & Ors v Ashue (2023) LPELR-59744(SC) per Kudirat Motonmori Olatokunbo Kekere-Ekun, JSC (now CJN) the Supreme Court held thus: “While it is correct that every Judge has his own peculiar style of writing his judgement, the judgement must reflect a calm and dispassionate consideration of all the issues submitted to the Court for determination. Not only the parties, but any other person reading the judgement must be satisfied that no matter the eventual outcome, the Court was fully alive to its responsibilities, and carefully and transparently considered the positions advanced by either side. It must also give cogent reasons for leaning one way or the other”. The Apex Court went on to say that a court, not being alive to its responsibilities, may hand down a decision that amounts to a grave miscarriage of justice. Is the FHC judgement in the Eurafric case one in which the Judge wasn’t alive to her responsibilities, seeing as the outcome appears to be dissatisfactory in law?