IOCs Shiver as Supreme Court Rejects Statoil’s Quest for Fresh Evidence

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Last week’s rejection by the Supreme Court of an attempt by a Norwegian oil firm, Statoil Nigeria Limited, to introduce fresh evidence in its lingering breach of contract dispute with an indigenous firm, Inducon Nigeria Limited, reports Davidson Iriekpen, has sent jitters down the spines of IOCs

Can fresh evidence be introduced when a case had been decided? This was what the Supreme Court determined last week when it heard the first leg of the appeal on breach of contract dispute filed by a Norwegian oil firm, Statoil Nigeria Limited, against the two judgements of the Federal High Court and Court of Appeal, both in Lagos, delivered in favour of an indigenous company, Inducon Nigeria Limited, and its promoter, Dr. John Abebe, in 2010 and 2012, respectively.

Appeal

In the appeal, which was interlocutory, the Norwegian oil firm sought to introduce fresh evidence in the case. But in dismissing the application, the apex court upheld the decision of the Court of Appeal in Lagos, which had equally rejected the appeal.

The lower court had confirmed that Inducon and Abebe were entitled to 1.5 per cent net profit interest in any and all oil and gas interests granted to Statoil in the Nigerian oil and gas industry. In a unanimous decision, the panel of justices at the apex court described the interlocutory appeal as frivolous and an abuse of court process. They held that the fresh evidence, which Statoil sought to present, were available to it during the proceedings at the trial court but it did not exercise due diligence to produce them. The court, consequently, awarded the cost of N500, 000 each to the two respondents for wasting their time and that of the court with a frivolous application.

THISDAY gathered that with the interlocutory appeal out of the way, the apex court can now concentrate on the substantive appeal, which has been fixed for October 22. The last time the case came up last January in Abuja, the court had asked the Norwegian oil firm to respect the decisions of the lower courts, which ordered it not to move monies out of the country pending the final determination of the substantive suit.

Justice Tanko Mohammed, who led four other justices of the court, ordered parties in the suit to put all the applications they had filed in the suit in abeyance pending the appeal. He said the best option was to hear the substantive appeal, which would resolve the case. Mohammed directed parties in the suit to try and maintain the status quo ante bellum till the judgement is delivered on the substantive appeal.

He stated, “The appeal will be held on October 22, 2018. Meanwhile, all applications from both sides are put in abeyance until appeal. Parties should try and maintain the status quo ante bellum. This is the best option for now.”

Issue

The substantive suit started when the indigenous company, Inducon, and its promoter, Abebe, filed an action against Statoil at the Federal High Court in Lagos, contending that in April 1990, he was informed by British Petroleum (BP) that it was interested in pursuing opportunities in the Nigerian oil industry together with its partner, Statoil of Stavanger, Norway, with whom it had entered into an alliance agreement. According to him, the alliance, as it was represented to him, would present the first ever opportunity for Statoil, then an indigenous Norwegian company, to operate outside its home base, Norway, and to venture into West Africa, among others.

In his statement of claim, Abebe argued that at all material times, he was told that BP and Statoil would be equal partners on a 50:50 basis in the alliance and that although the alliance would not be set up as a separate legal personality, the two companies would operate as one. He added that he was also instrumental to ensuring that the production sharing contracts for the blocks were signed with the Nigerian National Petroleum Corporation (NNPC) and the Department of Petroleum Resources (DPR).

The businessman said much of the achievements the two companies made in Nigeria then were due to his extensive contacts in government and the oil and gas sector. He argued that Statoil was granted those blocks because of the policy of indigenous participation and transfer of technology in the oil industry and that since Statoil entered Nigeria as a result of that policy, it denied that the policy existed and had failed to live up to its undertaking to encourage the promotion of indigenous participation in the Nigerian oil industry.

Even the witnesses from the DPR and others corroborated Abebe’s statement of claim.

But in its defence, Statoil described Abebe’s claims as unfounded, adding he and his company were retained by the company throughout most of the 1990s and that the contract had long been terminated. It stated that the role of the businessman was to offer advice and assistance in connection with its business in Nigeria and that for a period, he had a seat on the board of Statoil’s Nigerian subsidiary until the alliance it had with BP was dissolved in 1999. Statoil wondered that if there was actually an oral agreement as claimed by Abebe, why did he not use his position as the vice-chairman of the oil firm from 1991 to 1997 to regularise it, stating that from the plaintiffs’ own evidence, there was no conceivable evidence to show that there was an agreement between them.

Judgement

In its judgement, the Federal High Court affirmed Abebe’s submissions and held that there was, indeed, an agreement between him, BP, and Statoil, contrary to the claim of the oil firm, which must be honoured. The court ordered the oil firm to pay the plaintiff and his company a 1.5 per cent net profit interest accruable to it from the three oil blocks allocated to them for bringing the firm to Nigeria to explore oil resources.

Dissatisfied with the judgement, Statoil headed to the Court of Appeal, which later dismissed its appeal and upheld the judgement of the Federal High Court.

Since the substantive appeal was filed in 2012, not much has come out of the case due to alleged delay tactics by the appellant to frustrate the matter. Investigation by THISDAY revealed that part of the ploy by the appellant to delay the case was the frequent change of counsel.  So far, the Norwegian company has employed the services of the seven law firms to prosecute the case, with Abebe and company holding on to Uche Nwokedi (SAN).  

THISDAY also discovered that Statoil had rebuffed the request by some International Oil Companies (IOCs) to amicably resolve the matter. It was gathered that the IOCs, sensing that the case could boomerang on their own operations in Nigeria if the Supreme Court ruled in favour of Inducon, had on many occasions sought to resolve the case, with Statoil refusing to yield to their out-of-court settlement.

The Norwegian oil firm has been accused of trying to muzzle an indigenous company and deprive it of its rights.

All eyes are now on the Supreme Court. The expectation is that the apex court would carefully examine the matter and come up with a sound judgement.