Finally, Supreme Court Ready for Abebe, Statoil

The Acting CJN, Hon Justice Ibrahim Tanko Mohammed


Breach of contract disputes are often quickly settled out-of-courts before they get to judgments. But since the one involving Inducon Nigeria Limited and the Norwegian oil firm, Statoil Nigeria Limited (now Equinox Nigeria Limited), defied all settlement mechanisms and meandered its way to the Supreme Court, parties are looking forward to a sound judgment that would serve as a reference point in many years to come, Davidson Iriekpen writes

The Supreme Court has set Friday, February 5, 2021 to deliver judgment on a breach of contract dispute that could potentially be a reference point in resolving similar disputes in the country in the nearest future. The appeal, which has been pending in the apex court since 2012, was filed by a Norwegian oil firm, Statoil Nigeria Limited (now Equinox Nigerian Limited), against the decisions of the Federal High Court and Court of Appeal both in Lagos which awarded judgments to an indigenous company, Inducon Nigeria Limited and its promoter, Dr. John Abebe in 2010 and 2012 respectively.

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, the promoter of Inducon, 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 has 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 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? He stated that from the plaintiffs’ own evidence, there was no conceivable evidence to show that there was an agreement between them.

In his judgment, Justice Charles Archibong 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.

It held that there was indeed an agreement between him, BP and Statoil contrary to the claim of the oil firm, which must be honoured, adding that it was clear that there were short-term, intermediate-term and long-term remunerations in connection with the contractual agreement, resulting to the ceding of the 1.5 per cent of the oil blocks to the plaintiffs.

In resolving the question of whether there was enforceable agreement in law between the plaintiffs and the defendant, the court held that though it appears that there was no written agreement, BP and by extension, Statoil engaged the plaintiff as partner and thereby took up the commitment of BP to the defendant.

Justice Archibong then ordered Statoil to pay Abebe and his company, 1.5per 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 judgment, Statoil headed to the Court of Appeal which in 2012, dismissed its appeal and upheld the judgment of the Federal High Court.

In a unanimous decision, the panel of the justices held that it would amount to an injustice if Abebe and his company were not paid the amount for bringing the oil company to the country. In the lead judgment, Justice Helen Ogunwumiju held that Statoil’s appeal lacked merit and consequently dismissed it. She faulted the argument of Statoil and its counsel that judgment of the lower court was against the weight of evidence adduced.

Relying on various submissions of the judge of the lower court, Justice Ogunwumiju held that the arguments of the appellant was no of value. She held that since there was an alliance between British Petroleum (BP) and Statoil and Abebe, because BP later divested and left the country does not mean that the agreement reached with the businessman had died. She added that since Statoil became a beneficiary of the crude oil exploitation, it means that it inherited the agreement.

Part of the judgments of both court were restraining orders barring the international oil company from repatriating its funds pending the determination of the case.

Still not satisfied, Statoil proceeded to the Supreme Court with an appeal.

THISDAY investigation revealed that after the Norwegian oil firm filed its appeal, some International Oil Companies (IOCs), sensing that the case could potentially affect their operations in Nigeria if the apex court rules in favour of Inducon, on many occasions sought to resolve the case out-of-court but were rebuffed. It was also learnt that after a careful study of the judgments of the Federal High Court and Court of Appeal, one of the lawyers in the Norwegian company’s legal team had called on the company to engage Abebe in an out-of-court settlement but the company refused to explore the option deeper after the paltry offer it made to the respondents failed.

However, there was a turning point in the case while it was still pending at the Supreme Court as Inducon and Abebe in 2016 raised the alarm, alleging that Statoil was violating court orders and two extant laws of Nigeria, by moving out of the country $4.1billion in four years. They consequently filed a motion on June 13, 2016 at the court, asking the international oil firm to bring back to Nigeria the $4.1billion illegally repatriated out of the country in flagrant disregard to the provisions of Section 11 of the Pre-shipment Inspection of Exports Act and Section 19 of the Foreign Exchange Act and the extant non-repatriation order of the Federal High Court as confirmed by the Court of Appeal.

Startled with the development, Statoil filed an interlocutory application seeking to introduce new evidence in the case but was turned down. In deciding the application in April 2018, the Supreme Court in a unanimous decision, described the interlocutory appeal as frivolous and an abuse of court process. The panel of justices held that the fresh evidence which Statoil sought to present were available to it during the proceedings at the trial court but did not exercise due diligence to produce them. They consequently, awarded cost of N500,000 against the Norwegian oil firm for wasting the time of the court with a frivolous application.

Apparently startled by the developments especially when the allegation of reparation of funds coincided with when the federal government fined MTN Nigeria for similar offence, Statoil immediately called for a meeting of both parties to find an out-of-court settlement. When the meeting broke down, Statoil petitioned the Vice President on the alleged forgery and the VP directed the Economic and Financial Crimes Commission (EFCC) to look into the matter. Not even a petition to the Attorney General of the Federation and the Office of the Vice-President as a whistleblower on the $4.1 billion issue changed anything.

While there were divided opinions as to the appropriateness of that action, in its characteristic manner of always not carefully investigating cases, the anti-graft agency filed charges against the whistleblower at the Lagos High Court.

Those who have been following the case, see the action of the Norwegian oil firm as an attempt to muzzle an indigenous company and deprive it of its rights. They, therefore, urged the Supreme Court to carefully examine the case and come up with a sound judgment that would lay the matter to rest once and for all.