Supreme Court Upholds Statoil’s Appeal

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*Says Federal High Court has no jurisdiction to hear case

Davidson Iriekpen

The Supreme Court yesterday upheld the appeal filed by a Norwegian oil firm, Statoil Nigeria Limited (now Equinox Nigeria Limited), against the judgment of the Federal High Court in Lagos which ordered it to pay an indigenous company, Inducon Nigeria Limited and its promoter, Dr. John Abebe 1.5per cent net profit interest accruable to it from the three oil blocks allocated to them for bringing it to Nigeria to explore oil resources.

In a unanimous decision, the apex court agreed with Statoil that the Federal High Court did not have jurisdiction to hear the case in 2010.

The five-man panel of the court said Abebe and his company, Inducon, should have filed the case at the Lagos High Court which should have been the proper place to start the case, and not at the Federal High Court.

Abebe and his company had in 2010 filed an action against Statoil at the Federal High Court in Lagos, contending that he brought them to Nigeria in 1990 to do business.

He said 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.

They 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.

The plaintiffs 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.

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, stating 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.

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 Hellen 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.

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

Ironically, when Statoil lost the case at the Federal High Court, it had approached the Lagos High Court in 2011 and Justice Dotun Adefope-Okojie dismissed the case for lack of jurisdiction.

Statoil then went on appeal to the Court of Appeal and again, the case was dismissed in 2013.