Justice A. Faji dismissed Atlantic Energy’s
application to set aside the Arbitral Award of March 5, 2020.
He upheld the submissions of NPDC lead counsel
Prof Fabian Ajogwu SAN and granted orders recognising the $1.7bn Arbitral Award
as well as for leave to enforce same as a judgment of the Federal High Court.
The landmark decision upholds one of the single largest Awards ever in a
Nigerian Arbitration. Sometime in August 2015, Atlantic Energy, through its
lawyer, T. Fagbohunlu SAN, took the NNPC to arbitration for alleged breach of
contract.
NPDC in response, filed a counter-claim for funds
due to the Federal Government on account of crude oil sales from the Oil Mining
Leases (OMLS) 26, 30, 34, 42, 60, 61, 62 and 63 (known as ‘Brass and Forcados
assets’) without payment of remittances due. NPDC also sought the recovery of
unpaid net approved cash calls in respect of the OMLs.
On March 5, 2019, the
Arbitral Tribunal in agreeing with Ajogwu’s arguments, delivered a landmark
Arbitral Award of $1.7bn in the NPDC’s favour. It ordered Atlantic Energy pay
the $1.7bn to NPDC as the value of the 55 per cent crude oil portion of the
Federal Government taken and sold by Atlantic but not remitted to NNPC.
Atlantic Energy (Award debtors) sought an Order of Court to set aside the
arbitral award delivered in favour of NPDC because the Arbitral Tribunal
allegedly misconducted itself by wrongfully assuming jurisdiction over NPDC’s
Counter-Claim, and dismissing their preliminary objection to the said Counter-Claim.
NPDC, at the same time, sought for an Order of Court to recognise and enforce
the arbitral award.
In upholding Ajogwu’s submissions, Justice A. Faji
of the Federal High Court held that NPDC’s Counter-Claim in the Arbitration was
distinct in all material respects from the suit referred to by the Award
Debtors. According to the Judge, as rightly argued by Ajogwu, whilst the claim
in suit 701 touched on criminal conversion/ diversion of revenue due to the
Federation, the counter-claim to the Arbitration bordered on breach of the
Strategic Alliance Agreement between NPDC and the Award Debtors. Accordingly,
the Court dismissed the Award Debtors’ application to set aside the Arbitral
Award. This landmark decision settled the question of the impact of non-payment
of signature fees on lifted crude oil as well as the principles of Unjust
Enrichment in Crude oil lifting and recovery. Furthermore, the significance of
this Arbitration to Nigeria, which depends mostly on Crude oil for revenue
generation and economic development is enormous for the Nigerian economy, which
is heavily dependent on crude oil revenues.