Court Assumes Jurisdiction in Brittania-U’s Case Against Chevron, Seplat

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In a much awaited ruling on the various preliminary objections filed by Chevron and other defendants, including Seplat Petroleum Development Company against the suit instituted by Brittania-U Nigeria Limited over the assignment of Chevron’s 40 per cent participating interest in Oil Mining Leases (OMLs) 52, 53 and 55, the presiding judge at the Federal High Court, Lagos, Justice M. N Yunusa, yesterday ruled in favour of Brittania-U and struck out all the objections of the defendants.
 
Before Tuesday’s ruling, the objections by the defendants against the suit, which was instituted by Brittania-U in December 2013, had earlier been argued on March 20, 2014.
 
 
The defendants had argued that the Federal High Court lacked the jurisdiction to hear the case because the dispute pertained to a simple contract that ought to be tried at a state high court.
 
Overruling the objection, the court held that assignment of oil leases and control of interest over such leases is a right primarily vested in Section 44 of the constitution and that the Minister of Petroleum Resouces is given statutory powers to grant or revoke such leases.  
Furthermore, the court held that no holder of an oil lease can deal or dispose of such interest without the prior approval of the minister by virtue of Regulation 8 in the schedule to the Petroleum Act.
 
 
“Any such claim of dispute cannot be a mere simple contract because it will involves the prior consent of the minister and compliance with the relevant provisions of the constitution and the Petroleum Act,” the judge ruled.
 
 
Accordingly, the claim by Brittania-U was held to fall within the subject matter under which the Federal High Court has exclusive jurisdiction under S.251(1)(n) (p) (q) and (r) as well as S.7(1) of the Federal High Court Act, the judge said.
 
He added: “There can be no determination of the dispute without having to pronounce on the statutory role of the minister and the interpretation of Section 44 of the constitution.”
 
 
The court accordingly dismissed the preliminary objection to its jurisdiction.
On whether the suit disclosed a reasonable cause of action, the court agreed with the counsels to Brittania-U, Mr. Rickey Tarfa (SAN) and Abiodun Owonikoko (SAN), that the objections of Chevron and Seplat merely raised issues as to whether the case could succeed at the trial for being weak.
 
 
The court held that at the stage of the preliminary objection, it was not permitted to determine or prejudge the merit of the case.
The court also held that having gone through the statement of claims, there was a triable dispute as to why the highest bidder for the leases was not announced, the transparency of the bid process and whether Chevron arbitrarily or whimsically terminated the bid allegedly won by Brittania-U, as pleaded by the plaintiff in its claims.
 
The court further held that the fact that some of the defendants joined were agents of the disclosed principal was not a matter of jurisdiction.
 
 
According to the court, “A misjoinder of parties cannot defeat a suit once there is a competent suit to be determined as between the parties before the court; and furthermore, since allegations were made in the pleading against the agents, the law is settled that any party against whom allegations were made must be made a party.”
 
 
Finally, on the contention that the case ought to be referred to arbitration under the confidentiality agreement, the court held that the claims were not arbitrable because it will be against public policy to refer the dispute to arbitration when the ultimate decision and control on the transaction is exclusively within the power of the minister under the Petroleum Act, and the minister is not a party to the arbitration agreement.
 
 
The court directed parties to take the necessary steps by responding to all pending applications, in particular the motion to join the Minister of Petroleum Resources and the Nigerian National Petroleum Corporation (NNPC) and to amend the statement of claims.
The matter was adjourned to May 23, 2014 for hearing of the pending applications.
Brittania-U is claiming specific performance of the assignment of the three OMLs or $10billion damages for wrongful repudiation of the contract.
 
 
Speaking to THISDAY on the significance of the suit, Tarfa said the case was significant not only for Nigeria but to the international community because it borders on transparency and corruption.
 
 
“It concerns the issue of corruption. Fundamentally, that is the root of it and for an international company to be involved in such matter, it is quite important for the Nigerian people to see how things are being done and whether all the allegations against Nigerians really; whether it is right or wrong, having regards to what happens in the international community,” he explained.
 
 
“We seek to take a cue from what happens internationally and it is also important for the court to establish the rightness or wrongness, if there are issues of corruption in the dealings as pleaded by the plaintiff,” he added.
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