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SPDC appeals asset sale judgment on controversial OML 11

Shell Petroleum Development Company (SPDC) has appealed the asset sale judgment by the Rivers State High Court which affirmed the enforcement of the purported sale of interests in SPDC’s JV’s assets in Kidney Island and specified interests in OML 11 to the Rivers State government.

The Rivers State High Court had on Thursday delivered judgment in suit No.PHC/652/CS/2020 filed by the Attorney General of Rivers State against Shell Petroleum Development Company (SPDC) of Nigeria Limited.

The presiding judge, Charles Nwogu, had directed the defendant to account for and hand over to the claimant all monetary accruals it had made from its continued appropriation of the fixed landed assets comprised in its Kidney Island Base, Port Harcourt, and interests in lands comprised in OML 11 from the date the Deputy Sheriff of the High Court of Rivers State issued title documents thereon to the claimant until the defendant peaceably yields up possession thereof.

But SPDC has filed an appeal and an application for a stay of execution of the recent judgment.

According to the company, in the underlying judgment (Chief Agbara and Others v. SPDC), which is being enforced by the sale, the claimants themselves accepted in the High Court in England that the claim was “miscalculated” and “materially overstated”.

Prior to the instant case, according to SPDC, the Rivers State government had filed a similar case at the Federal High Court in Abuja asking the court to direct the Minister of Petroleum Resources to recognise the same purported interest acquired through auction sale. The Rivers State government withdrew the Abuja case in July 2020 and refiled the new case at the Rivers State High Court without joining the Minister of Petroleum Resources. An application by SPDC to join the Minister of Petroleum Resources to the suit as a necessary party for a just determination of the issues was denied by the judge, the company said.

Under the Nigerian Petroleum Act, any acquisition or assignment of interests in a licence or lease must have the consent of the Minister of Petroleum Resources.

The root case, Chief Agbara and Others v. SPDC, which led to the purported sale of interests in SPDC JV’s assets, according to the company, is still the subject of ongoing proceedings in several courts, including the Supreme Court, and SPDC says it insists that no payment is due and any purported sale or enforcement of payment is premature and prejudicial to ongoing proceedings. It said it is also challenging the auction sale on appeal.

The root case has its origin in a spill caused by third parties during the Nigerian Civil War, a challenging period which resulted in significant damage to oil and gas infrastructure in the Niger Delta region, SPDC said.

The company said though it does not accept responsibility for the spill, the affected sites in Ejama Ebubu community were fully remediated, and this was certified by the government regulator.

It said the claim for N17 billion as damages was first brought by the Ejama Ebubu community against SPDC in 2001 in the Federal High Court of Nigeria. In 2010, the court gave judgment against SPDC and awarded the claim without SPDC being given reasonable opportunity to defend the facts of the case.

“Indeed, this case has focused too long on procedural issues and not on its merits – we have always been clear that we are ready to defend this case based on the available facts,” the company said.

“SPDC appealed the 2010 judgment and obtained an order to stay the execution of the judgment upon the provision of a bank guarantee issued by First Bank of Nigeria Limited in favour of the claimants. Despite this matter being the subject of ongoing proceedings in the Nigerian courts, the claimants went ahead to seek to enforce the judgment in both Nigeria and England.

“The English court last year rejected the claimants’ attempt to enforce the Nigerian court judgment in the UK, referring to a ‘breach of natural justice’ in the proceedings against Shell in Nigeria. The English court also found that the claimants had ‘materially over-stated’ the value of the judgment which the claimants admitted was N34.716 billion. The court therefore ruled that it would not be just and convenient for a Nigerian judgment to be enforced in the UK which the claimants acknowledge is ‘miscalculated’.

“On Monday, March 2, 2020, the Federal High Court sitting in Abuja issued an order attaching the sum of N182billion in First Bank of Nigeria Limited’s statutory account with the Central Bank of Nigeria in favour of Ejama Ebubu community in Rivers State.

“SPDC and other parties affected by the March 2, 2020 order of the Federal High Court filed separate appeals, as well as applied to set aside the order and restrain its execution pending the appeal decision.

“In accordance with the spirit of fair hearing in the Nigerian judicial system, we remain of the view that until the pending appeals are heard and determined, SPDC is not liable to make any payments, and therefore none any of its assets or interest should not be attached to satisfy the judgement,” it said.

SPDC operates the SPDC Joint Venture on behalf of the JV partners which include the Federal Government, represented by Nigeria National Petroleum Corporation (NNPC), with 55 percent participating interest.

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