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Shell appeals affirmation of ruling by Rivers High court on OML 11

Shell Petroleum Development Company (SPDC) on Friday said it has filed an appeal for a stay of execution of the ruling of the Rivers State High Court affirming the enforcement of the purported acquisition of interests in the company’s joint venture assets in Kidney Island and specified interests in OML 11 in Ogoniland to the state government.

OML 11 has been the subject of prolonged litigation between the Ejama-Ebubu community in Tai Eleme Local Government Area of Rivers State and the SPDC, the operator of the oil concession on behalf of the joint venture partners, including the Federal Government, represented by the Nigerian National Petroleum Corporation (NNPC), with 55 per cent participating interest.

Back story
The root of the long litigation has been allegations by the community of a massive oil spill during the Nigerian civil war period in 1969/70, which they claimed was traced to a ruptured oil pipeline that belonged to the SPDC.

The Dutch oil giant serially denied responsibility for the incident the community claimed flooded the Ochani stream and extensively impacted its environment.

However, in 2001, Ejama-Ebubu community representatives filed an application at the Federal High Court for compensation for “a major crude oil blow-out and spill involving over two million barrels of oil”, resulting in the pollution, environmental devastation and destruction of property belonging to individuals and families in the area.

Apart from complaints about general inconveniences, impact of acid rain, pollution of underground water and hardship to the population, the community sought the court’s approval to claim about N17 billion as special damages, interest on the sum as well as N10 billion “in Punitive General Damages.”

The community accused Shell of ignoring series of protests and calls for the company to take steps to clear the spill and remediate the environment of the consequence of the incident, which they said deprived them the right to self-sustenance, education and good life.

Although Shell on several occasions denied responsibility for the oil spill, blaming it on the devastation of the civil war, it nonetheless claimed it had taken remedial measures to substantially clear up the effects of the spill.

Regardless, following a series of adjournments and requests by Shell for change of the judge, proceedings in the suit dragged till 2007, when the High Court in Asaba, Delta State on July 5, 2010, gave a ruling valued at S100 million (about N15.41 billion) in favour of the community.

But the SPDC and its parent companies appealed the ruling on the ground that the spill was a third-party incident during the civil war. The appeal was dismissed.

The SPDC proceeded with a further appeal to the Supreme Court in 2017. On January 11, 2019, Shell’s appeal was dismissed after it gave the community a Bond Guarantee for First Bank to pay the value of the Judgment debt earlier pronounced by the Appeal Court, with interest amounting to about N182.8 billion.

On February 25, 2019, the community proceeded to apply in the UK high court for the registration of the order for enforcement of the judgment.

In a report by PREMIUM TIMES, legal experts familiar with the matter said the implication of the community taking the court order to register in a UK court was to confer on it the status of a judgment of the court.

By registering the order of a Nigerian court in the UK court, the experts said, was to give community representatives access to Shell assets in Europe and around the world for easy enforcement.

However, at Shell’s request, on May 28, 2019, the UK court set aside the application by the community pursuant to section 9 of the Administration of Justice Act 1920 prohibiting registration since an appeal was still pending before the Nigerian Supreme Court.

The British court presided by Jason Coppel, a Deputy Judge of the High Court, also refused the community’s application for permission to file an appeal.

Rivers state government interest
As reported by PREMIUM TIMES, while the case was ongoing, the Rivers State governor, Nyesom Wike, on September 30, 2019, announced his government had “fully acquired” interest in the disputed oil mining lease (OML 11) owned by Shell in Ogoniland.

Mr Wike said the state government had submitted a bid of $150 million for 45 per cent stake in the asset reputed to hold oil reserves of about 250,000 barrels per day (BPD).

As a follow-up, the Rivers State government filed a case at the Federal High Court, Abuja seeking to direct the Minister of Petroleum Resources to recognize its interest in acquiring the disputed oil mining lease through an auction sale.

Although the case was withdrawn in July 2020, the State government refiled a fresh case at the Rivers State High Court without joining the Minister of Petroleum Resources.

In a counter-application, the SPDC requested the court’s permission to join the Minister of Petroleum Resources in the suit as a necessary party for a just determination of the issues. But, its application was rejected by the Judge.

In line with the provisions of the Petroleum Act 1969, all acquisition or assignment of interests in oil licenses or leases must be approved with the consent of the Minister of Petroleum Resources.

On Monday, March 2, 2020, the Federal High Court, Abuja issued an order attaching the sum of N182 billion in First Bank of Nigeria Limited’s statutory account with the Central Bank of Nigeria in favour of Ejama Ebubu community.

But, SPDC and other parties affected by the order filed separate appeals seeking the court order to set aside the order and restrain its execution pending the appeal decision.

Shell’s reaction to Controversial court affirmation
However, following the ruling of the Rivers State High Court affirming the enforcement of the purported acquisition of interests in the State government, the SPDC in a statement expressed disappointment, while demanding for a stay of execution of the judgment.

“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 of its assets or interest should be attached to satisfy the judgement,” Shell said in a statement by its Managing Director, and Country Chair, Shell Companies in Nigeria, Osagie Okunbor.

Mr Okunbor said the root case, Chief Agbara and Others vs SPDC, which led to the purported sale of interests in SPDC JV’s assets is still the subject of ongoing proceedings in several courts, including the Supreme Court.

“It remains the position of SPDC that no payment is due and any purported sale or enforcement of payment is premature and prejudicial to ongoing proceedings. The auction sale is also being challenged on appeal by SPDC.

“In the underlying judgement (Chief Agbara and Others v. SPDC), which is being enforced by the sale, the claimants (the Rivers State government) themselves accepted in the High Court in England that the claim was “miscalculated” and “materially overstated”. SPDC has therefore filed an appeal and an application for a stay of execution of this recent judgment issued by the Rivers State High Court on 13 August 2020,” he said.

Source: Premium Times