ABUJA—Counsel to the Federal Inland Revenue Service, FIRS, and Nigerian National Petroleum Corporation, NNPC, in the appeal by Shell and other oil companies over the $10.85 billion arbitration, which the Appeal Court ruled in favour of NNPC, Mr. Lucius Nwaosu, SAN, has called on the Attorney General of the Federation, Mr Abubakar Malami, SAN, to ensure that the Deep Offshore Act, as regards the Production Sharing Contracts, PSC, between NNPC and oil multi-nationals operating in Nigeria were re-negotiated.
It will be recalled that the Court of Appeal, Abuja, had on August 31, 2016, upheld the judgment of a Federal High Court, Abuja, which quashed two arbitration awards worth $10 billion against NNPC in favour of Shell, Esso Exploration & Production Nigeria (Deep Water) Ltd.; Nigeria Agip Exploration Ltd.; as well as Total Exp. and Production Nig. Ltd. Shell, Esso, Nigerian Agip, Total Exploration had, following a dispute over PSC entered into on April 19, 1993 over Oil Mining Lease, OML, 118 in Bonga oil field, dragged NNPC before an arbitration panel which sat in South Africa and another European country and awarded costs against Nigeria.
The arbitration panel awarded huge sums against NNPC. But FIRS challenged the award before a Federal High Court, Abuja, arguing that an arbitration panel outside Nigeria cannot exercise jurisdiction on issues of revenue of the Government of the Federation connected with or pertaining to the taxation of companies and other bodies established or carrying out business in Nigeria. The court upheld FIRS argument and nullified the awards and same judgment was upheld by the Court of Appeal, Abuja.
The appellate court agreed that only the Federal High Court not an arbitration tribunal can exercise jurisdiction on the issue of revenue of the Government of the Federation connected with or pertaining to the taxation of companies and other bodies established or carrying out business in Nigeria. Mr Nwaosu, in a letter to the AGF, said: “The Legal Department of NNPC is certainly aware of the Deep Offshore Act, which stipulates that the PSC shall re-negotiate when oil prices rise above $20 per barrel. Of course the PSC were signed when oil prices were about $9 per barrel.
It therefore, pre-supposes that there is a serious oversight or some other vice surrounding the decision to shut their eyes against this provision. “It will make common sense to invoke this legislation and carry it into full effect by back-calculating NNPC’s losses from non enforcement of that enactment.
Contract in writing should not be enforced by a beneficiary, who will not also accept the burden ensuring against him in the provisions of the same contract. This will be in-equitable. “You owe us and are legally and morally bound to pay a fair fee for a fair service. Save us the agony of enforcing our rights to recompense. We have done our bit.”
VANGUARD
